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Australian Market Wrap

Australian Stocks were little changed, with the S&P/ASX 200 erasing an intraday rise to end flat in afternoon trade. Ex-div stocks, meanwhile, took 4.5pts off the index. Another round of disappointing Chinese economic figures also weighed on sentiment, with Industrial Production moderating to a new multi-year low, though the Shanghai Composite still managed to hang onto gains after rising the most in 3-Years on Friday. Volume was relatively average ahead of event risk this week.

Materials outperformed, with Fortescue (A$3.55, +7.3%) rallying more than 20 percent of last week’s 3-Year low at A$2.82/sh as Iron Ore swaps rose the most in 5-Months. Rio Tinto (A$54.70, +4.4%) & BHP (A$32.46, +1.5%) were also bid, with the former completing is US$1.9 billion acquisition of Richards Bay from the latter. Separately, BHP shelved its Gregory Coking Coal mine in Queensland. That news had little impact on NRW (A$2.35, +5.9%) who has exposure to the project. Atlas (A$1.50, +9.9%) was a standout, in part driven by a recommendation upgrade from a Swiss broker.

Gold rallied to its highest level in 7-Months on Friday and maintained gains above $1730/oz in Asian trade. Hence, miners of the yellow metal including Kingsgate (A$4.75, +5.6%), Newcrest (A$27.01, +4.5%) and Ramelius (A$0.425, +9.0%) all surged. Cudeco (A$4.35, +3.1%) and Panaust (A$3.08, +9.6%) also rallied as Copper broke out to a multi-month high, while Bloomberg reported that traders of the metal are the most bullish in nearly a year. Major Banks – ANZ (A$24.19, +0.1%), CBA (A$54.48, -0.2%), NAB (A$25.01, -0.2%), Westpac (A$23.60, -0.4%) – finished flat, while Woolworths (A$29.17, -3.6%) went ex-div.

Sabre Resources (A$0.235, -6%) rose as much as 14 percent before paring losses in afternoon trade. The group said drilling from Pad 1 at Guchab continued to return significant copper mineralisation. Meanwhile, Lynas (A$0.835, +1.8%) pared losses after the Malaysian Government opposed an appeal against the operation of its rare earths plant. Qantas (A$1.28, +1.6%) finished with upside, even as S&P cut its credit rating to ‘BBB-‘ from ‘BBB.’ On a less positive note, Lend Lease (A$7.88, -6.6%) slumped after reporting losses on two projects within Abigroup.

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Australian Market Wrap

Australian Stocks extended gains, sending the S&P/ASX 200 to a 14-week high after overseas markets climbed on stronger US economic data and European resolution hopes. Superficially, Angela Merkel voiced her support for the ECB’s plan to fight the crisis, while a person familiar with the matter said Spain is about to receive an emergency funding disbursement. Earnings remained in focus domestically in the absence of major news flow today, keeping a lid on local flow.

Major Miners – BHP Billiton (A$33.00, +0.4%), Fortescue (A$4.20, +1.9%), Newcrest (A$25.20, +2.8%) – posted gains. Meanwhile Rio Tinto (A$55.35, +1.1%) US finance division has priced US$3B of fixed rate bonds for the second time this year. Bathurst Resources (A$0.435, +11.5%) continued its rally, adding as much as 63 percent from its near 2-year low on July 24th. Mining Services Names – NRW (A$3.02, +3.8%), Macmahon (A$0.625, +4.2%), Coffey International (A$0.475, +10.5%) – climbed before reporting earnings next week.

Santos (A$11.78, +3.2%) rallied. The group said it will begin sales from Australia’s first commercial sale gas project in October. Separately, it reported a 48 percent drop in first-half profit.  Karoon (A$4.37, +3.6%) also ran after an exploration and appraisal campaign offshore northern Australia resumed operations after technical problems. Treasury Wine Estates (A$4.58, +3.6%) spiked even with earnings falling below estimates, while also forecasting a fall in profits for the next financial year. The M&A contest between APA (A$4.65, -1.1%) and Pipeline Partners for Hastings Diversified (A$2.59, +2.4%) has intensified. APA lifted its mixed offer by A$0.18/sh in cash and A$0.39/sh in APA stock.

