Australia | Jul 29 2014
By Henry Jennings, Private Client Advisor, BBY Ltd
Another quiet and lacklustre day with QBE Insurance Group Limited (A$10.57, -11.1%) latest downgrade setting the tone.(good call as usual Brett)Three things in life you can be certain of death ,taxes and a QBE downgrade. Having sliced any optimism out of the market early we then rallied the rest of the day closing higher in thin pre FOMC trade at 5588 up 11. Tuesday the Dow always rallies too so punters happy to stay square.
Financials once again proving resilient(ex QBE that is) and even poodle status Macquarie Group Limited (A$58.04, +0.5%) had a positive day as buyers returned. In resource land RIO Tinto Limited (A$65.75, +0.6%) and Fortescue Metals Group Ltd (A$4.86, +2.3%) worked higher but BHP Billiton Limited (A$39.06, -0.1%) failed to inspire. Energy stocks were mixed with Woodside Petroleum Limited (A$42.63, +0.3%) and Drillsearch Energy Limited (A$1.61, +2.2%) feeling the love but Santos Limited (A$14.38, -0.3%) and Origin Energy Limited (A$14.20, -0.3%) slipping slightly. Liquefied Natural Gas Limited (A$3.25, unch) remained in a trading halt pending the placement to fund their Hungry Bear project in Canadia. Other resources mixed with Newcrest Mining Limited (A$10.90, +1.1%) better but other golds generally weaker, Silver Lake Resources Limited (A$0.47, -2.1%),Evolution Mining Limited (A$0.795, -1.2%) and Alacer Gold Corp. (A$2.58, -0.8%). Recent high flyers Sirius Resources NL (A$3.98, -2.2%) and Syrah Resources Limited (A$5.60, -0.4%) came off the boil as placement stock comes out of the former.
In the industrials landscape Wesfarmers Limited (A$43.55, +0.8%) and Woolworths Limited (A$36.22, +0.9%) both did well as did Crown Resorts Limited (A$16.08, +1.6%) but Navitas Limited (A$4.70, -5.6%) suffered following heavy losses recently following results and the contract loss at Macquarie Uni. Telstra Corporation Limited (A$5.46, +0.6%) reverse yesterday’s falls with other telcos also drawing buyers like Tpg Telecom Limited (A$5.55, +0.4%),M2 Telecommunications Group Limited (A$6.00, +0.7%) and Singapore Telecommunications Limited (A$3.41, +0.6%). NKOTB #HSO# continued to twirl gracefully around the dance floor as another 42m shares traded.
Picking up gold in the pool today were Zimplats, Atlas Iron Limited (A$0.595, +4.4%),Mesoblast Limited (A$4.10, +2.5%),Drillsearch Energy Limited (A$1.61, +2.2%),Treasury Wine Estates Limited (A$5.04, +1.6%),#JHC# and Poseidon Nickel Limited (A$0.23, +7.0%) and Nanosonics Limited (A$0.82, +9.3%) in the mids. Jumping the gun twice for disqualification were #SNZ#,Billabong International Limited (A$0.53, -4.5%),Beach Energy Limited (A$1.705, -3.1%),#OFX# and Troy Resources Limited (A$0.92, -22.4%)(quarterly report).Volume was low again at around $3.2bn.Aussie dollar at 94c(again, actually still!) and bitcons at $622 whilst gold at $1305.
Asian markets were better with Japan up 0.3% and HK and Shanghai up around 0.12%.
Stocks and Stories
Navitas Limited (A$4.70, -5.6%) made some wishy washy no comments today following media speculation that they are in talks with US colleges and Unis.
QBE Insurance Group Limited (A$10.57, -11.1%) shocker. Again. This time is the Argies that are upsetting the apple cart with big hits to their workers compensation business.It’s always something with these guys.Dont you love diversification.
ALS Limited (A$7.50, -6.5%) announced underlying net profit after tax for the half year ending 30 September 2014 will be approximately $74 million, 26.5% below the $100.7 million achieved in the first half of last year. Not a great result. Blamed volatility and the high Aussie dollar. Given.
Graphite continues to stoke the bulls as Tanzanian hopeful Imx Resources Limited (A$0.036, +89.5%) today announced they had found some. Only rock chips at the moment with drilling to start in October.
Fonterra Shareholders’ Fund (A$5.54, +1.3%) has cut its farmgate milk price forecast to $NZ6/kg from $NZ7/kg for 2014-15 and a dividend somewhere between 20 cents and 25 cents a share.
Housing numbers today were especially strong in apartment sales. They continued to drive new dwelling sales in June, rising almost 16 per cent compared to May, while growth in new home sales was moderate.
Consumer confidence rose a further 2.4 per cent to 116.2 in the week ending July 27 back to pre-budget levels. Maybe this has something to do with the budget actually not being passed yet or maybe sticker shock has worn off. I suspect as things haven’t changed that much the rage has faded.
Japanese unemployment has risen to 2014 highs at 3.7% with household spending and retail sales falling for the third straight month.
Tomorrow’s News Today
Not sure which one scares me more. The US has accused Russia of breaking a 1987 treaty when they test fired a ICBM. They called it “very serious” and our old friend Ebola is causing some serious fears in West Africa at the moment as villagers are now blaming the doctors for the disease. Doctors are being threatened with knives, guns and machetes and infected villagers are being treated by the witch doctors .Not sure that is going to contain the disease.670 people dead so far.
RasPutin continues to get the bad news as Russia has been ordered to pay $50bn to shareholders of Yukos, the former defunct oil company that was broken up a decade ago after its boss fell foul of Vladimir Putin. Lovely turn of phrase from the court in the Hague saying Yukos had been “bent to the will of Russian executive authorities” to “incarcerate a man who gave signs of becoming a political competitor”.
Keep on Fracking in the UK. The government is pretty keen to get things going again with big including tax breaks, payments of £100,000 per site plus a 1% share of revenue to local communities.
If the government forces the unemployed to apply for 40 jobs a month is this good for Seek Limited (A$16.39, -0.7%). Certainly bad for the employers!
Zillow, the REA Group wannabe of the United States, has acquired rival Trulia for $US3.5 billion in stock or monopoly money whichever is the more desirable.
Sliding back in the news will be the Argentinian default that looks back on the blocks as they enter two days of negotiation. If there is some positive resolution you can expect a big rise in their stock market. I even had one friend who wanted to buy an Argentine company today! He met a bloke in a bar!!
The IMF has told the BOE to raise rates if all else fails to take the bubble out of the property market!
One billion people travelled to another country last year.
That is all.
Henry Jennings
Private Client Advisor
BBY Limited
Participant of the Australian Securities Exchange
Authorised and Regulated by the Financial Services Authority
Level 17, 60 Margaret St
Sydney NSW 2000
D +61 2 9226 0067
M +61 414 345 137
E hcj@bby.com.au
W www.bby.com.au
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