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A snapshot of today:

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What happened today?

ASX200 closes up 37.4 points at 5103.6 on a low volume rally which seemed to wither on the vine as the day wore on before a late push. Conviction still lacking with banks struggling to make ground. China rallies 1.1% as Xi Jinping touches down in the US and defends economic stewardship. US futures down 16.

A relief rally after the bloodbath of yesterday…but lacking any real conviction. After a rush at the open we saw the market settle back – banks underwhelmed and energy stocks shone. A late rally saved some blushes, as mid afternoon we were only up 10 points.

  • Banks turned south by mid afternoon but a push at the close ensured a positive finish with Westpac (WBC) +0.84% the best performer.
  • Energy stocks were the standouts today on the back of higher oil prices. US drilling rigs have slowed dramatically to only 644, down 57% from the start of the year. Woodside (WPL) +2.84% rallied dragging target Oil Search (OSH) +4.28% along for the ride. Even Santos (STO) +4.39% drew strength today from media reports on the progress of asset sales.
  • Iron ore stocks were also weaker, Fortescue Mining (FMG) -3.04% the worst of the three. Gold stocks were mixed with Newcrest (NCM) -2.96% but Regis Resources (RRL) +5.71%. In speculative shares Ardent Resources (AWO) +133.33% had a special day as it announced it was joining the IOT revolution. It is set to acquire the private IOT group in exchange for nearly 700m shares. If you are wondering, IOT is the internet of things and IOT Group is involved in wearable devices and ‘selfie drones’.
  • In the clean and green food sector, Bellamy’s (BAL) +1.44% continued to rise, as did new kid on the block Vitaco (VIT) +5.88%. Blackmores (BKL) +4.28% still working higher as did Capilano Honey (CZZ) +1.68%.
  • Utilities were another bright spot. AGL Limited (AGL) +0.87%, Duet (DUE) +0.47% and APA Group (APA) +2.05%. Other defensives were also in demand Transurban (TCL) +2.3%, Auckland Airport (AIA)+1.6 % and Sydney Airports (SYD) +2.74%.
  • Consumer stocks continued to attract buyers, Wesfarmers (WES) +0.96%, Woolworths (WOW) +1.18% and Asian facing Coca Cola (CCL) +1.96% and Treasury Wine Estates (TWE) + 2.47% all stronger.

Corporate News Today

  • TPG (TPM) -4.58% announced slightly disappointing numbers today and gave no guidance to the future given the short period of time that it has had iiNet. TPG Telecom increased net profit to $224.1m in the year ending July 2015, slightly missing analyst expectations of around $254m but beating its own guidance. This is the last set of numbers before its $1.56 billion acquisition of iiNet takes effect. Revenue rose 31% to $1.27 billion.
  • The number of broadband customers at TPG also rose to 821,000, including 42,000 on the NBN. When combined with iiNet’s 988,000 subscribers as of June, this gives TPG a combined total of 1.809 million users and confirms its place as Australia’s second biggest supplier of fixed-line broadband services. The full-year dividend was 11.5c per share and fully franked – up 24% on last year.
  • South 32 (S32) +1.35%. S32 has raised its mineral estimates for its Canning silver project by 21%. Its GEMCO tailings and the Illawarra Metallurgical coal were also upgraded.
  • Another day another bid, this time for PAS Group (PGR) +22.12% as US private equity group Coliseum Capital Management has bid 63 cents. They already have a 19.2% stake and the bid is worth $86m.
  • New Hope (NHC) + 5.59% announced a positive result today. Focus remains on cost reduction but NPAT rose 25% to $51.7m. The company also paid a 2.5 cent dividend and a special of 3.5 cents which always pleases the market.

Economic News

National house price growth was 4.7% over the JUne quarter, or 9.8% over the year. This compared with estimates of 2.3% and 8% respectively, and 1.6% and 6.9% between December 2014 and March 2015.

Sydney prices grew 8.9% in the quarter and 18.9% over the year, with quarterly growth rate the largest since the series started in 2002. Melbourne was second with quarterly growth of 4.2% and 7.8% yoy.

In consumer confidence it looks like the Turnbull factor has helped with an 8.7% jump in the ANZ-Roy Morgan weekly confidence survey. It is now sitting above the long term average. It will be interesting to see if this warm glow lasts.

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ANZ-Roy Morgan Consumer Confidence indicator

This is what is currently spooking the cattle. Our current biggest fear is the slowdown in China.

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  • Meanwhile in Asia, Japan remained closed but Shanghai finished the morning session up around 1% as the President makes his first official visit to the US. He has said that market reforms will not be disrupted by volatility. He has also defended the track record on economic reforms and urged foreign investors to take a long term view on China. It is probably a sign that his first stop is Seattle and he will meet with Boeing, Apple and Microsoft.Must be a Nirvana fan.

Looking at unofficial gauges of activity things seemed to have stabilised.

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Online interest in small and medium sized business is seeing a rebound according to Baidu which handles 6 billion net searches every day.

  • Alibaba is similar to Ebay but on an industrial scale.
  • Earlier this month IKEA said China was its fastest growing market with sales up 18 per cent.

In early European market calls:

  • FTSE up 12 to 6121.
  • DAX up 41 to 9990.
  • CAC up 9 to 4595.

Tonight,all eyes will be on the continuing fall out from Volkswagen as it has admitted to cheating its emission tests in the US. The scandal is spreading to Asia as S Korea vows to get tough if problems are found in their cars there. The company is facing fines of $18bn after admitting it installed software to deceive regulators.It seems that Volkswagen are not alone. Or at least that is the concern of German car makers which could really affect the industry and their reputation.VW is being re-christened ‘Very Worried’.

Clarence

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