Major Banks - Commonwealth Bank (A$57.35, +0.5%), NAB (A$24.63, +0.5%), Westpac (A$24.50, +1.6%) – continued higher, albeit ANZ (A$24.61, +3.0%) was the standout. The lender said its nine-month profit rose 10 percent after increasing its domestic market share. QBE (A$13.05, -4.5%), however, slumped on its earnings.  APN News & Media (A$0.42, -10.6%) was day’s laggard after reporting a first half net loss of A$319M, whilst announcing a A$485 million impairment charge.

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Australian Market Wrap

Australian Stocks jumped, with the S&P/ASX 200 posting its biggest one day advance since January after finishing the session at a 5-week high. Asian stocks on the whole were also bid, with Japan’s NIKKEI 225 adding as much as 1.8 percent, while S&P 500 futures rose to a 6-week high after projections showed Greece’s pro-bailout parties won enough seats to control parliament following overnight elections. The Euro rose to as high as $1.2748 from Saturday morning’s finish at $1.2638 given renewed hope that Greece will remain a member of the currency bloc.

Materials outperformed, with Industrial Miners – BHP Billiton (A$32.64, +2.5%), Fortescue (A$4.97, +4.0%), OZ Minerals (A$8.59, +4.1%), Rio Tinto (A$57.00, +4.6%) – tracking commodity prices higher. Lynas (A$0.935, +6.3%) rose as much as 9.8 percent after Malaysia rejected a bid to cancel its license. Integra Mining (A$0.40, -1.2%), however, lagged after the Gold producer said production is expected to be halted for approximately four days at its Randalls plant. Whitehaven Coal (A$4.53, +5.1%) extended Friday’s gains as the AFR reported that Nathan Tinkler may bid between A$5/sh to A$5.50/sh for the miner.

Fairfax (A$0.65, +7.4%) surged after the news publisher said it will cut 22 percent of its workforce, close printing sites and introduce digital subscriptions to halt sliding sales.  Mesoblast (A$5.93, +7.2%) was also well bid, the biotech confirmed that it expects its Phase 3 heart failure trial to start shortly, but otherwise announced that it is not aware of any information concerning it. Echo Entertainment (A$4.33, +0.9%) resumed trade after raising about A$266 million through an institutional offering.

Financials followed the trend, with Macquarie (A$26.14, +2.6%) and Major Banks – ANZ (A$21.80, +2.4%), CBA (A$51.54, +1.3%), National Australia Bank (A$22.81, +3.1%), Westpac (A$20.76, +2.1%) – following offshore peers. Separately, reports surfaced that G20 leaders will agree to boost the $430 billion firewall that the IMF announced in April, helping support the space. Excelsior Gold (A$0.14, +3.7%) reported high grade gold intersections at the Zoroastrian prospect at its wholly owned Kalgoorlie North Project.

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Australian Market Wrap

Australian Stocks caught a mixed lead as the market resumed trade following yesterday’s public holiday. Wall Street dropped overnight after excitement from Spain’s 100 billion euro bank bailout proved short lived, offsetting upside from Friday’s session. Hence, the S&P/ASX 200 held a relatively narrow 24 point trading range to finish flat by the close, while the Australian Dollar gravitated around US$0.99 after yesterday trading above parity. Asian markets were otherwise biased to the downside with Japan’s NIKKEI 225 losing as much as 2 percent before paring losses.

Qantas (A$1.075, +10.8%) rallied. The airline hired bankers to help prepare against any potential takeover bid. Separately, Emirates said they will seek deeper ties with the airline, but said it is not interested in taking an equity stake. Echo Entertainment (A$4.49, unch) entered a trading halt ahead of a capital raising that is expected to dilute Genting’s stake. Ten (A$0.525, -13.2%) resumed trade after completing the institutional component of its entitlement offer at A$0.51/sh. Bluescope (A$0.285, +9.6%) said it’s not planning to raise new equity.

