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What happened today?

The ASX 200 closed up 74.1 points. Banks lead the way. Nothing new there!

  • And with one mighty bound the market shook off its winter blues and sprinted to be up 70 for most of the day. Even Flash PMI numbers from China at around consensus (49.6) and a profit downgrade from Flight Centre (FLT) – 13.59% before lunch couldn’t upset the bulls.

  • The big winners have been the yield plays with the big four banks charging ahead. Gains of between 1.5-2% across the spectrum including insurers. Even resources did ok with Alumina (AWC) +2.24% one of the standouts. BHP + 1.02%,RIO + 0.97% and Newcrest (NCM) + 1.1% together with energy stocks lifting them.
  • Yesterdays’ problem child IOOF (IFL) + 2.6% continued to bounce following the dramatic events on Monday with a 20% fall before a statement from the company. More bargain hunters around today in the as the company has moved quickly to send Head of Advice Research Peter Hilton ‘on leave until further notice.’ This crisis control has emboldened bargain hunters as they snap up this at knock down prices.
  • The “Forgive me father for I have sinned” list continues with Flight Centre (FLT) -13.56% continuing the tradition for former high flyers to come out and downgrade their numbers and expectations. We have seen SEEK, Flight Centre, Metcash, Woolworths, NINE and others all come clean in recent weeks.
  • No wonder SEEK are having problems with their TAFE business. News today in the NSW Budget (massive stamp duty receipts) that changes to the fees and charges for course has sent enrolments plummeting. This year’s budget papers show certificate III enrolments plummeted by 18,073 students. And for certificate IV, there were 10,568 fewer enrolments this year than last year. Importantly for SEEK, it also coincided with the collapse of a new computerised enrolment system.
  • Woolworth (WOW) -0.04 % continue to churn as bargain hunters vie with impatient investors struggling to find a firm direction.
  • Another shock plunge today for Flexigroup (FXL) – 7% with the resignation of CEO and MD Tarek Robbiati. The company reaffirmed its guidance of $90-91m
  • Crescent Capital has agreed to acquire private hospital operator Healthscope’sAustralian pathology business in a $105 million deal.
  • New Entrant RENT (RNT) Unchanged, joined the market today hoping to do whatRealEstate.com.au did for sales, in the rental market. They already have 80% of the rental market and are looking to now expand their unique visitors to the site from 230,000 to 500,000 within the next 12 months.
  • Low-cost mobile reseller Amaysin is set to list on the ASX on July 16 with a market capitalisation of $317.8 million, well below what analysts initially said it was worth.
  • In other local news the Amcom/Vocus deal has been ratified by the Perth court despite the machinations of TPG to derail the merger. Looks like there will be new and bigger competition for Telstra, Optus and TPG.

  • China actually opened up positively following last week’s 13% falls and the Dragon Boat Festival holiday. However it didn’t last long and slipped from there, down around 0.22% as I write. Huge volatility with falls around 4.8% at one stage(range today 4,264.77 – 4,526.06) before stability returned. Seems the continuing rout has been fuelled today by news that the PBOC Operations Office has called for stricter regulation of brokerage liquidity (implicitly clamping down on the seemingly infinite expansion of margin lending required to fuel the boom).

Shows how far the Chinese IPO market has fallen

  • Japan, on the other hand, hit a 15 year high today. Isn’t it amazing what a huge dose of free central bank money can do to asset prices?
  • I am sure we will see more news coming from the EU tonight as discussions continue. Everyone is convinced a compromise is near but if it happens as I am sure it will, the question remains on how to reignite a Greek economy when wealthy people and businesses will be slugged with ever increasing taxes. I suspect that any real resolution is years away in reality. Some of the new proposals will be met with a mass exodus. Increased taxes for higher income earners (revenues above 50,000 euros, while lowering the tax for revenues below 30,000 euros. It introduces a solidarity tax of 8 per cent on revenues above 500,000 euros.
  • And this is the killer for business owners a special levy of 12 per cent on businesses that post a profit of over 500,000 euros, increases in luxury tax on pools, planes, big cars and private boats over 10 metres and a tax on gambling slot machines.
  • Looking to Euro Markets tonight expect some scepticism to creep in especially given the euphoric rises of 3-4% yesterday. After rises of 3-4% last night some profit taking will be inevitable.
  • Sydney dwelling prices rises were up 13.1 per cent in the 12 months to March,data from the Australian Bureau of Statistics shows. The next best was Melbourne with an annual rise of 4.7 per cent, much slower than the 9.8 per cent recorded at the same time last year.

                                                       Gangi

  • And finally as property prices soar in Sydney and Melbourne and State governments celebrate the boost to their coffers, if you are looking for a home maybe a Sicilian town called Gangi is the answer. They are giving away houses for free. There is a catch, as there always is. Most are dilapidated and require extensive repair but still there is now a waiting list. Previous attempts by Italian villages to give away houses have failed due to bureaucracy. Says it all really!

Have a great night 

Clarence

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mt_tryforfree

Get a Global take on things at www.ntmarkets.com

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