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A snapshot of today:

 


What happened today?

ASX 200 closes up 30.5 to 5197.5 on a low volume day. Energy and gold stocks the standouts with banks and industrials underperforming significantly. Bank of Japan sticks to its guns as China set to reopen tomorrow and US earnings season start to kicks off. Dow futures up 39.

  • It was a tale of two markets today, resources and industrials. In an indecisive day, fluctuating between losses and gains, the ASX 200 closed up 30.5 after an afternoon rally into the close. The big gains were in the fast recovering Energy and Resource sector with gold stocks the big winners again. The sector has been the best performing this year and the delayed (?) rate rise in the US is helping the USD move lower in the short term and push the gold price up. The rest of the market though was easier across the board, with banks holding modest gains and IT stocks falling away.
  • The market was surprisingly quiet given school holidays have now finished and it is consolidating its recent gains.

Stocks and Sectors

  • Big wins today in the energy sector – Woodside (WPL) +5.98%, Santos (STO) +11.92% and Origin Energy (ORG) +9.71% all blasted the lights out as shorts got squeezed. Mid cap oil stocks also did well with AWE Limited (AWE) +15.07% on a successful flow test at a gas well drilled with ORG, Carnarvon Petroleum (CVN) +9.52% and Senex (SXY) +6.9%.
  • Miners were also in demand with BHP +1.59%, Fortescue Mining (FMG) +6.33% and RIO +3.29% very firm. OZ Minerals (OZL) +6.03% continued to push higher as brokers upgraded their price targets based on the smaller funding and project requirements for the Carrapateena deposit. 61m @2.9% copper is the defined high grade resource with capital requirements at under $1bn.
  • Gold stocks rose following good gains in the underlying metal. Newcrest (NCM) +3.77% led the way in the big end but Perseus Mining (PRU) +5.97%, Silver Lake(SLR) +5.56% and Oceana Gold Corp (OGC) +12.32% all did very well.
  • In the Financials it was a slightly different story as risk appetite returned to the resource stocks. REITS were sold down, as were wealth advisers and banks to chase the commodity dollar. Banks were barely changed with National Bank (NAB) +0.87% the stand out whilst insurers like QBE Group (QBE) -1.69% slipped away.
  • Platinum Asset Management (PTM) -4.82% suffered today as a large broking house turned a little negative on the outlook given its recent portfolio performance and the exposure to falling Chinese stocks. Other diversified wealth managers were also affected with Perpetual Limited (PPT) -1.33%, BT Investment Management (BTT) -2.43% and Henderson Group (HGG) -0.69%.
  • In the industrials, Qantas (QAN)-3.63% eased on higher fuel prices, as did Sydney Airports (SYD) -1.79% and Auckland International (AIA) -1.32%. It seems that traders are selling out of safe and defensive stocks and putting the money to work in the resource sector. Even Bellamy’s (BAL) -3.24% fell away, together with Webster(WBA) -3.33% and Tassal Group (TGR) -2.54%.
  • Gaming stocks are gaining ground as the Golden Week holiday finishes, with Chinese gamblers travelling far and wide. Crown Resorts (CWN) +1.26%, Aristocrat (ALL) +2.32% and Sky City Entertainment (SKC) +1.67%

Corporate News

  • Telstra (TLS) -0.7% announced that retail group executive Gordon Ballantyne, who was once seen as a likely candidate for the top job at the company, has quit after five years with the business. Mr Ballantyne led Telstra’s retail division and its extensive revamp as well as its new health division, which is expected to hit $1 billion in annual revenues by 2020.
  • Insurance Australia Group (IAG) +0.2% has appointed technology boss Peter Harmer as its new chief executive to replace Mike Wilkins, who is retiring.
  • Santos (STO) +11.92% on short covering and a monthly drill report from Beach Energy. The main reason for the rise is the success, so far at least, of the Origin Energy rights issue. If STO does need to go to the market the risk is diminishing slightly as investors are showing a stronger appetite for oil stocks. The rallying oil price is obviously helping concentrate the short sellers.
  • Beach Petroleum (BPT) +8.25% on its monthly drilling report.
  • Magellan Financial Group (MFG) -1.24% announced its FUM numbers today showing a slight increase from August. Currently it holds around $38.7bn in FUM with net inflows of nearly $1bn into Global Equity Strategies.

Economic News

  • The AiG/HIA Performance of Construction Index dropped slightly by 1.9 points to 51.9, remaining above the 50-point level separating expansion from contraction. The slight easing in the pace of growth comes after the construction industry index rose for the first time this year in August.
  • Figures out today on tourism shows the positive effect of the lower AUD especially on Chinese arrivals.

 

Asian Markets

  • The Bank of Japan has kept monetary policy steady. As widely expected, the BOJ reiterated its pledge to increase monetary stimulus at an annual pace of 80 trillion yen through purchases of government bonds and risky assets.
  • The Nikkei up 0.7% after the BOJ announcement and press conference. The Hang Seng was up 1.32%.
  • Samsung Electronics rose 6% after its quarterly profit topped estimates. Operating income jumped to 7.3 trillion won (US$6.3 billion) in the quarter ended September, compared with the 6.7 trillion-won average of analyst estimates. Operating profit from mobile devices probably rose 24 % to 2.2 trillion won, the first year-on-year rise in seven quarters.
  • Apple sold a record 13 million units of the new iPhone 6s and 6s plus during their debut weekend last month. China accounted for 27% of Apple’s revenue in the June quarter.
  • China will be back online tomorrow. There have been a few announcements during Golden Week with Chinese FX reserves falling by a record amount as the PBoC sold USD to support the yuan. The stockpile fell by $180 billion in the three months through September to $3.51 trillion.

Ahead in Europe

  • In more bad news for the coal sector, the UK is looking at closing all its coal fired power stations by 2023 as part of its strategy to deal with climate change. Its share in the power generation market dropped to 30% last year, from 36% a year earlier, and several plants have closed down in recent years in the face of European Union regulations on air pollutants. It is considering allowing exemptions for those that are fitted with carbon capture and store technology.
  • Reports out of London that hedge funds have suffered their worst monthly monetary loss since Lehman’s collapse in 2008. Some of the smartest investors in the world had a horror month. Total hedge fund assets stood at $3.05 trillion at the end of August, down 0.2% year on year.
  • And in London tonight, six brokers are about to go on trial for rigging the LIBOR rate. They stand accused of a conspiracy to defraud by trying to move the rate linked to the yen.

European Futures

  • FTSE up 2 to 6328
  • DAX up 6 to 9909
  • CAC down 3 to 4658

And finally shorts in the US hit their second highest level in September. The last time they were at these levels was in July 2008 just before the GFC was unleashed.

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