A quiet start to a busy week with FOMC and Bank results to come, starting Thursday. The market shrugged off the negative overseas leads as talk was all banks and how much they are going to reward shareholders. Disappointment looms I suspect, but the market is getting frothed at the mouth in anticipation of more records falling, so who am I to question it.
Anyway after a negative start and seeing us down to 5518 we rallied from there hitting highs of 5548 before some caution returned, we ended up around 5535 for an unchanged kind of day in the chocolate wheel close out. The stars were the financial sector with Commonwealth Bank of Australia (A$79.45, +0.7%) and Australia and New Zealand Banking Group Limited (A$34.94, +0.8%) the stars whilst insurers were also positive as were Macquarie Group Limited (A$57.10, +1.0%).
The wealth managers were under pressure though with Magellan Financial Group Limited (A$12.60, -3.4%), Henderson Group PLC. (A$4.41, -2.6%), IOOF Holdings Limited (A$8.50, -1.0%) and Platinum Asset Management Limited (A$6.60, -2.1%) all to the bad.
The big news in the industrial sector was a bid for Goodman Fielder Limited (A$0.635, +15.5%) from our friends in the east, Wilmar International from HK. Priced at 65 cents the stocks immediately went to a small premium as any deal will have to pass Joking Joe and we know what happened last time with GrainCorp Limited (A$8.95, -0.2%).
Usual defensives continued to attract buyers as Woolworths Limited (A$38.49, +2.0%) continued its strength coupled with Woodside Petroleum Limited (A$41.08, +0.4%),Telstra Corporation Limited (A$5.20, +0.4%) and Santos Limited (A$13.52, +0.9%).
In miners we saw some serious profit taking in the iron ores due to continued price weakness. BHP Billiton Limited (A$37.87, -1.1%), RIO Tinto Limited (A$62.06, -1.5%) and Fortescue Metals Group Ltd (A$5.12, -4.1%) the obvious ones. But Sims Metal Management Limited (A$9.77, -2.9%), Arrium Limited (A$1.23, -4.7%), Atlas Iron Limited (A$0.925, -5.1%) and Aquila Resources Limited (A$2.48, -5.7%) were miserable. However the impending war in Ukraine is creating the gold bulls with more reasons to get on board bombed out Gold stocks like Newcrest Mining Limited (A$10.74, +4.8%), Beadell Resources Limited (A$0.695, +4.5%) and Evolution Mining Limited (A$0.94, +4.4%).
Healthcare stocks were in casualty today led by Ramsay Health Care Limited (A$45.32, -1.4%), ResMed Inc. (A$5.21, -1.0%), Fisher & Paykel Healthcare Corporation Limited (A$3.66, -2.7%) and Sonic Healthcare Limited (A$17.75, -0.5%) but other widget makers were easier although Brambles Limited (A$9.57, +1.1%) bucked the trend.
Drinking champagne today were Goodman Fielder Limited (A$0.635, +15.5%), Evolution Mining Limited (A$0.94, +4.4%), Newcrest Mining Limited (A$10.74, +4.8%), Beadell Resources Limited (A$0.695, +4.5%), Oceanagold Corporation (A$2.56, +3.6%), Mount Gibson Iron Limited (A$0.795, +3.2%) and GWA Group Limited (A$2.72, +1.5%) as the gold price improved due to Russia and the Crimea whilst drinking XXXX were Karoon Gas Australia Limited (A$2.69, -7.6%), Aquila Resources Limited (A$2.48, -5.7%), XRO, Arrium Limited (A$1.23, -4.7%), Atlas Iron Limited (A$0.925, -5.1%), Mesoblast Limited (A$4.75, -4.4%), Fortescue Metals Group Ltd (A$5.12, -4.1%) and McMillan Shakespeare Limited (A$9.71, -3.3%).
Volume was ok for a Monday after another long weekend but nothing to get very excited about at around $3.8bn.
Asian markets continued to struggle for the third day running. Tokyo down 1%, HK down 0.3% and China down 1.2%. The Chinese market dropped 0.7 % last week after Chinese manufacturing data. China was especially weak as their Pres Xi Jinping cast doubt on hopes for further stimulus.
Stocks and Stories
After a good 15% gain in the last week or so we finally got a bid for Goodman Fielder Limited (A$0.635, +15.5%) at 65c from Wilmar. Expect this is the opening salvo but it does show how valued our companies are in strategic businesses like food. The Mounties got their Cheese but the skeptics failed to persuade Jokin’ Joe that they had the bona fides to buy GrainCorp Limited (A$8.95, -0.2%). Will be interesting to see how this one plays out. Especially as our Divine leader was up in China saying we are open for business. Maybe Joe will get on message this time.
Acrux Limited (A$1.105, -33.2%) shocker. Today it warned it is at risk of missing its next milestone payment from distributor Eli Lilly because concerns about a potential link between testosterone replacement therapy and heart failure have hampered sales in the United States. Not pretty at all. After a whack early it just kept getting worse and worse closing near its lows.
McMillan Shakespeare Limited (A$9.71, -3.3%) with the budget looming and word that everyone needs to feel the pain perhaps we will see some of the loop holes in car leasing being closed. Certainly looking at the share price of this one it looks odds on!
Woodside Petroleum Limited (A$41.08, +0.4%) Their new partner to be in the whale of an oilfield in Israel, Noble Energy, has signalled that they are getting on with it despite Woodside not signing yet. The deal is pretty close apparently with only a minor tax issue to resolve.
Having taken them private in 2011, Private Equity is about to release it back into the wild to Joe Public with an IPO priced at around 50% higher than what it paid. Spotless Group plans to raise as much as $1 billion in the country’s biggest initial public offering so far this year. Spotless is offering 540.5 million new and existing shares at A$1.60 to A$1.85 each, partly to repay debt, the company said today.
Tomorrow’s News Today
Bernie Ecclestone, who looks like Ronnie Woods dad, has avoided over $1bn in tax by doing a deal with the UK Inland revenue to pay around $10m on trusts. Nice work Bernie. Looks like he has just done the biggest legal tax dodge in history!
I was interested to read how one activist investor, Bill Ackman, in the US was told by a predator that they were going to bid for another company and so he bought shares. Made a squillion and it’s all legal apparently. Insider trading in the US is legal if the information was not given to you by someone who breached a duty of confidentiality or trust. Yeah right. No wonder nobody trusts the street these days!
Looks like the Liberal party is back in the spotlight at ICAC with another MP due to step down until his name is cleared. Such fun.
Looks like Pfizer is still interested in Astra Zeneca in what could be the biggest Pharma takeover ever. It’s worth over $82bn! As patents finish and generic drugs carve into those lucrative markets its M&A heaven for these multinationals. Lots of cash sloshing around and very competitive environment too. Suspect before the week is out this one will be in play!
And the numbers just get bigger and bigger as Apple which has more cash in its coffers at around $150bn is looking at a giant bond sale in order to fund its buybacks because the cash is not in the right country, tax haven or currency. $17bn bond sale coming at you this week.
In shocking news I read that fakes thrive on Alibaba’s Taobao, the Chinese equivalent to Ebay. I am stunned!
Still no sign of MH370.
