The market isup 34 points. The Dow Jones finished down 67. It was up 32 at best and down 74 at worst.

The S&P 500 closed down four to 1697. Fourth loss on the trot.

Bonds up — The US 10 year bond yield was down another three basis points at 2.657% – a six week low. Continued concerns about the US Government running into the debt ceiling drove a “risk off” trade including the buying of bonds over equities.

The Case Shiller house price index was marginally ahead of expectations up 12.4%.

Consumer confidence numbers came in slightly below expectations (79.7 versus consensus of 80.0) and fell from last month’s 81.8. Consumer confidence tends to be related to the equity market (which has been good), gasoline prices and the labor market. The fact that it fell is a poor reflection on the labor market which is key to the tapering debate. Official jobs numbers are on Friday next week in the US.

The A$ down to 93.88c on a small rise in the US$ generally. It is down from a peak of 95.25c hit on the “no tapering” decision last week. It was the fourth day of gains for the US$.

Talk of an Italian credit rating downgrade.

JP Morgan down 2.2% as it faces a $20 billion settlement of mortgage backed securities issuance case.

The Home Construction ETF defied the trend to close up 1.8% on good results from KB Home and Lennar and on the 1.0% increase in the FHFA Housing price index and a 12.4% rise in the Case Shiller 20-City index. The fall in bond yields also helped (reduces mortgage rates).

BHP was down 0.84% in the US on Friday. The stock closed in the US down 23c on the close here on Friday. RIO down 0.85% in the US.

The oil price fell 94c  to $103.13.

The Gold price fell another $10.70.

European markets mostly up small — UK up 0.21%. Germany up 0.34%.

The Japanese market was down 0.07%. The Chinese market was down 0.61%.

The iron ore price was up 30c at $132.70. FMG was up 2.8% against the trend yesterday as Andrew Forrest bought $23 million of shares.

Metals up — Copper and Nickel up 0.39% and 1.47%. Aluminium fell 1.45%. Zinc up 1.03%.

 RESULTS & STORIES

  •  Tapering confusion — We have gone from expecting a notional tapering to finding out the Fed are not tapering at all. It has created some confusion and damaged the credibility of the Fed. We’re hanging on every Fed utterance. Not a comfortable back drop for most risk averse investors. We are in a period of reasonably high risk.
  • The A$ has stabilized above 93c. A stable A$ is good for Australian stocks short term (not good for profitability long term).
  • Resources OK — Last week the World Bank expressed their confidence in China meeting its 7.5% growth forecast this year and this week the HSBC Chinese Flash PMI number came in better than expected. The resources rally has plateaued for now, Twiggy Forrest has been buying FMG shares, the iron ore price is holding up. Only the traders would be selling the sector.
  • Banks are back to the peak hit in May. With results coming up at the end of November they are still in demand from income hungry investors and because of that they are looking “comfortable” if a tad expensive at the top end of their trading range.
  • The Australian housing market is still improving — we were warned this week not to call every improvement in the housing market a “bubble” — it seems a gradual improvement is certainly under way. Auction clearance rates are over 80% in Sydney. A word of warning — Beware the proliferation of property sharks in the investment arena, trying to access your Super funds for their developments. Super buying is feeding the market. Be really careful of believing the marketing of over-priced apartments on big commissions – the spruikers are in and you are the target.
  • Iron ore price to fall says BHP — In its annual report BHP says increasing supply is causing commodity prices to fall and the trend is expected to continue in the short term. Jac Nasser said ,”we maintain a positive outlook over the long term as the fundamentals of wealth creation, demographics and urbanisation continue to create demand for commodities across Asia and other markets.” He also reinforced the company’s positive outlook for potash after their commitment to invest $US2.6 billionn in the Canadian Jansen Potash Project. Overall BHP performed well in a volatile and uncertain year. Profits fell by 30% this year to $US10.9 billion. Dividend was up 4% to $US1.16c.
  • David Jones (DJS)  Up 5% on results first thing — net profit of $95.2 million down 5.9% from $101.1 million in 2012. JP Morgan were expecting $93.9 million with a 6.5c dividend. The company say it is well positioned to take advantage of any recovery in consumer confidence, but the year will be challenging. Revenue down 1.2% to $1.845 billion. Fully-franked final dividend of 7c. Total 17c. The profit fall included a $9.1 million pre-tax charge relating to the company’s move to divest its Dick Smith stores. Underlying profit was $101.6 million.
  • Nufarm (NUF) — Underlying net profit of $83.2 million down 28% which is within but at the low end of their guidance range of $80-$95 million. Brokers were expecting up to $98 million. Net profit of $81 million up 12%. Final dividend 5c. Revenue $2.28 billion up 4%. Higher interest costs and foreign exchange losses contributed to a larger relative fall in underlying net profit.
  • ASX Limited (ASX) AGM today. The chairman said the company delivered a solid earnings result in a market that remains challenging. Revenue fell in the business directly linked to equity trading activity but was offset by growth in the company’s other businesses. Overall, operating revenue for the year was $617.4 million up 1.1% on last year. Payout ratio was 90%, final dividend 82.3c. The company made good progress in financial year 2013 to advance the position of the company as a strong and globally competitive exchange. The chairman is also seeking replacements for two resigned board members.
  • SMS Management & Technology (SMX) — Has announced that they will acquire The Birchman Group Asia Pacific for $25 million. Payment to be funded by debt. Price up 1% first thing.

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Peter Fray
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