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Australian Market Wrap

Australian Stocks rallied on positive job figures out of the US with the ASX/200 hitting intraday highs of 4,286 up 1.56% on low volumes before paring back some gains in afternoon trade. An independent inflation index inched up 0.2% in July, as the annual pace of inflation slowed to a 3-year low of 1.5%, below the RBA’s long-term target of 2%- 3%, although the reading is unlikely to sway the RBA’s policy decision tomorrow. Separately, Job Advertisements fell 0.8% in July marking a 4th straight decline, as the AUD climbed to intraday highs of US$1.057.

Materials with Major Miners – BHP Billiton (A$32.00, +2.2%) and Rio Tinto (A$54.13, +4.1%) led the Market higher as investors rotated back into riskier assets. Fortescue Metals (A$4.26, +1.9%) was also well bid after securing $A1.44B in new funding for the expansion of its flagship iron ore operations in WA. Cockatoo Coal (A$0.155, -3.1%) dipped even with a 28% increase in additional coking coal for the BBM project totalling 77Mt while YTC Resources (A$0.22, +18.9%) Rallied

Energy with Oil & Gas Majors – Santos (A$10.79, +1.4%), Origin Energy (A$12.17, +1.0%) and Woodside (A$34.05, +0.4%) tracked higher as did New Standard Energy (A$0.55, +4.8%) after announcing it had sold a partial stake in Buru Energy (A$3.18, +0.6%) in order to further shore up their balance sheet.

Silver Lake Resources (A$2.60, -8.5%) is set to buy Integra Mining (A$0.40, +27.0%) in a deal valuing Integra at A$422.4M and creating a combined entity worth more than A$1B. Retailer Harvey Norman (A$1.975, +0.3%) ended flat as profit before tax fell by almost 40% while peers David Jones (A$2.41, +1.3%), Myer (A$1.81, +1.7%) and JB Hi-Fi (A$8.91, +0.3%) bucked the trend and managed to stay in the black.

Financials with Major Banks – ANZ (A$23.56, +0.9%), Commonwealth Bank (A$56.38, +0.7%), NAB (A$25.16, +0.7%) and Westpac (A$23.45, +0.6%) continued to add to Julys 30% aggregate return this month banks eased as part of the NSW banking holiday.

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Australian Market Wrap

Australian Stocks declined, as investors locally struggled to gain traction with no significant lead from offshore markets, as such volume is quite thin. This is on the back of a close in US Markets due to Independence Day celebrations. Investors also favoured the sidelines ahead of the ECB rate decision overnight, tipped to produce a rate cut. Similarly, the BoE is expected to announce a $A76.78B stimulus package to boost recession-hit Britain. The AUD traded flat, even amid the release of AUS Trade Balance figures which indicated a deficit of – A$285m for May.

Materials lagged, Major Miners – BHP Billiton (A$32.42, -0.2%), Fortescue Metals (A$4.93, -2.4%) and Rio Tinto (A$58.68, -0.5%) in line with the Market. Aquarius Platinum (A$0.725, -8.2%) dragged the sector lower while Bluescope (A$0.32, -1.5%) followed a similar path, after agreeing to pay A$21.2m to the ATO as it awaits the outcome of a dispute over tax it paid on an equipment deal in 07. Cudeco (A$3.13, +1.0%) was well bid, signing a memorandum of understanding with Xstrata.

Energy declined, Oil & Gas Majors – Origin Energy (A$12.64, -0.9%), Santos (A$10.95, +0.3%) and Woodside (A$31.64, -0.7%) all traded moderately lower. Beach Energy (A$0.98, -3.9%) slid, even after confirming the positives of the PEL 92 license. Buru Energy (A$3.32, – 0.6%) faired better, providing an encouraging update on the drilling operations at the Yulleroo-3 well.

Flight Centre (A$20.49, +6.3%) was the standout in a glum session, as investors welcomed an upgrade in the company’ full year profit profit. Virgin Australia (A$0.39, +4.0%) was well supported, ordering 23 Boeing 737 MAX 8 aircraft, the first in Australia.

Financials ended mixed, as Major Banks ANZ (A$22.48, +0.5%), Commonwealth Bank (A$53.81, +0.4%), NAB (A$23.85, +0.1%) and Westpac (A$21.75, +1.0%) traded in and out of gains for the session as Illiquidity and hesitation guided direction.

