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ASX 200 closes down 5.2 at 5584.7 after a decent rally on Chinese relief. Shanghai trades in 6% range. Down 1% at our close. US futures up 69 pts.

“Turnaround…every now and then I fall apart!”

bonnie tyler

The ASX 200 staged a stunning turnaround as it shrugged off Chinese meltdown concerns and clawed its way back from a low of 5530 to close down 5.2 at 5584.7, looking like it could move higher given some positive moves from overseas markets. Bargain hunting from overseas investors pre earnings season may have helped. Volume was better too with around $6bn traded today as we flip flopped around in the afternoon. China held the focus as it swooned then rallied after the massive hit last yesterday then slid again. Once again a big range on the Shanghai market of around 200 points or 6% swinging from a low of 3537 and a high of 3762. Stability helped our recovery although the optimism evaporated into the close leaving us down 5.2 points for the day.

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The miners led the way with BHP -0.59 % turning around together with RIO +0.18 % ,Fortescue (FMG) +2.34 % and Oz Minerals (OZL) + 1.83 %.Cudeco (CDU) +23.6 % was once again in the big movers list but today it was for a positive move after a rout yesterday following the quasi takeover from Chinese corporates and the sacking(resignation) of founder, the colourful Wayne McRae.

Gold shares suffered today reversing yesterday’s gains with Newcrest (NCM) -2.04 %, Regis Resources (RRL) -4.74 %, Medusa Mining (MML) – 8.8 % and OceanaGold Corp (OGC) -5.34 % the heaviest hit.

Financials are undoubtedly the powerhouse of the market and having been roughed up early in the day, they took heart from the steadying Chinese markets and fought back. News from National Bank (NAB) -0.15 % that they were moving to offload the remaining holding in US Great Western Bank for around $590 was a significant positive.

In the industrials CSL + 1.61% had a stellar day after the US FDA is set to review their new haemophilia treatment. It looks like the race to a $100 share is going to go to CSL after Commonwealth Bank dropped out of the race. It is a long time since we saw a $100 major ASX stock. Last one we can remember was Macquarie Bank (MQG) +0.66 % which is looking like it may ultimately have another go at that price.

Gaming stocks under pressure as ‘rien ne va plus’ hit stocks across the board as Crown Resorts (CWN) -1.34 %,Echo Entertainment ( EGP) -1.84 % ,Tatts Group (TTS) -1.26 % and Tabcorp (TAH) -1.03 %.

REITS which had a special day yesterday gave back some gains with Dexus (DXS) -1.16 %, Westfield Corp (WFD) -0.61 % sliding on some profit taking.

Navitas (NVT) -3.28 % as the shares fall to a 30 month low as the continued weakness on university enrolments and broker downgrades flow through.

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Origin Energy (ORG) +2.69 % after the company announced its Australia-Pacific LNG project is on track to meet its export target. The JV said it had commenced loading refrigerants to its Curtis Island LNG facility and is firmly on track for its first LNG export in the second half of this calendar year.

Senex (SXY) +2 % after Sales revenue for the June quarter was $23.6 million, up 6% on the previous quarter with a higher average realised oil price partially offset by slightly lower production. The FY15 sales revenue result was $115.9 million, down 32% on the prior year, primarily due to the material fall in crude oil price. Senex remained in a strong financial position with total liquidity of $129 million at 30 June 2015, comprising $49 million of cash reserves, and $80 million of undrawn debt.

Atlas Iron (AGO)-8.33 % had another scary day with no rally in sight for this one as other miners pushed ahead. Having spent three months suspended the stock looks to be terminally wounded at the moment and short term pressure will continue as contractors look to edge out of some of their stock to raise much needed capital. Mark Rowsthorn on behalf of McAlesse emerged as a 10% shareholder after the raising at 5c.Interesting current CEO David Flanagan put his hand up for another $200,000 worth of stock at 5c adding to his 2.8m shares he already owned.

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BHP -0.59 % is holding the line above $25.00 as the yield and ‘progressive policy’ to the dividend underpin it, plus a lower dollar and some signs of life in the iron ore market also helping.

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The lower Aussie dollar is also proving a boom for tourism as the value for non-mining non-farming exports has surged 7% over the last year. Services and tourism the stand out as total receipts from tourism rose to $17bn.Looking further out this trend looks set to continue replacing coal as our second biggest export industry.

Much has been made of the rise of TPG (TPM) +0.33 % after the takeover of iiNet was almost signed sealed and delivered. Just the ACCC to come. Two years ago the market cap of this one was $3bn now it is bigger than Fortescue, Coca Cola and Santos at $7.4bn.Looks like Telstra should be on notice there is definitely a new kid on the block.

Heading overseas, China once again was extremely volatile and given the big falls on Monday were in the last two hours it was understandable that the ASX200 limped cautiously into the close. Japan was positive up 0.64% whilst Hong Kong gained 1.17%

The Chinese market has had an enormous performance from bubble to trouble inside 8 months. This is not going to resolve itself anytime soon and we should prepare ourselves for continued volatility and the prophets of doom rolled out on business TV from time to time. It is a sideshow for us, more importantly are the US rate rise and earnings season which will determine the fortunes of our market.

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As the acceptance of the Yuan continues, the London Metal Exchange, the world’s largest venue for trading metals where $15 trillion of metals was traded last year, is set to accept yuan as collateral for banks and brokers that trade on its platform. The Chinese currency joins the U.S. dollar, the euro, the British pound and Japan’s yen, which are all currently permissible as collateral on the LME’s platform.

We may also get the opening of the Greek stock market tonight. Another distraction but should be fun to watch capitalism at its most brutal. Suspect an early fall followed by some bargain hunting. It has been closed nearly a month now and unofficial trading in New York has pointed to a 3% drop initially. Happy Birthday Alex Tsipras! 41 today!

Clarence

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