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ASX 200 up 11.2 points to 5367.7. Banks shine as CBA returns. Healthcare and Industrials positive. Energy still on the nose.

  • A relatively quiet start to the week. Volumes were pretty good for a Monday with CBA volumes high as the market took confidence from the better vibe in the banking sector. CBA –0.35% came back on and the market reacted positively to the news of the placement price and the demand from institutions. The stock goes ex-dividend tomorrow, so there was some demand for the dividend helping it steady. Other banks took heart from Westpac’s (WBC) +2.17% third quarter update which revealed that it was not going to raise capital. At least not yet. Probably wise given it has been beaten to the punch by the other three. Remember though that WBC did sell a small stake in BT Investment Managers (BTT) +0.21% earlier so that may have be enough for the time being. Certainly the market took heart from the results and pushed the sector higher. In the healthcare stocks Sirtex (SRX) +4.17% continued its stellar run and CSL + 0.77% and Mayne Pharma (MYX) + 2.19% also did well.
  • Resource stocks tried really really hard but failed to make much progress today. The big miners slipped slightly but Fortescue Mining (FMG) +3.08% was once again back in demand as the punters plaything. In the gold stocks Newcrest (NCM) +4.66% brought a warm feeling to the sector. Evolution (EVN) +3% caught the bug with steel stocks BlueScope (BSL) + 2.54% and Sims Metal (SGM) +1.62%.
  • Friday’s rout in Santos (STO) -0.17% was partly reversed today as the company stressed that it had no plans to raise capital and had $2bn in cash and undrawn facilities. It also said underlying performance had been strong with production up 13% in the first half. Earnings due Friday.
  • Mesoblast (MSB) -2.7% announced yet another net loss and a faster than expected cash burn. The loss of $119.4m was a disappointment for investors but cash reserves slumped to $144m from $196m. There was some good news though, with talk that its chronic heart failure program may be given an accelerated pathway to market following a meeting between Teva Pharmaceutical Industries, Mesoblast’s partner, and the US Food & Drug Administration.
  • Newcrest (NCM) +4.66% reported today a $515m underlying profit, better than analysts had expected and 19% better than the 2014 profit. The statutory profit was $546m, a whole lot better than the $2.22bn loss in 2014 due to the huge write-offs.The company has taken some tough decisions and has focussed on reducing debt rather than pay shareholders dividends but it has flagged a return to dividends when the balance sheet is in better shape.
  • Aurizon (AZJ) +3.56%. Our largest freight operator revealed a profit of $604m compared to $253m last year. There were $317m of asset write-downs last year. The outlook was for flat rail volumes with 210-220m tonnes hauled. Once again looking at cost cutting initiatives to drive the bottom line.
  • FlexiGroup (FXL) +4.35% released its long awaited numbers today and showed just why there have been some senior management changes recently. It has confirmed big declines in revenue in its business leasing divisions despite meeting market forecasts of a rise in cash net profit to $90.1m. There was a 44% hike in statutory profit to $82.7m and a revenue rise of 5% to $1.1bn on Monday, in line with a 6% rise in the underlying profit. The management changes spooked the cattle but today’s numbers have gone a little way to steady the ship.
  • Transfield Services (TSE) + 6.67% issued a statement today after media reports on the regional processing centre on Nauru. The company was keen to correct a number of factual errors and reiterated that it has acted firmly and decisively on any substantiated allegations.
  • A couple of bolters in the mid caps today with Lynas (LYC) +11.43% reporting some good news on debt restructuring whilst Reva Medial (RVA) +16.33% was upgraded by one broker to a buy.
  • In Asia, we saw no major moves from the PBoC on the currency but numbers from Japan were worrying given the amount of money that has been thrown at the economy after it shrank at an annualised pace of 1.6% in April to June as exports slumped and consumers cut back spending. The contraction in gross domestic product (GDP) compared with a median market forecast of a 1.9% fall and followed a revised expansion of 4.5% in the first quarter. Private consumption, which makes up roughly 60% of economic activity, fell 0.8% from the previous quarter, double the pace expected by analysts.
  • We also saw Samsung drop today to a 10 month low following disappointment in the Galaxy Note 5 and the wraparound screens.
  • Opening calls on Euro markets are for FTSE up around 40 and DAX up around 75 points. US futures up 26.
  • And finally spare a though for investors in Dysart near the Norwich Park coal mine that BHP owns. They were looking at rents of $3000-4000 during the boom years. Now they are getting $220 a week. In Moranbah a house which changed hands at the peak of the boom at $850,000 was passed in recently below its $220,000 reserve!

Clarence

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