Australia | Jul 11 2013
By Stephen Hogan, Senior Private Client Adviser, Equities/Derivatives
Australian Market
The Australian market closed up 64.3 points or 1.31% at 4965.7 today. The Aussie market reacted quite positively to last night's global action with the Dow Jones easing -8.68 points or 0.06% to 15,291.70, and the S&P 500 gaining 0.30 points or 0.02% to 1,652.62 with the Fed meeting's minutes being released. That combined with some local weak jobs data sent the XJO pushing higher in the morning and hold on to that lead in to the afternoon to close at the day's high. The Gold sector was the clear best performer today, rising 11.52% followed by the Metals and Mining sector, adding 4.01%. The worst performer for the day was the A-REIT sector falling -0.48%.
In economic news, the unemployment rate has risen to 5.7 as 10,300 jobs were added to the economy. Announced at 11.30am, the forecast was for a fall of 2,500 jobs and the unemployment rate to move up to 5.6%. Still, this report can surprise and is one of several indicators that tend to move markets. Full time positions fell by 4400 while part-time positions increased by 14,800. The May jobless rate had been revised upwards from 5.5 to 5.6%.
Newcrest Mining Limited (NCM) will make an undecided number of employees redundant from its Telfer mine in WA as part of the controversial restructure announced on 7th June. Telfer was supposed to be one the biggest gold mines in Australia, but has underwhelmed since coming to operation, occasionally missing production targets and proving to be a very high cost mine. A NCM spokesman Jason Mills confirmed reports this morning that changes were coming, but could not give an exact number of redundancies given that some workers would be redeployed. ''Like all of our sites, Telfer is reviewing its operating plant with a focus on only producing profitable ounces, lowering costs and enhancing productivity to ensure it is cash flow positive in the current environment,'' he said in a statement. ''As a result, over the coming months Telfer will reduce the level of mining activity across the operation which means an associated reduction in the number of employees and contractors required to support the operation.''
AGL Energy Limited (AGK) has delayed a $550 million wind farm because of uncertainty over government policy to boost investment in the industry. AGL will defer hiring an engineering and construction contractor for the proposed Silverton wind farm in Australia's New South Wales state and review its position in 2014. ''This decision does not indicate reduced enthusiasm for the project,'' Nigel Bean, the head of power development at AGL, said in a statement.
AUD/USD is currently trading at $0.9277, up $0.0108 against the USD.
Top Performers
Perseus Mining Limited ((PRU)) up $0.115 or 23.71% to $0.60
Medusa Mining Limited ((MML)) up $0.31 or 21.60% to $1.745
Evolution Mining Limited ((EVN)) up $0.11 or 20.00% to $0.66
St Barbara Limited ((SBM)) up $0.09 or 18.95% to $0.565
Linc Energy Limited ((LNC)) up $0.21 or 18.58% to $1.34
Bottom Performers
Emeco Holdings Limited ((EHL)) down -$0.01 or -4.35% to $0.22
TPG Telecom Limited ((TPM)) down -$0.14 or -3.70% to $3.64
Fairfax Mining Limited ((FXJ)) down -$0.02 or -3.57% to $0.54
Mirvac Group Limited ((MGR)) down -$0.055 or -3.26% to $1.63
Discovery Metals Limited ((DML)) down -$0.005 or -2.94% to $0.165
Our Comments
It was a gold rush today and a huge bounce in some of these producers such as NCM, SLR, PRU. The gold sector itself was up 115 before the match. If you cast your mind back to our comments last month we mentioned that gold stocks since 1987 on average rally 7.1% in the month of July. It certainly looks like after today's price action that this particular seasonal pattern will continue again this year.
(For a more comprehensive summary of last night’s market action see FNArena’s Overnight Report.)
Re-published with permission. Views expressed are not by association FNArena's (see our disclaimer).
Stephen Hogan is an Authorised Representative of Novus Capital. Authorised Representative No.345411 – http://www.stephenhogan.com.au
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