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Australian Market Wrap

Australian Equities ended lower after opening higher as Italian Prime Minister Mario Monti said the majority of EU states backed Eurobonds. Nevertheless, nervousness prevailed, sending the Euro to a 22-month low of US$1.2519, with Gold tracking the currency lower to an intraday base at $1551/oz. China’s Shanghai Composite fell as much as 0.6 per cent after The People’s Bank of China said the state’s domestic economy faces downward pressure. Locally, more than A$5 billion of stock changed hands, boosted by options exercises following May expiry yesterday. US stock futures are little changed.

Gold Producers rose, with – Integra (A$0.44, +3.5%), Newcrest (A$24.75, -0.6%), Silver Lake (A$2.55, +3.2%) – earning a reprieve . Metals & Miners – BHP (A$31.61, -1.2%), Fortescue (A$4.31, -3.8%), Rio (A$55.93, -0.8%) – fell, while Iluka (A$12.80, +1.9%) outperformed. Oil & Gas Producers – Santos (A$11.80, -1.0%), Woodside (A$31.00, – 0.4%) – declined as Crude remained under pressure, even as the CME cut margin requirements this morning. Meanwhile, Flinders Mines (A$0.13, -18.8%) resumed trade after a Russian court deferred a ruling on MMK’s planned acquisition until after the bid expires

Emeco (A$0.865, +2.4%) outperformed, after confirming FY12 NPAT guidance of $67 to $70 million, up 41 per cent on the prior year. Meanwhile, Acrux (A$4.26, +2.4%) rose after Eli Lilly received approval to market Axiron in Australia. Clean Seas Tuna (A$0.035, +16.7%) jumped, despite forecasting a FY12 loss of A$14.7 million after a health problem affecting its Kingfish worsened. David Jones (A$2.27, +3.2%) rallied after the AFR’s “Street Talk” highlighted the possibility of a LBO.

Financials followed the trend, as Major Banks – ANZ (A$20.38, – 0.4%), Commonwealth Bank (A$48.72, -1.2%), NAB (A$23.30, -0.8%), Westpac (A$20.12, -1.3%) – printed losses. Defensives – Coca-Cola Amatil (A$12.59, -1.0%), Wesfarmers (A$29.00, -2.2%), Woolworths (A$26.69, -0.8%) – underperformed. Finally, Sims Metal Management (A$11.50, -6.1%) dropped after issuing guidance that FY12 earnings will be materially less than 85% of the prior year’s earnings.

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Australian Market Wrap

Australian equities advanced, extending yesterday’s gains after North American and European markets climbed sharply overnight. Hence, the S&P/ASX 200 reached its highest level in five trading days this morning, before the market pared upside after Chinese industrial production and economic growth missed expectations. Nevertheless, China’s Shanghai Composite rose as much as 0.8 percent, extending this week’s advance to nearly 3 percent on expectations that the nation’s 8.1 percent growth in the first quarter has finally marked the bottom of a ‘soft landing’ cycle.

Materials rallied, with the sector continuing to attract fresh interest after commodities extended upside, reflecting a weaker Greenback. Metals & Miners – BHP Billiton (A$34.47, +1.7%), Fortescue (A$5.92, +4.2%), Newcrest (A$29.24, +0.9%), Rio Tinto (A$65.95, +2.3%) – were all well bid. Lynas (A$1.11, +7.8%) jumped after a Kuala Lumpur court rejected an attempt to review its rare earths refinery permit. Flinders Mines ($0.22, trading halt) remained in a halt after MMK’s motion to lift an injunction on the acquisition of Flinders was rejected by a Russian court.

Intrepid Mines (A$0.76, +11.8%) surged, leading the ASX 200 after Standard & Poor’s said that proposed mining regulations in Indonesia may not be implemented in full. Atlas (A$2.91, +3.9%) rose following news that the miner is planning another iron ore project in the Pilbara. Eldorado (A$13.79, +9.4%) surged after the Gold Miner unveiled plans to more than double production. Oil & Gas Producers – Aurora Oil & Gas (A$3.76, +1.3%), Santos (A$14.00, unch), Woodside (A$34.76, +1.6%) – were mixed as Brent Crude fell to session lows at $121.03/bbl.

Financials tracked the market, albeit with consolidation in some of the Major Banks – ANZ (A$22.98, unch), CBA (A$50.18, +0.8%), NAB (A$24.80, +0.9%), Westpac (A$22.12, +0.3%) – as rotation into resources remained the dominant trade. Macquarie (A$28.99, +2.8%) rallied as European periphery spreads further narrowed. Insurance Australia Group (A$3.45, +0.9%) was little changed after its 49 percent owned AmG insurance made a A$483 million acquisition of Kurnia Insurans Berhad. Finally, Telecom Corp of New Zealand (A$2.00, +1.0%) said that it secured a three year, NZ$600 million credit facility.