Materials declined, reversing Friday’s gains as metal prices fell in Asia. Major Miners – BHP (A$31.72, -0.6%), Fortescue (A$4.55, – 0.9%), RIO (A$54.65, -1.7%) – printed downside, though Aquarius Platinum (A$1.00, -8.3%) lagged after idling a shaft at its Marikana mine in South Africa. Gold Miners – Newcrest (A$24.65, +0.3%), Regis (A$4.14, +1.5%), Silver Lake (A$2.79, -5.1%) – were a mixed bag, with the yellow metal holding little changed at $1590/oz. Sihayo (A$0.145, – 3.3%) announced an upgraded Sihayo-Gold JORC compliant resource.

Energy stocks were flat, with Oil & Gas Producers – Santos (A$11.82, -0.3%), Woodside (A$32.44, -0.6%) – proving surprisingly defensive, notwithstanding that Crude fell as low as $81.07/bbl from as high as $86.64/bbl in Asia yesterday. In other news, Buru Energy (A$3.21, +0.6%) released an operations update at Paradise-1, while Universal Coal PLC (A$0.155, -3.1%) released a resource upgrade.

Major Banks – ANZ (A$21.77, +1.0%), CBA (A$50.82, +0.7%), NAB (A$22.22, +0.3%), WBC (A$20.57, +0.7%) – outperformed, while S&P upgraded its credit rating on Bank of Queensland (A$6.66, +2.1%).

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Australian Market Wrap

Australian Equities fluctuated, with the S&P/ASX 200 marching to the upside out of the open, before the market turned lower into the close as
a late rally on Wall Street failed to inspire local participants. Separately, the Euro declined to a morning low at $1.2552 after the European Union summit in Brussels failed to deliver fresh measures to combat the crisis. German Chancellor Angela Merkel also said that she remains opposed to her nation issuing Eurobonds. China’s Shanghai Composite declined as much as half a percent after a private survey suggested the nation’s manufacturing sector is contracting. US stock futures traded in the red.

Financials underperformed, with Major Banks – ANZ (A$20.47, – 0.9%), CBA A$49.31, -0.2%), NAB (A$23.48, -0.9%), WBC (A$20.39, -
0.4%) – printing losses. QBE (A$12.38, +0.7%) was little changed, but The New York Times reported that regulators are investigating whether banks received improper payments from the insurer. Defensives – CSL (A$37.80, +1.6%), SingTel (A$2.51, +0.4%), Woolworths (A$26.90, +0.7%) – were well bid amid cautious investor sentiment. Shares of GrainCorp (A$9.02, -3.8%) consolidated as it held an investor day.

Materials – BHP Billiton (A$31.99, +0.2%), Fortescue Metals (A$4.48, – 1.8%), Newcrest (A$24.90, +0.6%), Rio Tinto (A$56.36, +0.1%) – printed gains and losses. Aquarius Platinum (A$1.20, -6.6%) lagged after saying it will lose 75,000 metric tons of ore because of a fire at a Zimbabwean project. Flinders Mines (A$0.16, unch) was placed in a  halt ahead of a Russian court outcome regarding a potential acquisition by Magnitogorsk Iron & Steel. Gold Miners – Alacer Gold (A$6.05, -1.0%), Regis Resources (A$3.86, -0.3%), Perseus Mining (A$2.38, +0.8%) – saw some upside as the yellow metal stabilised.

AGL Energy (A$14.93, unch) halted trade. The utility is planning a A$900 million capital raising to buy out its partners in the Loy Yang power station after gaining approval for the deal from the ACCC. In other news, Origin Energy (A$12.91, +0.7%) and its partner ConocoPhillips obtained US$8.5 billion in funding from banks and export credit agencies for a US$20 billion LNG project. Linc Energy (A$0.59, -0.8%) received a price query. The company cited an increase in short interest and that its stock is now oversold.

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Australian Market Wrap

Australian Stocks were little changed as renewed European worries overshadowed news that China’s central bank cut the cut its required reserve ratio by 50 basis points. As a result, the S&P/ASX 200 lacked direction, holding a narrow 19 point range on quiet volume. The Aussie Dollar fell below parity with the Greenback for the first time in six months as renewed risk aversion failed to offset stronger-than-forecast domestic home loans growth. Australian 3-Year Yields hit a record 2.58 per cent. RBA Deputy Governor Lowe said growth is expected to return to trend.

