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A snapshot of today:
What happened today?
ASX 200 up 25.4 points to 5096.5. Banks in vogue after CBA returns. China falls nearly 3% again on weak economic numbers.US Futures down 12.Canberra becomes the focus.
As the market is closing, there is a challenge for the Liberal Party leadership. This may be the reason the market has cheered up a little this afternoon as we head into the close.
- The market roared out of the gate, hitting a high of 5132 this morning before fading, on news that the Commonwealth Bank (CBA) -0.77% had successfully got the rump of its rights issue away at 7350 cents. This was a positive result and showed the confidence the market still has in the sector. National Bank (NAB) +1.16% and Westpac (WBC) +1.61% were the top two but were off their highs for the day. Net buying of financial shares by individual investors in August was the highest since broker CommSec began compiling the data in January 2006, beating the previous peak in May 2013.
- The rest of the market tried hard but failed to hold the 60 point early gain although a late afternoon push across the board as China rallied helped us close better than expected. Another down day in China not helping sentiment together with lack of conviction as we await the Fed announcement later this week. Conviction remains unconvincing and the market is skittish.
- Industrials were modestly better with Utilities, Ausnet Services (AST) +3.97% and APA Group (APA) +1.84% stand outs, as were the healthcare sector with CSL +1.28% and Ramsey Healthcare (RHC) +1.89% and Resmed (RMD) +0.84%. Bellamy’s (BAL) +7.39% continues in a vertical line with Blackmores (BKL) +3.44% pushing 12500 cents. Extraordinary demand for these two.
- In the resource sector there were a number of casualties, high flyer Liquefied Natural Gas (LNG) -17.25% announced a market update on their US gas project, Magnolia. It looks like the pricing negotiations and signing of the contract for their turnkey operation appears to be slipping. South32 (S32) -0.89% resumed their slide with Bluescope (BSL) -2.95%, Syrah Resources (SYR) –4.18% and Sims Metal (SGM) -1.95%.Energy stocks were weaker as the oil price slipped and the WPL/OSH rejection weighed. Santos (STO) +1.12% bucked the trend but Origin Energy (ORG) – 2.05% sank. Beach Petroleum (BPT) -7.76% were a big loser in big miners, BHP –0.13% and RIO -0.27% were barely moved but Fortescue Mining (FMG) +0.99% was in demand.
- Macquarie Group (MQG) +2.34% gave an investor presentation, announcing a 40% jump in profit for the first-half ending September, helped by a weak Australian dollar and better “trading conditions” across most businesses. It also restated guidance for the year to end-March 2016 with net profit expected to top the $1.6 billion recorded in the previous year. Second half profits will be broadly in line with the first six months, even as the firm expects lower performance fees in the period. Macquarie reports first half earnings October 30. It looks like the numbers will be around 2.2% ahead of consensus.
- Cardno (CDD) +16% today announced they had been approached by Crescent Capital with an unsolicited takeover offer for 50% of shares not already owned. The offer price is cash of 315 cents which is around 26% above the closing price on Friday. Crescent and its associates already owns 19.62% of Cardno and if the deal goes ahead then they will own 58.91% for a total cash outlay of $215m.They have explained that the proportional takeover offer was a way that they could keep the staff engaged and want to develop the owner mindset of Cardno employees.
- Oil Search (OSH) -0.54% rejected the proposal from Woodside (WPL) as grossly undervaluing the company’s assets. The company has left the door open to another deal at a higher price from either WPL or any other interested party. The WPL team was disappointed that OSH had not even met them to discuss the merger and the creation of a major regional player.
Meanwhile Chinese stocks suffered their biggest losses in three weeks following disappointing IP numbers at the weekend. Their market closed the morning session down 3.59%.However there was some bargain hunting after lunch which erased some losses. News over the weekend on industrial numbers Industrial output rose 6.1 percent in August from a year earlier, missing the 6.5 percent estimate. Fixed asset investment excluding rural households climbed 10.9 percent in the first eight months versus the 11.2 percent consensus.
- Shanghai -2.6%
- Hong Kong +0.23%
- Nikkei- 1.45%
Looking to Europe for some early moves
- FTSE 6172 up 54
- DAX 10217 up 93
- CAC 4590 up 41
And finally the odds on a rate increase have fallen as volatility has increased.
Friday morning here in Australia we will find out.