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A snapshot of today:  

 

What happened today? 

ASX 200 down 56.6 to 5207 back towards support. 9% loss, for the worst month since October 2008 (-12.8%).US futures showing steep losses of 170 points on Jackson Hole and Chinese falls (fools).State intervention pulled. Shanghai down 2.06 %.Low volume day.

End of month buying helped it close above 5200

  • A disappointing start to the week with quiet soft trade the feature as we limp into the end of the month .September is historically one of the worst performing months and with a Fed meeting and the end of holidays in the US and Europe ,it will get interesting.
  • Over the weekend comments from the Jackson Hole central bank talk fest pushed a rate hike in September back on the agenda. Shanghai markets didn’t help matters either with some confusion over the level of government support upsetting the locals. This is a big week for economic news with Chinese PMI, our own RBA and GDP combined with US jobs numbers all ensuring fund managers stayed firmly on the sidelines.
  • Broad based losses across the board but financials were weak with the banks down around 1.5% with resources led lower by BHP –1.22%, RIO –1.59% and South32 (S32) –1.62%. Energy shares were also weak despite the oil price bouncing hard on Friday led by Oil Search (OSH) +0.44% and Origin (ORG) –3.17% .Santos (STO) -30% for the month.Base metals shares were also weaker with Sandfire (SFR) –0.82% and Independence Group (IGO) –4.61%.Alumina (AWC) –2.96% was the worst performer down .
  • Other financials were lower with REITs sliding with Scentre Group (SCG) -1.3% the worst in the sector.
  • In industrials, Telstra (TLS) -0.86% and consumer stocks were especially weak. Wesfarmers (WES) –1.91% and Woolworths (WOW) –3.65% fell hard after the Woolies credit downgrade and healthcare stocks also slipped CSL -0.81%. Amcor (AMC) +2.24% was one of the few patches of green today. Small cap caravan and mining ‘donga’ builder, Fleetwood (FWD) –15.98% finally succumbed to gravity and the inevitable today, after their numbers showed an 18% drop in revenue and 29% drop in profits to $3.9m and a zero final dividend. Once again in mining services impairment charges were made of $4.5m
  • Ansell (ANN) + 0.77% today launched a US$100m buy back. The company said that it will launch the program no earlier than 15th September. They plan to reduce their share capital by 6 m shares. They will fund the buy back from existing cash reserves.
  • Woolworths (WOW) – 3.65 % had their credit rating downgraded by Moody’s to Baaa1.
  • Transfield Services (TSE) + 8.84 % on an announcement as preferred tenderer for a Dept of Immigration and Border Protection contract on Manus Island.
  • Bradken (BKN) unchanged, after the management walked away from takeover talks after the 60 day exclusivity period. This has proved a distraction from running the underlying business and they refused to offer another 60 day for due diligence. After initial falls the stock rallied to close up.
  • Former high flyer Vocation Education (VET) –  4.12% fell after revealing a statutory after tax loss of $300m.Debt has been reduced from $120m to $11m and the turnaround is on track. Or so they say.
  • Gold miner Perseus (PRU) + 8.57% on a strong performance with an NPAT up 388% to $92.2m including a $52m FX gain. Profit after tax was $92.2m with an average gold price achieved of US$1324 per oz.Cash balance of 19.7cps looks attractive.

As the reporting season winds up, out of the 143 ASX200 companies that reported revenue grew by 0.4% but expenses grew by 3.1%. 82 % reported profits, 61% reported better profits whilst 85% lifted or maintained their dividends.

  • In economic news, Business stock remained flat in the June quarter, according to the Australian Bureau of Statistics, leaving current estimates for second-quarter gross domestic product growth largely intact at around 0.4 per cent. Economists expect quarterly growth in output of around 0.4 per cent, on average, giving year-on-year growth of 2.2 per cent. However, the range of forecasts is wide, ranging from no growth to more than 0.6 per cent.
  • Sales of new homes dipped in July but remained at historically high levels.The Housing Industry Association (HIA) said its survey of large volume builders showed sales of new homes slipped a seasonally adjusted 0.4 per cent in July, from June. Sales of detached homes rose 0.7 per cent in July, but multi-units sales fell 4.2 per cent.
  • The TD Securities-Melbourne Institute’s monthly measure of consumer prices rose 0.1 per cent in August from July, when it edged up 0.2 per cent. The annual pace ticked up to 1.7 per cent, from 1.6 per cent but was still under the RBA’s target band of 2 to 3 per cent.
  • In Asia, Japan’ Industrial Production fell in July by 0.6%.Seems that all the money that is being thrown at the market by Abe is not having the required effect at all.
  • China’s securities regulator asked brokerages to step up their support for share prices by contributing 100 billion yuan ($US15.7 billion) to the nation’s market rescue fund and increasing stock buybacks. The China Securities Regulatory Commission gave the order at a meeting with representatives of 50 brokerages on Saturday. The government is now resorting to censoring the media and pursuing what it sees as unsavoury stock market practices. Goldman Sachs has also pared back its forecasts for the economy in China by 0.3% in 2016 and 0.4% in 2017.

Chinese volatility is continuing as some brokers at CITIC were arrested today for stock related crime

  • Heading into the European open, the UK is closed for a Public Holiday. Looks like the oil price squeeze is well and truly over as Brent Crude futures slipped more than US$1 to US$ 40.95 or 2%. DAX down 101,CAC down 52 are the early calls.
  • And finally a big week for economists with PMI,GDP ,RBA and NFP. Gotta love acronyms.

Clarence

xxxxx

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