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Australian Market Wrap

Australian Equities pared morning losses, with the S&P/ASX 200 ending little changed after touching a ten day low at 4,238 this morning. Asian Markets otherwise traded lower, driven by renewed Chinese growth fears. The Aussie Dollar climbed of early morning lows at US$1.0337, but encountered resistance at US$1.04. Separately, Federal Reserve President James Bullard said US monetary policy may be at ‘turning point.’ US stock futures are modestly higher, while Spot Gold is little changed at $1645/oz.

QR National (A$3.77, -3.1%) fell after cutting full year EBIT guidance to the range on $540 to $580 million from $578 million. An Analyst consistently stated that the stock’s multiples are too high. She maintains her UNDERPERFORM recommendation. In other news, Roc Oil (A$0.43, -2.3%) withdrew from offshore exploration in the Taranaki Basin, New Zealand. Finally, WDS (A$0.66, -2.9%) suspended operations on one of its mining projects at the request of a client.

Materials declined as peers were sold off in overnight sessions. Hence, Metals & Miners – BHP (A$34.40, -1.1%), Fortescue (A$6.00, – 1.3%), Iluka (A$16.90, -3.2%), Rio (A$63.70, -1.5%) – booked losses. Resolute Mining (A$1.79, -5.8%) dropped amid a coup in Mali, despite assuring that its gold producing operations in the country have not been affected. African tensions continued as Zimbabwe accepted a proposal to hand control of Aquarius Platinum (A$2.32, -3.3%) Mimosa mine to the state. Woodside (A$35.37, +1.4%) announced that its Pluto LNG Project is ready for start up status and said that first gas entered the processing train late this afternoon.

Financials rose as Westpac (A$21.37, +0.4%) led the sector after it closed its offer for convertible preference shares and additionally increased its offering from $1 billion to $1.19 billion. ANZ (A$22.74, +0.4%) and Commonwealth Bank (A$49.16, +0.3%) rose, while NAB (A$24.35, -0.4%) trailed. QBE (A$14.40, +3.6%) also booked solid gains. In other news, AGL (A$14.83, +1.6%) acquired the development rights for the Silverton Wind Farm. Leighton (A$23.12, +0.4%) confirmed AFR reports that it has been in negotiations with Fortescue to undertake contract mining work worth $3.6 billion.

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ASX200

Australian Market Wrap

Australian Equities extended losses, with the S&P/ASX 200 finishing at an eleven-day low after slower growth forecasts from China and weak data on US factory orders soured global markets. The Aussie Dollar fell sharply against the Greenback, hitting daily lows at US$1.0604 after the Reserve Bank left rates unchanged, but said that the outlook for inflation provides scope for easing if needed. The central bank also said “most information on the Australian economy continues to suggest growth is close to trend overall.” Volumes were heavier after A$4.9 billion traded.

Materials underperformed as Major Miners – BHP Billiton (A$34.58, – 2.3%), Fortescue Metals (A$5.53, -2.1%), Newcrest (A$31.82, -2.1%), Rio Tinto (A$63.62, -2.3%) – followed metal prices lower today. Iron Ore Plays – Atlas (A$3.08, -2.8%) Gindalbie (A$0.62, -6.1%), Mount Gibson (A$1.195, -4.8%) – were also offered. Separately, Kagara (A$0.31, unch) did not resume trade after the company cut its copperm and zinc output guidance and booked a first half loss of A$48.9 million.m Bluescope (A$0.395, +1.3%) will start a 8.8 billion rupee coated steel plant in India as part of its equal venture with Tata Steel.

Financials followed the trend, with Major Banks – ANZ (A$22.09, – 0.5%), Commonwealth Bank (A$48.58, -1.0%), National Australia Bankm (A$23.48, -0.2%), Westpac (A$20.56, -1.0%) – hitting session lows after the statement on monetary policy. QBE (A$11.82, -0.3%) said it’s in the “final stages of negotiations” of bolt-on acquisitions, while a major broker upgraded its price target.  Westfield (A$8.69, – 2.7%) is reportedly in talks to become a partner in a south London shopping centre that includes 167 shops.

Gloucester Coal (A$8.15, -3.7%) closed lower after the coal producer recommended its stockholders accept an amended A$2.05 billion takeover offer by Yanzhou Coal Mining. The cash and stock deal values the company at about A$10.11/sh. In other acquisition news, Flinders Mines (A$0.30, unch) said MMK’s proposed A$554 million takeover has been approved by FIRB. Buru Energy (A$2.65, +13.7%) surged to a record, before paring its advance after the company said it’s not aware of information concerning it in response to a price query.

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