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A snapshot of today:


What happened today?

ASX 200 drops 49.3 points to close at 5193 as the 5200 level breached. RBA comments,banks dividends and lower resources to blame as AGM season continues. Asian market firm with China up 4% and US futures up 26.

Another sorry performance by the ASX 200 as it once again defied regional moves up and capitulated. After a tentative start with around 9 points knocked off for the ex-dividend in NAB, we rolled over in the blink of an eye and never really recovered. Comments from RBA chief Glenn Stevens may have contributed to the falls as he stuck the knife into an already wobbly banking sector. In a speech to the Melbourne Institute he seemed to be happy where rates are currently, as they appear to be doing their job, and he also importantly suggested that bank shareholders need to get used to lower returns and that dividends are not carved in stone. This sent a shock wave through the sector and despite good numbers this morning fromCommonwealth Bank (CBA) -0.95%. With ANZ-0.82% going ex tomorrow, the pressure will not let up. A brief lunch time rally withered on the vine as cricket and Oaks day took away the enthusiasm although the index was off its low of 5167 with a very late touch up helping some respectability.

  • Financials were once again in the spotlight National Bank (NAB) -4.51%% predictably the worst given the 99c of dividend. The star in the sector was second tierBank of Queensland (BOQ) +2.73%. Other financial services companies also saw selling with the ASX -1.88% and BT Investment Management (BTT) -1.55% suffering. Does not seem that long ago Westpac sold its stake in BTT at 820 cents which in hindsight has been an absolute gift. REITS were weaker as were insurersIAG -1.25% and Suncorp Group (SUN) -1.3%.
  • In resources the big miners remain under pressure on a higher AUD and lower commodity prices. BHP -0.81%, RIO-% and Newcrest (NCM) -3.33%. Gold shares continue to slide as the rate rise fears hit the bullion price. AUD gold has fallen nearly $100 in the last week.

  • Energy stocks shrugged off the falling oil price to post modest losses with Oil Search(OSH) -1.0% and Origin Energy (ORG) -1.27% the big cap losers. Woodside (WPL) +0.96% managed a small gain as did miner South32 (S32) +1.01%.
  • In the industrial sector gaming stocks were unlucky,especially given the horror conditions for racing at Flemington. Tatts Group (TTS) -1.03%, Crown Resorts(CWN) -1.68% and Tabcorp Holdings (TAH) -0.44%. Discretionary spending groupFlight Centre (FLT) -0.56%, Harvey Norman (HVN)-2.26% and AMA Group (AMA) -2.42% led the falls. Media stocks fell away as the ACCC continues to flex its muscles, Fairfax (FXJ) -4.35% issued a trading update showing the strength of the Domain Group brand and business but not much else to write home about.
  • Graincorp (GNC) -0.95% to a 7 week low following their update the other day. AndEcho Entertainment (EGP) +3.12% were bouncing back on reflection on yesterday’s VIP loss numbers.
  • The speculative stock of the day was Genetic Technologies (GTG) +100% following the increased shareholding of some directors and comments in a US medical journal on breast cancer screening.

Corporate news

  • Commonwealth Bank (CBA) -0.95% reported a $2.4bn first quarter in line with market expectations and an expense of impaired loans of 0.13% of assets compared with 0.16% last year.
  • Xero (XRO) +3.14% Revenue jumped to NZ$92.8m but the company still reported a net loss of NZ$44.3m despite subscribers growing to 593,000. North American subscriber numbers jumped 114 per cent to 47,000, but this is only 8 % of its total paying subscribers.
  • Ardent Leisure (AAD) -13.59% has run hard in the growing tourism theme but today came crashing back to earth on the AGM comments. The marina division seemed to be the issue falling away in revenue terms but that should not have come as a great surprise given the renovations in work that is currently being done on some of the D’Albora Marinas around the country.
  • M2 Group (MTU) +2.92% and Vocus (VOC) +0.88% after the ACCC approved the merger.
  • Boral (BLD) -1.09% after AGM comments with NPAT of $249m up 45% on PCP. The market may have been disappointed with the lack of capital management and acquisitions.
  • Credit Corp (CCP) +8.09% has been under pressure recently but answered the critics with a positive full year guidance from $40-42m to $42-44m NPAT. The Purchase Debt Ledger was also better at $105m that is $40m higher than last year.
  • Ooh! Media (OML) +9.12% announced the purchase of Inlink Group for $45m to be funded by existing facilities. Inlink are a specialist digital media company targeting urban professionals through screens in offices,lifts,gyms and coffee shops. The company also upgraded their full-year forecast to between $57-58m v prospectus forecast of $48.6m. This is a 37% and above the last guidance of $53-55m.
  • Virgin Australia (VAH) -1.04% despite first-quarter underlying profit before tax of $8.5 million from a $45 million loss in the year-earlier period as it benefited from higher domestic fares and a turnaround at low-cost carrier Tigerair Australia. The all important load factor though was slipping. Virgin reduced its domestic capacity by 0.7 % but its load factor, or the percentage of seats filled, still fell by 2.5 % to 74.7 %. In contrast, Tigerair increased its capacity by 9.9 % but its load factor fell by 4.6 % to 85.6 %.
  • When trouble comes knocking, it has many friends. Woolworths (WOW) -0.92% has been put on negative credit watch by Moody’s Investor Services. The downgrade to negative comes after the profit downgrade last week and the Xmas trading period without a CEO.
  • Recall (REC) -3.03% shares have taken a hit after the ACCC raised concerns about Iron Mountain’s proposed $2.5 billion takeover of the document management business at 850 cents. The ACCC is due to finalise its recommendation on December 15thh  nearly two weeks after the vote.
  • Not all it well in the milk world with Warrnambool Cheese and Butter (WCB) +1.56% souring as they posted a $1.2m loss compared a $17m profit last year..Collapsing dairy prices and high farm gate prices

Economic News

  • The economists at NAB have moved the dial slightly up on their best guess for the country’s GDP. They are now saying that it will come in at 2.6% in 15-16 and 3.0% in 16-17. They are citing a better non-mining sector as things start to improve.

  • In other RBA related things today,deputy governor Philip Lowe has said he was surprised, disappointed and concerned with “recent problems with the data relating to banks’ owner-occupier and investor housing loans” which has led to a $50 billion upward revision of the stock of outstanding investor loans since regulators had increased scrutiny. Seems the banks cannot take a trick at the moment.

In Asia

  • Xi Jinping and his Taiwanese counterpart will meet in Singapore this weekend with a promise of no secret deals.
  • China continues to power ahead with another 3% move higher today as it flirts with an official bull market of 20% above its August low. The clamp down on short selling and other efforts to prop up the market seem to have worked their magic. Hopes of more rate cuts and further stimulus are dragging buyers back in.
  • Figures this week show the economy is moving towards new growth drivers.

  • The Japanese market was also positive up around 1.12%.

European Markets

  • Tonight we get ‘Super Thursday’ from the Bank of England with govnor Mark Carney pondering a rate rise for the first time in eight years.
  • The fallout from the VW scandal shows no sign of letting up . Sales in the Uk are down 8% although Audi sales apparently are holding up. Petrol cars now involved in the emissions scandal.

Ahead in European Markets

  • FTSE -3 points.
  • DAX -101.50 points.
  • CAC +12 points.




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