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ASX 200 closes up 39.5 to 5624.2 .China goes nowhere. Resources the highlight.US futures down 21.

A meteoric rise today from the starting gun. No looking back as a combination of strong overseas leads, steady Chinese market and continued short covering pre the reporting season helped things along nicely.We did lose 10 points at the closing match out so some caution ahead of Greek stock market return,the Fed and European markets.

Resources were the stand out led by BHP +2.05 % and RIO + 0/98 % but Fortescue Mining (FMG) + 7.43% really piled on the points despite a higher AUD and marginally higher iron ore. Seems that the bears are covering in the mining sector at the moment as fears of a meltdown recede. Even South32 (S32) + 2.30 % and Iluka Resources (ILU) + 3.56% were in demand. Gold stocks were mixed with Newcrest (NCM) -1.56 % but OceanaGold Corp (OGC) + 4.89 %.Alacer Gold  (AQG) + 8.43 % presented today after Tuesday’s results but it seems that takeover speculation was more on investors’ minds for the Turkey based Gold producer .One of the lowest cost producers around with its problem WA assets sold it might well be a tasty morsel for someone. Big move too in Bluescope Steel (BSL) + % but failed to translate for any meaningful recovery for Atlas Iron (AGO) unchnaged.

Banks of course joined in the fun with National Bank (NAB) +0.92 % outperforming as Andrew Thorburn stamps his mark on the company. QBE -1.36 % were one of the few red spots in the market today as the higher AUD hurts them a little. Results should prove interesting as a perennial disappointer and they have run pretty hard in recent weeks.

Industrials also performed well with CSL +1.59 % knocking on the door of $100.Ansell (ANN) + 3.25% was stand out as a number of talking heads on business TV talked the stock up. It has been underwhelming recently following a cost cutting initiative prompting some downgrades from analysts on headwinds in the business. Navitas (NVT) -1.21 % continued to suffer as did heavily shorted stocks like Greencross (GXL) -2.97 %, Nine Entertainment (NEC) -4.21 %. REITS were back in the green with GPT + 2.24 % and Westfield Corp (WFD) + 1.43 % the stand outs.

In news today AMP +2.03 % will stop writing new loans to property investors and is whacking up interest rates for existing investor customers They said they would increase variable interest rates for all of its investor borrowers by 0.47 percentage points, the biggest lift in rates from any bank in response to the clampdown on property investor loans.The rise will increase the rate on a “basic” loan to 4.97 per cent. They will also cease accepting new loans for investors from now on until possibly the end of year in response to the moves from the RBA and other regulators like APRA to let some air out of the property bubble.

Troubled 10 % shareholder in Atlas Iron (AGO) ,McAlesse(MCS) -14.29 %  revealed today they earnings could be hit by slow repayment of outstanding debts and may have to talk to bankers above loan levels. Recently McAlesse have taken a large chunk of stock in troubled Atlas in lieu of cash and may be thinking of letting some go.

Virgin Australia (VAH) + 1.12% has narrowed its full-year underlying pre-tax loss to $49 million in the year ended June 30 as it cut costs, faced less competition with Qantas and improved performance from Tigerair Australia. Virgin had reported a $211.7 million underlying pre-tax loss the prior financial year, and analysts had expected it to report a $60.7 million underlying pre-tax loss for 2014-15. The airline had previously said it expected a $50 million benefit from lower fuel prices in the second half.

In small cap but interesting stocks, medicinal Marijuana company Phylotech (PYL) +12.68 % had a pretty good day after completing its merger with Canadian MMJ Bioscience to create Australia’s first vertically integrated Medicinal Cannabis company. This is certainly a sector to watch as they are known as the ‘Wolves of Weed Street’ and new comer Medlab (MDC) +5.41 % has also gained approval for its cannabis research licence.

Gives you some idea of the prize at least in the US

Hard to turn away from the unravelling Chinese market but today we saw a distinct lack of volatility from Asia across the board .It is almost as if they are just worn out .Japan was down a mere 0.12 %,Hong Kong up 0.26% and China up 0.02% as we go to press. There is one theory doing the rounds that the authorities have drawn a line in the sand at the 200 day moving average and will defend it much like George Osborne did with the ERM when George Soros erupted onto the stage and famously broke the Bank of England in 1992 No government is bigger than the market. It has been proved time and time again. Hong Kong suspended trading during the 87 crash for a week hoping they could avoid the carnage.failed.It simply does not work and the Chinese government will need extraordinary big pockets to defend the market to the hilt. Better to let nature and gravity take its course. After all for all the bazookas they have fired at the market, threatening arrest for short sellers even they have still failed to build any sustainable rally.

Whatever it takes!

Here is a frightening fact. New Chinese stock investors totalled 391,500 in the week ended July 24, a 26 percent decline from the previous week, according to data from China Securities Depository and Clearing Corp. Investors opened 1.64 million accounts in the week ended May 29.There are over 90m individual investor accounts in China which account for 80% of the trading. That is 7% of the population who are traders. It seems that the State is buying and the mums and dads are selling and taking their margin medicine. Think that Warren Buffet summed it up well.

‘The Stock Market is designed to transfer money from the Active to the Patient.” And in China that happens very quickly indeed!

Importantly we get words from the Fed tonight and we can focus on the real issues.

Clarence

XXX

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