Afternoon all,Thanks Endless, Gttrain, Trees, Suzie and to all...

Afternoon all,

Thanks Endless, Gttrain, Trees, Suzie and to all regulars.

I also want to say thanks to you all for the feedback provided over the last couple of weeks, I will be more than happy to fill in when the boss has the day(s) off.

Very much appreciated! :)

Sorry once again for the lengthy report, it's too hard to keep it short lol

Hope you enjoy the read!

OK, so back to business:

Australian shares are higher in cautious trade, with losses in miners offset by gains in banks. The All Ords at 12:30PM were up at 5,037 or 19 points higher at 0.4%.

In news local miners won't like, China has ordered more than 1400 companies in 19 industries to cut excess production capacity this year, part of efforts to shift toward slower, more- sustainable economic growth.

Steel, ferroalloys, electrolytic aluminum, copper smelting, cement and paper are among areas affected, the Ministry of Industry and Information Technology said in a statement yesterday. Excess capacity must be idled by September and eliminated by year-end, the ministry said, identifying the production lines to be shut within factories.

‘‘This detailed list shows the government is serious in its efforts to restructure the economy and is prepared to tolerate the necessary pain,’’ says Zhang Zhiwei, chief China economist at Nomura.

More than 92 million tonnes of excess cement capacity and about 7 million tonnes of excess steel production capacity are expected to be wiped out under the government’s plan, Zhang notes. Nomura maintains its forecast of 7.4 per cent economic growth for China in this quarter and 7.2 per cent in the fourth quarter.

Mining giant Rio Tinto will spend $US1.03 billion ($A1.13 billion) to build a new seawater desalination plant at the Escondida mine in Chile.

Rio, which has a 30 per cent share in the mine, says the 2,500-litre-per-second facility will provide ‘‘a sustainable supply of water for the new OGP1 copper concentrator approved in February 2012’’ to minimise Escondida’s reliance on regional aquifers.

Construction will start this month with commissioning scheduled for 2017.

The project will include two pipelines, four high-pressure pump stations, a reservoir at the mine site and high voltage infrastructure to support the system.Rio Tinto’s investment will be funded through the company’s share of Escondida’s cash flows.

Japanese shares are down, with the Topix index headed toward its first weekly drop in six weeks, as banks and papermakers led declines and after exporters slid as the yen held gains against the dollar.

The Topix slid 1.9 per cent to 1,179.66, with all 33 industry groups falling. The index is on course for a 2.7 per cent decline this week, its first weekly drop since June 14. The Nikkei 225 Stock Average declined 1.9 per cent to 14,285.86.

‘‘Japanese earnings are steadily recovering. However, a lot of them are coming in-line with expectations,’’ said Juichi Wako, a Tokyo-based senior strategist at Nomura, the nation’s biggest brokerage. ‘‘It’s not enough to be a big boost to the stock market.’’

Japan’s consumer prices rose the most in four and a half years in June, a tentative sign that the economy is starting to shake off deflation.

Consumer prices excluding fresh food increased 0.4 per cent in June from a year earlier, the statistics bureau said in a statement today. The median estimate of 29 economists was for a 0.3 percent gain, a Bloomberg News survey showed.

Excluding energy as well, prices dropped 0.2 per cent, continuing more than four years of declines.

As Prime Minister Shinzo Abe’s policies weaken the yen and energy costs rise, the increase in prices points to a gradual shift away from the deflation that has dragged on the economy for 15 years.

After the Bank of Japan began rolling out unprecedented monetary easing in April, the next challenge for Abe is to loosen constraints on the labor market and companies to achieve sustained growth and 2 per cent inflation.

‘‘The deflationary trend may be changing,’’ Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute in Tokyo, said before the report was released. ‘‘It’s too early to say the end of deflation is in sight but we are seeing something we haven’t seen for a while.’’