Materials declined as Metals & Miners – Alumina (A$0.955, -2.6%), Fortescue Metals (A$5.34, -0.9%), Newcrest (A$25.65, -0.4%), Rio Tinto (A$61.00, -0.1%) – printed losses in line with weaker commodity prices. Gold Miners – Alacer (A$6.40, -6.0%), Silver Lake (A$2.54, – 7.6%) – were at the back of the pack as the yellow metal remained under pressure. BHP Billiton (A$34.46, +0.3%) said it will ‘scale back’ drilling shale gas wells to focus more on petroleum liquids in response to decade-low US natural gas prices. Woodside (A$33.49, unch) said it has received a ‘lot of interest’ in Shell’s 23 per cent stake.

Decmil (A$2.89, +3.2%) rose after it won new contracts totaling A$137 million. Lynas (A$1.035, +6.7%) was also bid on reports that it is still on track for a June start-up of its Malaysian plant after an official called it “the safest rare earths plant in the world.” Duluxgroup (A$3.03, unch) was little changed after reporting a decline in first-half net income to A$47.9 million. Incitec Pivot (A$3.17, +0.3%) also reported a profit decline. In corporate news, Coalworks (A$1.03, +0.5%) recommended investors reject the takeover bid from Whitehaven Coal (A$4.60, -0.2%).

Financials advanced, notwithstanding that Westpac (A$22.07, -2.9%) went ex-dividend (82cps). Fellow Major Banks – ANZ (A$22.20, +0.7%), Commonwealth Bank (A$52.80, +1.9%), National Australia Bank (A$24.80, +1.0%) – were otherwise well bid, in part due to continued rotation into higher yielding sectors. Telco’s – Telstra (A$3.64, +1.1%), Telecom Corporation of New Zealand (A$2.06, +1.0%) – followed a similar path. Offshore Revenue Generators – Brambles (A$7.27, +0.8%), CSL (A$38.36, +1.0%), News Corp. (A$20.46, +0.6%) – climbed, reflecting weakness in the local currency.

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Australian Market Wrap

Australian Equities fluctuated, with the S&P/ASX 200 tracking lower from the open before enjoying a mid morning rally that sent the index to a three-day high at 4,282. The local market, however, pared gains after a private survey showed China’s manufacturing output may contract for a fifth straight month. Hong Kong’s Hang Seng Index wiped out gains on the news, while the Shanghai Composite touched a four-week low. The hitting daily lows at US$1.0377. Spot Gold fell below $1650/oz, while US stock futures are little changed.

Financials rallied after Major Banks – ANZ (A$22.65, +1.0%), CBA (A$49.02, +0.8%), National Australia Bank (A$24.39, +1.2%), Westpac (A$21.29, +1.1%) – and Insurers – Insurance Australia (A$3.38, +0.6%), QBE (A$13.90, +2.1%) – benefited from continued rotation out of +3.0%) surged to an eight-month high after the investment bank priced US$250 million of exchangeable capital securities. Separately, APRA confirmed that the securities met Tier 1 Capital requirements under its current regulatory framework.

Defensives outperformed as investors turned to the safety of those less exposed to macro fundamentals. Consumer Staples – Coca-Cola +0.8%), Wesfarmers (A$28.70, +0.3%), Woolworths (A$24.98, +0.2%) – were all well extended this week’s advance to nearly 14 per cent after its earnings. In Health Care, Sigma (A$0.65, +5.7%) returned to profitability for the fullyear on better capital management. Acrux (A$4.06, +4.9%) hit a sevenmonth high. It received a bullish write up in the Sydney Morning Herald.

Materials fluctuated as Industrial Metals & Miners – Alumina (A$1.215, -0.4%), BHP Billiton (A$34.80, +0.3%), Rio Tinto (A$64.67, -1.0%), Oz Minerals (A$9.76, -0.8%) – ended with gains and losses. Gold Miners – Kingsgate (A$6.43, +0.9%), Newcrest (A$29.35, +2.0%), Perseus Mining (A$2.43, +3.4%) – mostly advanced on bargain hunting following recent, heavy losses. Alacer Gold (A$8.10, +1.3%) released its full year results, with production exceeding guidance. Beadell Resources (A$0.665, +4.7%) achieved positive results at its Tucano gold project. Firestone Energy (A$0.007, unch) entered into a new finance facility.

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