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A snapshot of today:
What happened today?
ASX 200 closes down 195.1 points at 4918.4 as losses accelerate into the close. Miners and energy stocks bear the brunt.ASX 200 back to levels of March 2006.Japan down 4.05% and China off 1.52%. US Futures down 108.India unexpectedly cuts rates 0.50% to 6.75%
- It was all about resources today as we test the recent intraday low at 4928. If the US does not meltdown tonight expect a dead cat bounce off the lows tomorrow.
- The vultures smell blood in Glencore as the company struggles under a huge debt burden and low commodity prices. Big falls in the UK and Hong Kong were bad news for the mining sector with resource stocks taking out multi year lows. It looks like the hedge funds are circling with massive short positions and ‘rumourtrage’ now dominating. There are two US hedge funds that have over 220m shares shorted and are continuing the pressure on the company.The Bloomberg World Mining Index is now at its lowest level in nearly 7 years. As our mining stocks shrink so does their relevance to the index now around 14% its smallest share since 2002.
Our market took its cue from the US, the Glencore rout and collapsed. All the hope and optimism from yesterday was gone in 60 seconds as we capitulated at the opening and crashed through the 5000 level. The market then just sat there in a daze and failed to attract any buyers waiting for some impetus from overseas until the Asian market kicked down towards the close as margin selling seemed to hit the market. Surprisingly the volatility after the gap down open was muted for most of the day until the final hour. Volume was around $5.2bn with high volume in the futures market pointing to some fund selling into the close.
- Resources were obviously kicked hard with BHP-6.65% ,RIO-4.57% and Fortescue Mining (FMG)-6.44% all looking very heavy but Bluescope Steel (BSL)-8.12%,Iluka (ILU)-5.67% and South32 (S32)-5.78% were even worse.Base metal stocks were hit hard too,Sandfire (SFR)-4.35%,Independence Group (IGO)-5.9% and Oz Minerals (OZL)-3.55% with Newcrest (NCM)-1.49% holding up better than most.
- Energy stocks had a torrid day after Shell announced it was pulling out of the Arctic,Woodside (WPL) -5.82% and debt leaden Santos (STO)-9.13% were once again back in the shorters’ crosshairs. Origin Energy (ORG)-10.43% ,Beach Petroleum (BPT)-8.74 % and Liquefied Natural Gas (LNG) -9.12% all finding no support.
- In the banking sector, we once again saw heavy losses as they reversed the gains of Monday.The big four were all down around 3-3.5% with Macquarie Group (MQG)-4.99% and insurers down around that 3% mark. Wealth managers were also sold down as Challenger (CGF)-3.92%,Perpetual (PPT)-4.39% and Henderson Group (HGG)-4.85% fell on market weakness.
- Industrials were unusually weak given they have held up relatively well. Aurizon Holdings (AZJ) -4.64 %,Transurban (TCL)-3.61% and even Sydney Airports (SYD)-4.36% falling on lower growth fears.
- Even healthcare stocks were sold off with nowhere to hide. Concerns on a government Medicare enquiry and US biotech falls hurt the sector led by CSL–3.26%,Ansell (ANN)-5.2% and Ramsay Healthcare (RHC)-3.61%.
- Consumer and gaming stocks red across the board with food stocks particularly harshly dealt with Select Harvest (SHV)-7.08%,Treasury Wine Estates (TWE)-2.89% and Bega Cheese (BGA)-2.12%.
- Telecom stocks were also reversing the big gains of yesterday following the merger of M2Group (MTU)-7.54% and Vocus (VOC)-4.66%.Telstra (TLS)-4.36 % ,TPG (TPM)-5.05% and Spark NZ (SPK)-4.24% falling back.
- Kathmandu (KMD)+2.36 % Net profit after tax fell from $NZ42.2 million in 2014 to $NZ20.4 million while earnings before interest and tax plunged 48 % to $NZ33.3 million. Same-store sales fell 1.9 % to $NZ409 million in the 12 months ending August 2, while total sales grew 3.7 % thanks to 10 new stores. Same-store sales were particularly weak in Australia, falling 2.7 %. Profit before one-off costs fell 47 %, even worse than consensus forecasts of a 43 % drop.
- OceanaGold (OGC)-5.29% announced their takeover of TSX listed Romarco Minerals had been approved by shareholders of both companies. The resolution was passed by nearly 80 % of Romarco shareholders votes and 99 % of OceanaGold shareholder votes. The takeover is expected to be completed by October 1.The deal includes Romarco’s flagship Haile Gold Project, which is under construction in South Carolina and is one of the gold sector’s highest grade open pit development projects.
- Bradken (BKN)-4.76% chair Nick Grenier has announced his plans to retire on November 10th.
- Alumina (AWC)-4.58% on news that the US parent was about to copy BHP and split into two companies. Manufacturing and refining.
- The ANZ/Roy Morgan weekly consumer confidence index fell 3.4 % last week, after jumping 8.7 % the previous week after the change of PM.
- Asian News
- Japanese stocks were in the red, leading the rest of Asia down to three year lows. Mitsubishi Corp which is heavily involved in commodity trading was down 5.6% as were Mitsui down 9.4%.
- The Nikkei was down around 4%,Hong Kong down 3.6% as the weaker Chinese industrial profits took their toll. Strange how we completely ignored them yesterday and rose 73 points.
European Markets ahead today
- FTSE down 50 to 5909
- DAX down 61 to 9423
- CAC down 43 to 4314
Saudi Arabia, OPEC’s largest oil producer, has withdrawn as much as $70 billion from global asset managers as they try to plug their income gap due to lower oil prices. The Saudi Arabian Monetary Authority’s reserves held in foreign securities have fallen about 10 percent from a peak of $737 billion in August 2014 to $661 billion in July, data from the central bank show.
It is not just metals and hard commodities that have fallen hard this quarter.