Australian Stocks: What Happened Today?

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By Max Ludowici, Equities & Derivatives Advisor, 708 Capital

 

The scoreboard:

–          The ASX200 closed down 11 points or 0.25% to 4509

–          The AUD drifted lower during the afternoon session after jumping on the employment data.. Currently reading 1.0462 vs the USD

–          Total volume for the day was $4B. This is slightly below the average at the same time last year and well above November’s average.

The Aussie share market was pushed lower by gentle profit taking over the day as investors were happy to watch progress surrounding the unfolding China story and Fiscal cliff from the sidelines. Gains in our market centred around the big miners follow strong gains on the ADRs thanks to encouraging comments from the new Chinese politburo. The defensives and high-yielders led declines after steering our market the past fortnight. A surprise fall in the jobless rate did little to the change Mr Market’s mind and investors were happy lock in profits and await developments overnight.

All eyes were on China overnight after incredibly bullish comments late yesterday from China’s new leadership pledged to promote domestic demand and urbanisation with greater policy support for the economic recovery. US coal heavyweights went ballistic on the news. Alpha Natural Resources jumped 10% on the news and other coal miners moved between 3-7%.

This comes as rumours swirl around the market that BHP Billiton ((BHP)) may be gearing  up for a takeover of another US coking coal goliath, Walter Energy at $55. Walter closed up 6.5% to $31.66 on the news. The US coal market had been in the doldrums for the past 12 months facing increasing pressure from Democrat led environmentalists and competition from falling domestic gas prices. This has seen the likes of coal miners like ANR falling from highs of around $60 2 years ago and $25 just 1 year ago to trade at current levels of $7.35 as of yesterday’s close. The industry is desperate and miners have resorted to scaling back production in order to avoid growing inventories as exports to Europe and Asia rapidly slowed in such a short period of time. The Chinese rhetoric that they will continue to support growth as well as whispers that BHP is interested in metallurgical coal (coking coal as we call it in Australia) is BIG news for cyclicals and the global growth story.

A shock fall in the unemployment rate to 5.2% against expectations that the rate would hold steady at 5.5%. Not that the market was paying attention as it barely awoke on the news. The dollar jumped from US$1.0445 to US$1.048 on the news as traders anticipated a slowdown in monetary policy intervention. The rise in employment numbers was mostly in the part time sector so likely to be seasonal and largely unimportant to the real economic picture.

Ten Network ((TEN)) confirmed a $230m capital raising at a massive discount to market as they try to pay down debt and battle declining ratings. The raising at 20c represents a 60% discount to their last traded price at 32c.

QBE ((QBE)) regained some ground today after being demolished in yesterday’s trade to finish up 1.8% to $10.

RIO Tinto ((RIO)) climbed through $60 intraday for the first time in 7 months to close the day up 0.96% to $59.92

The Shanghai Composite is off around 0.4% currently after gaining over 3% yesterday.

DOW futures are pointing to a weaker opening, currently down 20 points 
 

(For a more comprehensive summary of last night’s market action see FNArena’s Overnight Report.)

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 costconsultation and portfolioreview or to learn more visit www.708capital.com.au. Note: 708 Capital offers wealth management services for Sophisticated and Wholesale Investors only. We can only assist investors who are classified as Sophisticated Investors or have verified assets over AUD$2.5m.

708capital is a holder of AFSL. No. 386279

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