A snapshot of today:

today

What happened today?

ASX 200 closes on its lows, down 32.7 points at 5193.7 as banks slip and miners stall again. Energy stocks slightly better but consolidation continues. Asian markets mixed on Russian jet downing and AUD picks up. US futures +17 as Thanksgiving approaches.

A tepid start today was hijacked mid-morning as the banking stocks and miners came in for more profit taking in a very mixed market. Selling accelerated into the ‘match out’ and knocked it to the low of the day. Low volume with only 25,000 futures traded.

News from ratings agency Standard & Poors gave the banking sector a big tick of approval, saying the regulatory and governance frameworks remain strong and the nature of the industry means that the big four will achieve reasonable return on equity without any undue risks. Seems though the market chose to focus on the caveat that banks may increase risk in order to achieve growth. Unlikely given their conservatism.

  • In resources, the iron ore price continues to weigh on Fortescue Metals (FMG) -1.42% and BHP –0.2%, which was expected to bounce on better oil and metal prices. Not sure which commodity breaches $40 first – oil or iron ore.

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  • Despite good bounces in underlying metals, our miners were left scratching their heads. South32 (S32) +0.84%, Independence Group (IGO) -0.79%, Oz Minerals (OZL) -2.35% and Sandfire (SFR) -0.54%. Nickel producer Western Areas (WSA) +3.26% was positive though leaving others in its wake.
  • Gold stocks were back in buyers sights as bullion jumped on the Russian jet downing. Northern Star (NST) +1.56%, Oceana Gold (OGC) +7.23%, Newcrest (NCM) +1.33% and Saracen Minerals (SAR) +7%.
  • Financials were generally weaker with the big four losing ground again. Westpac (WBC) -0.03% was the best of the bunch, and wealth managers fell led by Challenger Financial (CGF) -2.59% and K2 Asset Management (KAM) -5.06%. Insurers were also weaker with AMP -1.57% the worst hit.
  • In industrials, building stocks fell after construction numbers with Adelaide Brighton (ABC) -1.36%,CSR -1.59% and James Hardie (JHX) -0.91%. Media stocks eased as APN Outdoor (APO) -1.45% saw profit taking, APN Media (APN) -2.06% and Prime Media (PRT) -2.65%. Telstra (TLS) -1.11% also had a tough day at the office.
  • Woolworths (WOW) +1.37% gained a few friends at the expense of Wesfarmers (WES) -1.28%.
  • A delayed reaction for Technology One (TNE) +8.19% after the good results yesterday. Guidance was exceeded by around 10-15% with NPAT up 16%. Macquarie updated its price target today.
  • More action today in the clean and green stocks. Bellamy’s (BAL) +2.00% and Blackmores (BKL) +2.95% doing well but profit takers were taking the cream off A2 Milk (A2M) -10.81%, Select Harvest (SHV) -2.08%, Vitaco (VIT) -2.06% and even new IPO entrant Baby Bunting (BBN) -2.55%.
  • The Lazarus stock of yesterday continues to show a picture of rude health. Lynas Corp (LYC)+20% – a past dog has resurrected itself on cost cutting and lower shipping costs.
  • Speculative stock of the day: LiveTiles (LVT) +25% as confidence grows in the tie up with Microsofts Sharepoint. One to watch.
  • And in a competition for worst float in the last few years, Dick Smith (DSH) -5.67% continued to fall away, finishing at a new low.

Corporate News

  • Aristocrat Leisure (ALL) -0.1% reported results much in line with expectations as the US acquisition kicks in. Digital gaming was also a standout, as were gains on lower AUD currency conversion. Strong sales of its poker machines in North America and Australia boosted full-year earnings for the 2015 financial year with a 79% rise in underlying net profit of $236.1 million beating a consensus estimate from analysts. The stock is up 45% this year so probably needs a break.
  • Looking to its opponents on the pokies, Ainsworth Gaming (AGI)-10.98% suffered a big loss today as Scott Clareburgh resigned as general manager of strategy and development. He was responsible for the game designers and the market is now worried about the ongoing design and strategy in this important growth driver.
  • Netcomm (NTC) +31.2%, a stock we highlighted back at the end of September, has doubled since then with a huge rise today based on a deal with an unnamed US telecomm provider (thought to be AT&T) to provide wireless broadband for the rural network using modems wirelessly to provide the last leg of the jigsaw. Considering the lack of detail and the gains so far this year it may be time for consolidation. Looking to the fundamentals, its net profit for the year to June 2015 was only $2.5m on revenues of $74m. The stock is up 450% in 12 months. Really.
  • Hastings Fund Management (owned by WBC) announced that it had won the bid for the NSW electricity assets in a consortium with Spark Infrastructure (SPK), in a trading halt pending a capital raise.
  • Surfstitch (SRF) has announced a $24m acquisition and a $50m institutional share placement.The company’s shares are in a trading halt ahead of the all-cash purchase of Surf Hardware International (SHI), which owns high profile brands such as the iconic FCS, as well as Gorilla and Softech.
  • Recall Holdings (REC) +0.14% has deferred the merger scheme while it waits for the ACCC to report back.

Economic News

  • Words of wisdom from ‘Uncle Fester’ Glenn Stevens in a speech last night, ‘Chill out and wait for the data’. Wise words indeed on the rate outlook.
  • Construction work done fell 3.6% in the September quarter, which was worse than economists’ expectations of a 2% fall. Total building work done on homes and non-residential buildings such as offices and shops, rose 0.6% in the quarter. Engineering work done, which includes mines, roads, bridges and the like, was down 7.3% in the quarter.
  • Like all good things that eventually end, it seems the commodity super-cycle is now well and truly over. Problems for Scott Morrison will continue.

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Seems you can only consume so much. Infinite growth on a finite planet will end in tears.

In Asia

Singapore’s economy grew more than initially estimated in the third quarter as services helped offset a decline in manufacturing amid slowing growth in China. GDP rose an annualised 1.9% in the September quarter, up from a fall of 2.6% in the June quarter.

Ahead in European Markets

Interesting to see whether base metals can consolidate gains tonight.

US weekly jobless claims out tonight.

Trust the Italians to come up with a plan so cunning it should be called a fox. In response to the attacks in Paris, the government is planning to give 18 year olds EUR500 to spend at theatres, concerts and museums. Genius.

  • FTSE +22 points.
  • DAX  -193.50 points.
  • CAC -70 points.

All eyes on the Turkish/Russian relations tonight but at least Bindi Irwin has won Dancing with the Stars.

 

Watch Henry Jennings on Sky Business Lunch Money today.

 

Clarence

XXXX

 

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NT Markets

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