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A snapshot of today:

 


What happened today?

ASX 200 closes up 16.9 points back to 5167.4 on light volume once again. Resources led the charge but enthusiasm wanes with trade deficit and rates on hold. AUD bursts through 71.00, not helping the bulls. China closed but US Dow futures ease 24.

  • Another strong start to the market following a 300 point rise on the Dow. Commodity stocks were once again in the cross hairs of bargain hunters as the Fed now looks to 2016 perhaps to start to normalise rates. However the market looked tired after the heavy lifting of the last few sessions and probably needs to consolidate at these levels.
  • The RBA “cut and paste” the statement from last month as it once again left rates on hold.
  • It did say that ‘Regulatory measures are helping to contain risks that may arise from the housing market’ and added that ‘global financial conditions remain accommodative ’. Then back to the Port for the board it seems. Looks like we will be watching and waiting for some time to come, maybe mid-2016.

Stocks and sectors

  • Resources were the highlight, BHP +2%, RIO +1.73% and Fortescue Mining (FMG) +5.63% all gaining solid ground. Even South32 (S32) +3.45% managed a good gain today as did Iluka Resources (ILU) +1.52% and Alumina Limited (AWC) +1.74%.
  • Energy stocks took heart from the return of Origin Energy (ORG) +2.88% after the successful (at this point anyway) rights issue. WorleyParsons (WOR) +7.43% was the big winner, although it could not hang on to its early 14% gain as rising energy prices help this oil service company.
  • Industrials were mixed with Telecoms down as Hutchison (HTA) -8.79% and TPG(TPM) -1.02% sold off after their promising runs. The IT sector also came in for some profit taking led by Technology One (TNE) -1.52%. and UXC -3.76% following a bid for the company at 126 cents cash.
  • Banks outperformed the general market rallying around 0.75-1.5%. Wealth managers did well –  Challenger (CGF) +0.55% and Magellan Financial (MFG) + 1.77%. REITSalso better across the board.
  • Gaming stocks did well possibly due to the Chinese Golden week, Crown Resorts(CWN) +3.37%, Donaco (DNA) + 6.88%, Echo Entertainment(EGP) +1.62% andSky City (SKC) +3.01%.
  • In other consumer stocks Woolworths (WOW) +1.28% continues to outperformWesfarmers(WES) -0.38%, whilst Metcash (MTS) +3.3% had a very strong day as shorts continue to cover.
  • Blackmores (BKL) +0.82% hit 15000 cents, and a market cap of over $2.5bn.Webster (WBA) +7.14% was another food stock doing well today. They do know their onions. Healthcare stocks though were generally weaker, Ansell (ANN) -1.55%,Sonic Healthcare (SHC) -0.27% and Primary Healthcare (PRY) -0.27% all slipping as risk on plays out.
  • Speculative stock of the day – SciGen (SIE) +75% punched the lights out whilstAshley Services (ASH) -17.11% continued its falls from yesterday following the strategic review and profit downgrade. Another huge mover in recent days is Lucapa Diamond (LOM) +27.17% after finding a ‘world class’ diamond field at Lulo in Angola.

Corporate news

  • UXC -3.76% announced that it had received an indicative non-binding and conditional proposal from CSC, a NYSE listed company, to acquire UXC at 128 cents plus payment of a 2 cent franked dividend.
  • G8 Education (GEM) – 3.3% was sold off today following a finding from the Takeovers panel concerning warehousing and/or insider trading during GEM’s attempted bid for Affinity Education (AFJ) -0.28%. The takeover panel described it as unacceptable circumstances, as related parties appear to have bought holdings in Affinity before GEM bid and then subsequently agreed to the terms from Anchorage.
  • Origin Energy (ORG) +2.88% came back today after its rights issue. The rights are now trading under the ticker code ORGR. The issue was fully underwritten and the 8% not taken up in institutional entitlements was snapped up at 520 cents, giving the company some positive momentum. The rising oil price has helped too.
  • Veda Group (VED) +1.51% agreed today to recommend shareholders accept the Equifax revised proposal for 282.5 cents in cash. The board has agreed to allow due diligence and an exclusivity period. The new deal values Veda at $2.5 billion, or 18.1 times Veda’s EBITDA for the year ended June 30.
  • Treasury Wine Estates (TWE) – 0.3% announced the next stage of its supply chain optimisation with sales and earnings continuing to grow out of Asia.

Economic News

The trade deficit has fallen even further into the red, coming in at $3.1 billion. That’s up from a revised 2.8 billion in July and above expectations for a $2.4 billion trade gap. Exports were little changed over the month, but imports rose 1%, adding to the deficit.

The RBA kept overnight rates at 2.0% at its meeting today, pretty much as expected.

The AUD jumped on the result pushing above 71.30.

Betting for the November meeting on Cup day is as follows:

  • No Change: 1.14
  • 25 bps cut: 5.0

The only thing moving in the RBA interest rate world is the number of words in the statement, now at 400. This time last year we had an extra 59 words. So at least that is something that is going down.

In Asia

Another day of gains bringing it up to five straight days. In Japan the BOJ has started two days straight of meetings with some analysts expecting additional stimulus measures as PM Abe struggles to ignite the Japanese economy. The TPP agreement may help things along but the economy still has little to show for the stimulus so far.

The Nikkei is up around 1.2% with Hong Kong up 0.16%

Ahead in Europe and US

Oil giant BP has agreed to pay $20bn (£13.2bn) to settle claims with the US stemming from the company’s Deepwater Horizon oil spill. In July, the Department of Justice and BP announced an agreement for $18.7bn. This newest figure includes some payment BP has already made.

Last night US investors were happy to park three month money at zero interest rates. The US$21bn issue of zero yielding T-Bills brings it into line with other countries like Germany, France, Switzerland and Japan. They have all auctioned 5 year notes at zero return.

European Futures 

  • FTSE  6324 up 25 
  • DAX 9858 up 43 
  • CAC 4639 up 22

Clarence

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