The market is down 20. Dow Jones finished down 5 on well below average volumes. The Dow was up 15 at best and down 33 at worst with no economic data overnight. Best sectors — financials, technology. Worst sectors — consumer staples, utilities.

Apple jumped 2.4% after Barclays lifted their target price to $525 from $465.

Eurozone retail sales were down 0.1% in March after falling 0.2% in February. The Sentix index of investor sentiment (Eurozone) was up from -17.3 to -15.6 in May.

Metals closed. The LME was closed for a bank holiday. Spot iron ore was unchanged at $128.10. Gold up $4.40 to $1468.60. Oil up 22c to $95.83.

  • All eyes on the RBA today — It is actually quite an interesting meeting because although most economists are expecting rates to remain on hold the money markets have priced in a 57% chance of a cut. In other words it really is a bit of a 50-50. The arguments for a cut include a series of weaker economic numbers, higher than expected unemployment last month and weaker than expected retail sales numbers yesterday but more importantly the need to counterbalance the stimulus efforts (quantitative easing and record low monetary policy) in the US, Japan and Europe all of which weaken their currencies and strengthen the Aussie dollar to the detriment of Australian businesses trying to compete in a global market as well as domestic Australian businesses trying to compete against imported goods. The bond markets have been rallying recently with a 55bp drop in three year bond yields in the last few weeks suggesting the chances of a rate cut have risen. A rate cut will feed the ‘safe income’ theme in the market including the bank sector.
  • Coca-Cola Amatil (CCL) has issued a profit warning this morning. They expect FY13 profit to be broadly flat on the year and earnings likely to be 8%-9% lower in the first half with an improvement in the second half. CCL is down 8.51% to 1322c.
  • Billabong (BBG) — Shares in a trading halt ahead of an update about their potential takeover. They are in exclusive takeover talks with the Sycamore consortium led by Paul Naude and private equity firm Sycamore Partners. A $287 million bid has been made.
  • Telstra (TLS) — Has secured spectrum licences in the 700Mhz and 2.5Ghz bands in the spectrum auction held buy the Australia Communications and Media Authority. TLS is up 0.3% to 507.5c.
  • TPG Telecom (TPM) — Was a successful bidder in the auction for 2x10Mhz spectrum in the 2.5Ghz band across all regions. The company will pay $13.5 million for the total of 20MHz of spectrum. TPM is unchanged on 379c.
  • Whitehaven Coal (WHC) — Has announced that they have achieved record monthly coal railings of 0.95Mt in April 2013 up from 0.82Mt achieved in January 2013. For FY13 the company’s forecasting coal production of 9Mt. WHC is up 2.43% to 189.5c.
  • Soros shorting the Aussie dollar — There is a rumour that has made some publications in the US that George Soros was shorting the Aussie dollar.

Peter Fray

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