ASX 200 gives up early gains after hitting 5549 to close up 23 at 5531 on a late rally. Banks again a drag as materials energy and consumer stocks in demand. Asian markets positive, Japan up 1.19% and China up 0.32% AUD dips slightly to 76.85c and US futures down 5.

A disappointing day after a very bullish start, the banks once again sunk us together with the Chinese data and Olympic distractions. Just as we saw disappointment in the pool so it spread to the market. It has been a long week of results and analysts are tired. Fund managers are tired and it is good to pause and reconsider especially given the lack of big companies reporting today. Broker recommendations on Telstra (TLS) -1.09% and Commonwealth Bank (CBA) +0.08 % were tepid to say the least.

For the week we have put on a mere 34 points or 0.61%. It is not about the index at the moment. Gold medal performances are rewarded, 4th gets you nothing.

STOCKS AND SECTORS

  • Bank stocks gave up some early gains before a late rally ensuring a finish of $159.14 for the basket.
  • Wealth managers were mixed as Magellan Financial (MFG) -2.73% saw profit taking as BT Investment (BTT) +2.30% continued to find fans.
  • REITS also suffered today with some serious profit taking creeping in. Scentre Group (SCG) -2.34%, BWP Trust (BWP) -3.26%, Westfield Corp (WFD) -0.57% and Dexus Property Group (DXS) -1.16%.
  • Energy stocks naturally rose with the firming oil price. Whitehaven Coal (WHC) +4.90%, New Hope Coal (NHC) +4.11% and Santos (STO) +3.96%.
  • Big miners also in demand led by BHP +2.12%, Oz Minerals (OZL) +5.27%, Iluka Resources (ILU) +4.94% and Syrah Resources (SYR) +3.42%.
  • Discretionary spending back led by Harvey Norman (HVN) +2.79%, Myer Holdings (MYR) +3.07% on better US department store sales although why that would translate into Myer is strange.
  • Once again mining services rose aggressively UGL Limited (UGL) +4.33% Maca limited (MLD) +3.16% and RCR Tomlinson (RCR) +5.49%
  • In healthcare, Mesoblast (MSB) +11.76% continues to rocket higher after reporting some positive trial results on one its treatments.
  • IT strong too, Mitula Group (MUA) +7.61%, Covata (CVT) +9.38%, Computershare (CPU) +2.24% and iSentia Group (ISD) +2.90%
  • Speculative stock of the day: Empire Resources (ERL) +24.32% after halting trading ahead of a new research report by Stocks Digital. Trading is expected to recommence next week.

CORPORATE NEWS

  • Baby Bunting (BBN) +7.75% has reported a strong start to the new year and says it now plans to push forward with more store openings. Net profit rose 38% to $8.3n. Same-stores sales growth rose 12.5% for the year to 26 June 2016, while total sales jumped 31% to $236.8m.
  • WAM Leaders (WLE) +0.43% revealed a cash position of 39% with a 61% net weighting to equities with a NTA of 111.63c after tax.
  • James Hardie (JHX) +0.80% quarterly net profit rose 45% thanks to its US operations. Net profit in the three months climbed to $US87.1 million ($113.2 million) from $US60 million in the year-earlier period. It forecast an adjusted net operating profit of $US260 million-$US290 million in the year through March.
  • Landmark White (LMW) +13.04% Gross revenue up 14.2% to $28.2m for this residential property valuer and surveyor. NPAT up 113% to $1.7m and dividend of 3.25c up from 2.5c fully franked. Current yield of around 6.7%.
  • Redflow (RFX) +10.81% after announcing their involvement in a US test program co-funded by Microsoft for their battery technology.
  • RIO +0.06% Standard & Poor’s Global Ratings said it may shift its negative outlook on the company’s A- rating to stable on improving commodity prices.

ECONOMIC NEWS

  • NZ retail sales volumes boomed in the second quarter, +2.3% over the three months. This is well above forecasts of 1% The gains were quite broad-based across groups and were also evidenced in value terms +2.2% quarter on quarter.

ASIAN NEWS

In China factory output, retail sales and investment all slowed missing forecasts.

  • Industrial production rose 6% from a year earlier in July
  • Retail sales climbed 10.2% last month
  • fixed-asset investment increased 8.1% in the first seven months of the year.

Bloomberg’s monthly GDP tracker slipped to 6.94% in July, from 7.13% a month earlier.

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On the positive data front

  • Property development investment in the first seven months of the year rose 5.3%, while the value of property sales during the period soared 39.8%.
  • Car manufacturing was the outperformer with a 22.9% increase from a year earlier.
  • China’s crude steel output rose 2.6 percent from a year ago to 66.81 million tonnes in July.

Elsewhere

  • Malaysian growth slowest in 7 years.
  • Sharp have jumped 19% after Chinese regulators approved a takeover of the Japanese electronics firm by Taiwan’s Foxconn.

EUROPE AND THE US

  • The US Energy Department is funding 75 projects developing electricity storage. There are plans for hydrogen bromide, zinc-air batteries, storage in molten glass, next-generation flywheels, many claiming “drastic improvements” that can slash storage costs by 80% to 90% and reach the magical figure of $100 per kilowatt hour in relatively short order. The US energy secretary believes that the US grid will be ‘decarbonised’ by the middle of the century. Makes Redflow (RFX) an interesting company.
  • EU probes $130bn Dow-DuPont chemicals merger.
  • Countries where the old outnumbers the young will rise to 56 by 2030 according to research by an independent researcher. Toys R Us to Olds R Us.

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And finally……………….

Donald Trump goes on a fact-finding visit to Israel. While he is on a tour of Jerusalem he suffers a heart attack and dies.

The undertaker tells the American Diplomats accompanying him, ‘You can have him shipped home for $50,000, or you can bury him here, in the Holy Land for just $100.’

The American Diplomats go into a corner and discuss for a few minutes. They come back to the undertaker and tell him they want Donald shipped home.

The undertaker is puzzled and asks, ‘Why would you spend $50,000 to ship him home, when it would be wonderful to be buried here and you would spend only $100?

The American Diplomats replied,

‘Long ago a man died here, was buried here, and three days later he  rose from the dead.

We just can’t take the risk’!

Clarence

XXXX

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NT Markets

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