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A snapshot of today:

 


What happened today?

ASX 200 closes up 90.5 points to be back at 5112.1, the mid-point of the range as the bounce back continues. Across the board gains as the Chinese PMI numbers calm some nerves, and the market took off from 11am. Resources outperform and Health Care continue to lag. Dow futures up 117.

Tuesday never happened.

The market put in another strong day today after the window dressing rise on Wednesday. Once again the overnight SPI 200 contract was a poor indicator. Good strong leads from Europe and the US combined with slightly better than expected Chinese PMI dragged the bargain hunters back in. Resources were the highlights as some potential M&A activity with Oz Minerals also galvanised the sector.

  • Banks were firm with both ANZ +1.62% and National Bank (NAB) +1.87% outperforming. Insurers were up around 1% but REITS had a surge led by Federation Centres (FDC) +2.92% and Scentre Group (SCG) +2.05%.
  • Big miners were back in favour, BHP +2.07%, RIO +2.02% and Bluescope Steel (BSL) +5.56% very strong as were base metal stocks Independence Group (IGO) +8.3%, Sandfire Resources (SFR) +7.61% and Oz Minerals (OZL) +19.34%. But Fortescue Mining failed to inspire (FMG) -1.37% as debt concerns in the wake of Glencore linger. South32 (S32) -1.8% should have named itself North 32, it may have risen instead.
  • Energy stocks bounced back as the Origin Energy capital raise was bedded down and some bargain hunters returned. Woodside (WPL) +2.87% and Santos (STO) +4.77% leading the charge.
  • In Industrials, in the hot seat today were Vocus Communications (VOC) +7.31% and M2Group (MTU) +5.06% powering ahead as TPG Telecom (TPM) +0.46% took a breather after the rally yesterday on the Vodafone deal news.
  • Consumer stocks Woolworths (WOW) +2.66% and Wesfarmers (WES) +1.68% did well as did gaming stocks especially Crown Resorts (CWN) +2.83% on the better Chinese numbers. Some of the resilient stocks during the panic of recent months have paused, Blackmores (BKL) -0.51%, Bellamy’s (BAL) -0.13% and Silver Chef (SIV) -4.3%.

Corporate news

  • OZ Minerals (OZL) +19.34% responded to market rumours of a stake being bought by KKR Private Equity at 360 cents a share. It know nothing it seems but will keep shareholders updated when it does.
  • Australian and New Zealand Bank (ANZ) +1.62% announced today that CEO Mike 007 Smith would be stepping down as CEO after an eight year turn at the helm. He will be replaced by Shayne Elliott.
  • Arrium (ARI) -2.3% will cut jobs and overhaul operating practices at its Whyalla steel works in South Australia to save $100 million as the company rolls ahead with an auction for its prized mining consumables business. ARI said that it is seeking an additional $100 million of cost savings in its steel arm, OneSteel, on top of $60 million of previously announced cost savings from the group.
  • Origin Energy (ORG) is still in suspense following the $2.5bn capital raising announced yesterday. Analysts though have been busy slashing price targets as they rush to close the door after the horse has well and truly not only bolted but been shot by a truck and scraped off the road. JP Morgan has halved its target to 640 cents, whilst UBS has reduced its target to 657 cents from 967 cents…but still calling it a buy.
  • Evolution Mining (EVN) +1.2% as Newcrest exited its remaining stake, selling $125m worth of stock at 128 cents.
  • Silver Chef (SIV) -4.3% completed a $5.5m placement at 900 cents following the DRP, allowing retail investors to apply for shares at 820 cents.
  • Z energy (ZNZ) -11.9% fell heavily as Infratil announced that it had agreed to sell its 20% stake in ZNZ in a block trade at 600 cents.
  • Although not listed – David Jones, now owned by the South Africans, lost another CEO today, barely 14 months into the job for mysterious reasons. There was talk about internal issues and health concerns but there’s no other board like David Jones. Oscar Wilde would be happy to have his famous quote about losing a parent updated to DJs CEOs.
  • Suncorp (SUN) +0.98% started life today under new head Michael Cameron, formerly of GPT.

Economic News

  • Property values in Sydney have gone nowhere following a 9.8% rise in the June quarter as the clearance rate comes back to around 70%.

In Asia

  • The Japanese Tankan gauge of large manufacturers fell to 12, below the 13 level projected by economists. Despite the concern that the economy actually contracted in the last quarter, the Nikkei was better today +1.92%. We have seen the Nikkei drop around 14% since the beginning of August.
  • Chinese official Manufacturing PMI came in at 49.8 which was slightly better than the 49.7 expected by analysts. Although not strong, and still showing a slowing economy, things seem to have stabilised in its economy and this helped the Asian markets. China is closed for a National Holiday so nothing from the Shanghai Index today.
  • Caixin/Markit PMI at 47.2 against the flash reading last week of 47.

Interesting comparison in regional manufacturing thanks to Business Insider. AI Group manufacturing report in Australia is looking positive on lower dollar.

Underlying demand for metals in China continues to decline though. Consumer consumption rising.

Ahead in Europe

  • FTSE up 77 to 6138
  • DAX up 101 to 9762
  • CAC up 50 to 4505

And finally Melbourne is closed tomorrow for Grand Final Holiday (!) whilst Sydney has a public holiday on Monday. Business will be quieter than usual especially given the Non–Farm Payrolls number from the US on Friday night. Expect some backing and filling. ASX200 back to where we started after three very different days.

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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