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Shorts being squeezed across the board with another stunning day as Greece recedes into the background. ASX200 up 84.1 points. US jobs number tonight.

  • The market jumped out of the blocks today with a renewed sense of purpose. The early news of an upgrade for Pacific Brands (PBG) +50.77% helped but more importantly the mood seems to have changed as the blues of June have given way to July optimism. This is traditionally a good month and although early days it feels like we have found a good base to work our way higher from.

daily chart

The daily bull run continues

  • The spill over of feel-good from the corporate action in the last few days has left investors with an inner glow. The Canadian bid for Asciano (AIO) +1.03% has been a shot in the arm for local shares. An international vote of confidence, and coupled with the Kathmandu (KMD) +0.33% bid from New Zealand shows that the lower dollar is proving a big incentive for corporates to put their balance sheets to work.
  • Financials were again the stars of the show with around 26 points of the rise down to the big four. Insurers and wealth managers joined in the new year celebrations with Macquarie Group (MQG) +0.79 %,Suncorp (SUN) +1.84% and Insurance Group Australia (IAG) +1.43%.
  • Not to be out done the big miners also put in a respectable performance, surprisingly given falls in iron ore and oil overnight. BHP +1.31% the stand out as yield buyers seemed to have drawn a line here.
  • Even energy stocks shrugged off the gloom and moved ahead with Woodside (WPL) +1.76%, Santos (STO) +2.86% and stand out superstar LNG +5.39%.
  • Bluescope Steel (BSL) + 25.6% was a huge winner today as respected fund managers Ausbil Investment Management issued an updated substantial shareholder notice showing it had lifted its stake to 6.19% from 5.06%. The rise came despite a mixed report from brokers as they continue to find cost cutting measures at Port Kembla.
  • Bonds underwear and Sheridan parent Pacific Brands (PBG) +50.6%, announced a positive upgrade to its numbers today, now expecting around $63-65m compared with previous guidance around $57-63m.
  • In other industrial news, Woolworths (WOW) +2.66% and Wesfarmers (WES) +1.81% both improved as did CSL + 1.48% and Crown Resorts (CWN) +2.65%
  • A horror day for childcare operator Affinity Education (AFJ) -34.15%, which is trying to be G8 education (GEM) +0.31% and not ABC Learning. Traders spat the dummy following a surprise downgrade to profits from the company. Management said it expected EBITDA of $7.5-8.5m for the first (June) half and full-year EBITDA of $27-32m, excluding acquisition and integration costs. Management offered only vague outlook commentary at February’s full-year results and at the April AGM, but it’s clear that the market expected much, much more. Worryingly too, enrolments in the June quarter were down on the previous year.
  • Some good news from Telstra (TLS) +0.65% as it launched Dr Ready Care. A phone or video call service connecting patients with doctors over the net. Patients take pictures and send them to a doctor reducing the spread of infection in doctor’s surgeries. The service is not bulk billed and they will be charging $76 a consult.
  • Former chief of Sigma Pharmaceuticals, Elmo de Alwis, could face jail time after pleading guilty to falsifying the company’s accounts in 2009 and 2010. Sigma’s accounts overstated the company’s income and revenue by $15.5 million, inventories by $11.3 million. Pre-payments to the company were inflated by $2 million and Sigma’s profit after tax was overstated by $9.6 million.
  • In local economic news, the trade deficit narrowed from a revised $4.1bn to $2.75 bn in May but missed expectations of around $2.25 bn. Exports rose 1% in May, but imports were down 4%. Pleasingly exports to China rose to their highest level since December last year but are still 7% lower over the year
  • And if you thought you were having a bad day spare a thought for former boss at Asciano, Mark Rowsthorn who was let go from his own company some years ago and sold all his shares to finance his new venture McAlesse (MCS) unchanged. Not a good pairs trade. Looks like he missed out on around $340m!

performance

Comparison between Asciano and McAlesse

  • Turning to Greece, news today that Moody’s has downgraded its outlook to extremely dodgy were overlooked as we head into the weekend referendum with the increasingly erratic Tsipras flailing around and blaming everyone else. Probably not helpful and whatever the outcome the level of acrimony has been upgraded to AAA rated on all sides. When the dust settles on this crisis no one will come out looking good.
  • Looking to Asia, China continues to hold a morbid fascination as the numbers just spiral out of control. An opening 3.5% fall was made back by lunch time only to give it back as the day wore on. Currently down around 2.7% despite the government looking to draw a line in the sand at 4000. To get an idea of the gains and losses, Guotai Junan Securities rose 77% in its first four days of trade having completed China’s biggest IPO in five years last month at around $5bn. It is the worst start among 190 initial share sales on Chinese markets this year. Every other one recorded a gain at or near the 92% maximum allowed. The company, whose $43 billion market value is in line with that of Deutsche Bank AG, received $379 billion of orders, equivalent to Indonesia’s entire stock market.
  • In other Asian markets the Nikkei pushed up 1.15%. The Hang Seng is 0.43% as Macau casino operators surged in Hong Kong trading after the industry’s free fall in revenue showed signs of abating, and as a relaxation of visa rules for Chinese travellers is expected to bring further relief. Sands China soared 16 %, heading for the biggest gain since October 2011. Wynn Macau Ltd jumped as much as 16%, while Galaxy Entertainment Group Ltd rose 15%. Good news for Crown (CWN) +2.65%.
  • US jobs number tonight but with July 4th celebrations starting early in the US, expect overseas markets to remain skittish on Greek news and lower volumes.

us

The Fed is not concerned about Greece but jobs will be a focus

  • Having written this morning, in our market call, that we had a 5600 target, we are stunned to see it achieve that today.
  • Perhaps the volatility of China is giving overseas hedge funds more reasons to buy our market.

facebookk

facebook has a new logo. Huge difference!

  • Finally, Sydney was named the world’s fifth most liveable city as a the result of low unemployment rate (4.3%), its high rate of recycling (68%) as well as public swimming pools available for city workers to have a swim during lunch breaks.  Not sure that is an important one. Melbourne dropped from third to fourth spot and remains the top Australian city.

Clarence

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