tip off

Moody’s downgrades banks, local markets down

The market is down 45. The SFE Futures were up 13 this morning.

The Dow Jones closed up 67 —  up 100 at best. Moody’s  downgrades of 15 major global bank ratings were not as bad as expected. The US bank sector was the best performer, Morgan Stanley was up 1.3%, JP Morgan was up 1.4%, Bank of New York Mellon up 1.63% and Citigroup was up 0.57%. European markets were mostly down with the German Dax down 1.26%, UK FTSE down 0.95% and the French CAC down 0.75%. Oil was up $1.77 to $80.09 on a gathering US cyclone. Gold was up $1.40 to $1566.90. Metals were mostly down on the LME with Zinc down 1.24%, Lead down 0.62% and Copper down 0.35%. BHP and RIO were down in the UK but their ADRs were up 0.27% and 1.48%. The A$ is at 100.45c. We are on resistance of 4000 this morning although 3985 is a more accurate support level. If the sentiment flip flop protagonists are right this is the moment to buy, but a test of 3985 is perhaps the more imminent threat we need to hurdle first.

Main points:

  • Ex Distribution/Dividend - A lot of REITs, Infrastructure and Utility stocks are ex dividend/distribution today. See list below.
  • Billabong (BBG) is out of its trading halt today after their, profit warning and $225m 6 for 7 capital raising at 102c. The opening price was 100c. BBG is down 35% to 94.5c. In other words all institutional fund managers that supported the issue at 102c are already under water.
  • Perpetual (PPT) has released details of their cost cutting strategy and delivered a profit downgrade. The stock recently jumped 8% in a day on talk of a private equity approach. They were last bid for in 2010 by KKR at $38-40. PPT is down 0.51% to 2322c.
  • Transpacific Industries Group (TPI) has issued a profit warning downgrading guidance due to lower waste volumes and weaker manufacturing activity. TPI is down 3.38% to 71.5c.
  • Consolidated Media Holdings (CMJ) – The press speculates that Kerry Stokes may increase his 24% stake in takeover target CMJ and threaten to launch a counter bid as a bargaining chip in discussions over the future of Foxtel. CMJ is up 0.89% to 340c.
  • Singtels Optus (SGT) is planning invest $2bn to build a network that will compete with Telstra post the development of the NBN. SGT is unchanged on 246c.
  • Atlas Iron (AGO) – production update – has received the final environmental approvals for their Mt Dove mine and construction is due to being early July. Output is expected to be at 8M tons a year by 3Q 2013. AGO is down 1.01% to 196c.
  • Lynas Corp (LYC) says there could be plans to build a rare earths processing plant in WA similar to their existing plant in Malaysia which has met a lot of local population resistance. LYC is down 3.17% to 91.25c.
  • Silver hit a 19-month low last week.
  • Fortescue Metals Group (FMG) has launched a last minute high court challenge to the government’s mining tax last Friday, arguing the tax contravened Australia’s constitution.  FMG is down 1.22% to 485c.

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