What Happened Today?

This story features WESTPAC BANKING CORPORATION, and other companies. For more info SHARE ANALYSIS: WBC

By Max Ludowici, Equities & Derivatives Advisor, 708 Capital

After a big leg down on the open, the ASX shrugged off Westpac Bank Limited ((WBC)) and National Australia Bank ((NAB))’s ex-div selling and Origin Energy’s ((ORG)) shock revised profit downgrade which weighed heavily on the market, to climb strongly for the majority of the afternoon. If their influence was removed from the market we were looking to end the day in the green. Being a Friday and given the strength over the day, profit taking that hit the market at 2pm wasn’t much of a surprise. We closed the week at 4462 points down 22 points or 0.5% for the day. Concerns surrounding a fall off the ‘fiscal cliff’ into the abyss of potential US economic doom caused another night of heavy selling on Wall Street. Whilst the vertigo investors feel is justified in many respects (as Greg touched on this morning), this is not new news so expectations are that the sell-off will be swift as investors regain confidence that the Republicans and Democrats will make peace and pull another rabbit from their bag of tricks. This was felt throughout the day and a strong post on the DOW futures all day gave us confidence that the selling should dry up tonight.

Our index found support at the 50 day moving average of 4437 early in the session, a breach of this level could trigger a more significant fall with the next level  of support sitting around 4375. A quick scan of the charts of the major European indexes (DAX, FTSE & CAC) shows they too are all sitting on key support levels.

The RBA’s monetary policy statement released today showed it had revised up forecasts for inflation in 2013 due to larger than expected price increases in September. CPI is now expected to climb to 3.25 per cent by June 2013. This is above the RBA’s target of 2 to 3 percent. It also forecast that domestic growth would fall to 3% in 2013 (from 3.75% in 2012) due to declining capex from the mining industry. This statement is hardly bullish and whilst there was no particular indication of where rates would go next year, we can only assume down.

We also saw today that Mitsubishi elected to wash its hand of the Oakajee port deal and forfeit the $700m it has spent to date. A clear sign of a slowdown in the mining industry and a forward indicator of where the big global industrials see the direction of the global economy going. The port and rail development was estimated to inject as much as $6B into the WA economy based on the project value alone.

DOW futures are looking strong up 43 points.
 

This article produced at the request of and is published by FNArena with the expressed permission of 708 Capital.

708 Capital is a full service stockbroking and investment advisory firm. 708 offers investment and market advice to high-net-worth Private and Institutional clients in Australia and across the globe. 708's extensive network of contacts gives its clients exclusive access to ground-level fundraising opportunities and new company listings in a variety of small and large cap ASX listed companies. 708 has a longstanding track record of generating exceptional returns for its clients. Click here 708capital.com.au/contact-us/ for a no cost consultation and portfolio review or to learn more visit www.708capital.com.au. Note: 708 Capital offers wealth management services for Sophisticated and Wholesale Investors only. We cannot assist investors who aren’t classified as Sophisticated Investors or have verified assets over AUD$2.5m.

708capital is a holder of AFSL. No. 386279

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This document is intended to provide general securities advice only, and has been prepared without taking account of your objectives, financial situation or needs and therefore before acting on advice contained in this document you should consider its appropriateness having regard to your objectives, financial situation and needs. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Disclosure of Interests: 708capital receives commission from dealing in securities and its authorised representatives, or introducers of business, may directly share in this commission. 708capital and its associates may hold shares in the companies recommended.

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