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Market closes down 61.5 points after heavy falls earlier. China whacked another 7% early and Greek vote ahead.

yes no

Another blood bath as the market free fell after three days of gains .Whether it was the looming Greek vote, the never ending panic margin selling on the Chinese market or the 6% fall in iron ore prices overnight, it added up to a nasty end to the week.

At one point the index was down nearly 100 points before some sense prevailed. Once again volume was not indicative of a panic sell off, more buyers stepping away unwilling to commit new funds before the weekend shenanigans.

Resource stocks were obviously the worst hit with Fortescue Metals (FMG) – 4.71% leading the falls with heavy hitter BHP -% not far behind. They suffered the double whammy of a falling ore price coupled with the falling oil price. The crashing Chinese stock market is doing nothing to help confidence in the economy and with a serious glut due to record production from both Australia and now Brazil, iron ore is looking decidedly wobbly.

Energy stocks also took falls in the oil price badly with Woodside (WPL) – 1.45%, Santos (STO)- 3.14% and Origin Energy (ORG) -3.45% whilst Drillsearch (DLS) + 0.94% seem to be now looking for a new CEO with the sudden resignation of Brad Lingo.

Banks were slightly better behaved than the rest of the market with modest falls of up to 1% and Westpac (WBC) – 0.76% only down a few cents. In industrials, the falls were more muted with both Wesfarmers (WES) -0.53% and Woolworths (WOW) – 0.61% holding up relatively well. Infrastructure stocks held up well with in play Asciano (AIO) + 1.91% one of the few green spots today.

News today of an opportunistic bid from G8 Education (GEM) – 2.15% which has used the earnings downgrade as a launch pad to acquire a near 17% stake in Affinity Education (AFJ) +29.63% from Perpetual Fund managers and go for the jugular with a 1:4.61 scrip bid Valuing the company at around 68c given the share price of GEM. Of course the management have strongly advised shareholders to take no action but the game is now afoot.

New entrant Murray Goulburn (MGC) +6.6 % joined the herd today with a good premium to its 210c listing price. A positive sign and NZ milkman Fonterra Share fund (FSF) 1.41% also had a good day although off the highs.

Another new float kicked off today having raised $286m,Argo Global Infrastructure Fund (ALI) -% marginally down on its 200c offer price however the float came with a 1:1 option with ALIO trading around 6c, making a small profit for the stags..

You could be forgiven to thinking Xmas had come early. At least for Qantas staff as Alan Joyce put on his Santa costume and rewarded long suffering staff with a bonus of around 5%.Following last year’s wage freeze, it seems Joyce is happy to reward his 28,000 loyal workers with a $90m hand out. The first staff bonus since 2002, so drinks all round this evening.

In economic news, Retail spending edged 0.3 per cent higher in May, disappointing economist expectations of a 0.5 per cent rise on the back of more spending due to a small business-friendly federal budget. Hardly the stuff of a storekeepers dreams and likely to increase the pressure on the RBA next week. The AUD slipped under 76c on the news as we await a potential rate cut.

syndroime

The China Syndrome: The world hardly noticed China is down 30%

Meanwhile in China, traders are trying to catch a falling chopstick as the market continues to ‘panic sell’ on the back of margin selling. We saw falls again today of around 7% at one point as the phone calls to sell hit the market shortly after opening, before a brief rally turned it positive but not for long as it resumed its downward spiral -2.93% as the government moved to ban short sellers.

china chart

This is what a bursting bubble looks like

We are witnessing the steepest three-week decline since 1992. The ‘Shanglow’ Index has tumbled 30 percent from its June 12 peak, helping wipe out at least $2.8 trillion of value. Eighty stocks fell for each that rose on the index Friday. In extraordinary moves to prop up the market, authorities have said it will no longer require brokerages to force the sale of stock held by clients with insufficient collateral.

vote

Not even sure what the question is. So hard to vote ‘Yes’ to a non-existent deal. A ‘No’ vote for a new deal that is not even close to a flat surface of any sort.

And finally the last word on Greece, our 112th largest export market at around $11.7m. So many words have already been used and so many outcomes. The country though is sliding into a full blown crisis with it looking more and more like a run not just on the banks but on the whole country. Raw materials and pharmaceuticals, fuel and any other import has to be paid with money and now they have none. Nor any way to transfer any funds as capital controls are handcuffing what is left of businesses there .Banks are down to their last billion in the vaults. Vote looks very close which is going to cause its own problems. Hopefully Yanis Varoufakis will not have to cut his arm off as he suggested in an interview last night.

greek statur

This is one they prepared earlier!!!!

Next week should prove very interesting.

Clarence

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mt_tryforfree

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