A snapshot of the market

 

 

What happened today?

The ASX 200 gained 12.8points  to 5040.60.25 during a see-saw day with banks weaker and resources stronger. The AUD fell below 70 cents. Dow futures down 81 with Chinese stocks in HK down 2%.

  • A day of indecision as traders waited for the US jobs number tonight. Without the Chinese market, things were a little muted – although we still had a 75 point range. For the week the index is off around 4%, its weakest performance in three months, in the wake of the disappointing economic data this week.

  • Volume was patchy with conviction low, and the banks underperformed. The sector is traded as a sector with no growth. But what if the banks actually competed against each other to win each other’s business. A radical idea, but one that seems to have passed the momentum traders by at the moment. Perhaps that is where the growth is going to come from. It has been one way traffic for the sector for some time. Commonwealth Bank (CBA) + 0.25% bucked the trend although it did trade through the capital raising price briefly before closing up for the day. ANZ –0.37% is still trading in the rights issue pricing period which ends on Tuesday. The VWAP over a five day period is the key and then take off another 2% to get the issue price.

  • The broader market actually showed some signs of life with resources very firm: BHP +1.52%, RIO +0.99% and even South32 (S32) +1.99%, but base metal stocks were easier, led by Oz Minerals (OZL) –0.28% and Independence Group (IGO) -1.93%. Energy shares continued to suffer despite long shot rumours of Woodside (WPL) +0.43% bidding for Oil Search (OSH) –1.89%. Santos (STO) – 3.30% continued its slippery slide on ‘rumourtrage’ and shorting, plunging to a 15 year low.
  • Industrials were also firm with consumer stocks bouncing back as did Telstra (TLS) +0.9%. Standouts included M2 Communication (MTU) +8.17% on a broker upgrade, Mesoblast (MSB) +7.74% on Japanese approvals and Greencross (GXL) +6.77% after recent falls. Some S&P index rebalancing affected Qube Logistics (QUB) –2.88%, Spotless (SPO) –3.71% and on the positive side Mg Unit Trust (MGC) +5.68% and St Barbara (SBM) +5.26%.
  • In corporate news, Echo Entertainment (EGP) +2.16% was given permission from the NSW regulator for Genting Hong Kong to increase its stake to 23% from 10%. Crown Resorts not so happy at the news (CWN) –1.55%. Genting currently holds a 6.6% stake in Echo and has been waiting since 2012 for the NSW Independent Liquor and Gaming Authority (ILGA) to approve its application to boost its holding above the legislated 10% cap for any one shareholder. Having done so the pressure will now be on Crown.
  • Newcrest (NCM) –1.38% also announced it had ceased to be a substantial shareholder in Evolution Mining (EVN) –0.86%, having sold its last 2.5% stake on Wednesday through Citi at 112.5 cents.

The yawning chasm between ten year bond yields and dividends. Back to GFC levels. Notice the spike in late 2008 before the March 2009 low.

  • The big news today was the AUD slipping below the 70 cent support level. Predictions for more downside to come look spot on the money.

65 cents here we come. Music to Glenn’s ears.

  • Tonight we get the US nonfarm payrolls with a forecast of around 220,000. Job gains averaged 211,000 through July after 260,000 a month in 2014, the best year for American hiring since 1999. The last rate rise was in 2006. It has been 9 years and a whole generation of computer traders who do not know what raising rates is like. Looks they will soon find out.

  • Meanwhile in Asian markets today, China remained closed but in Japan, base pay climbed 0.6% from a year earlier, the biggest increase since November 2005. Overall wages adjusted for inflation rose 0.3%, the first rise in more than two years, after a steep decline in the previous month. This will be pleasing news to Abe as he endeavours to reflate the drab local economy. The Nikkei was still down 2% toying with a seven month low however. Chinese stocks in HK fell around 2% pre the reopening on Monday.

Opening calls for the Euro markets. Don’t forget they were far better than the other global markets yesterday on a Draghi QE hope.

  • FTSE down 88
  • DAX down 163
  • CAC down 77

And finally here is what is scaring the world. Or at least the 400 voters across 40 countries.

Chinese weak growth is first and foremost followed by market structure and then technical factors.

Clarence

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Get a Global take on things at www.ntmarkets.com

Get a Global take on things at http://www.ntmarkets.com

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