There were a couple of interesting pieces of US economics news out overnight.New orders for big-ticket US manufactured goods rose 4.2 percent in June, led by demand for aircraft, the government reported Thursday.

Orders for durable goods, long-lasting manufactured products, rose to $244.5 billion, an increase of $9.9 billion from May, the Commerce Department said.

Analysts had predicted a much smaller 1.8 percent increase on average.

And a gauge of planned US business spending rose more than expected in June and new orders for long-lasting manufactured goods surged, offering tentative signs of a pickup in economic activity.

The Commerce Department said on Thursday non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, increased 0.7 percent after rising by a revised 2.2 percent in May.

Economists had expected this category to only rise 0.5 percent after a previously reported 1.5 percent gain in May.

On the flipside of those releases, the number of Americans filing new claims for jobless benefits rose slightly last week in a sign the US labor market continues to improve at a moderate pace.

Initial claims for state unemployment benefits increased by 7,000 to a seasonally adjusted 343,000, the Labor Department said.

A note from the US, where the political environment is still “very poisonous” at the moment, and confidence among chief executives is at a “low ebb,” according to Goldman Sachs chief Lloyd Blankfein.

But the world has been well-served by Ben Bernanke, the chairman of the US Federal Reserve, and his handling of the financial crisis, according to the Mr Blankfein, one of the most controversial figures in modern finance.

He has been chief executive of Goldman Sachs during a notorious period. The investment bank was a key player in the sale and purchase of complicated financial products that were linked to the US subprime mortgage market.

When the market for those products unravelled, it contributed to the financial crisis in 2007.

Mr Blankfein arrived in Australia this week, and he spoke at a business conference in Sydney this morning.

He was ushered into and out of the conference by a team of private security guards.

“It’s a very poisonous political environment [in the US] now, and it’s made worse by the fact that it’s a bitter moment, having just come through the trauma [of the GFC],” Mr Blankfein said.

“The bail-outs and the banks, that’s a very political issue as one would expect it to be … and a very big burden on the social fabric and the culture of the United States and around the world.”

Gold headed for the longest weekly rally since March as US economic data backed the case for sustained monetary stimulus.

Russia and Kazakhstan added bullion to reserves for a ninth month in June.Spot gold gained as much as 0.3 per cent to $US1,338.50 an ounce, and traded at $US1,334.55.

Prices are 3 per cent higher this week after advancing to a one-month high of $US1,348.65 on July 24.

Gold is up 8.1 per cent in July, heading for the best month since January 2012.

"Gold advanced on expectations that the Fed will maintain stimulus measures after US jobless claims rose more than expected," Lachlan Shaw, an analyst at Commonwealth Bank of Australia, wrote in an email today.

As the local market hops above the line into positive territory, the Australian dollar is headed for a second-straight weekly gain amid speculation US Fed next week will maintain bond purchases that have supported higher-yielding assets around the world.

‘‘A lot will depend on how financial conditions evolve in the U.S. and whether the Fed looks to reduce its stimulus,’’ said Peter Dragicevich, a Sydney-based currency economist at Commonwealth Bank of Australia, the nation’s largest lender.

‘‘We expect it will at some point in 2013, but there is a risk that it delays it by a meeting or two. We don’t think the Aussie will fall too far.’’

Levels around 91.50 US cents could provide support to the Aussie in coming days, said Dragicevich, referring to an area where orders to buy may be clustered.

The Aussie was little changed at 92.45 US cents, paring its weekly advance to 0.8 per cent.

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What you need to know

·SPI futures are 3 points lower at 4990
·The $A is higher at 92.54
·In New York, the S&P500 was 0.26% higher at 1690.25
·In Europe, the FTSE100 lost 0.49% to 6587.95
·China iron ore was flat at $US132.10 a metric tonne
·Gold added $US9.30 to $US1,328.80 an ounce
·WTI crude oil added gained 38 cents, or 0.4% to $105.77 a barrel
·Reuters/Jefferies CRB index lost 0.3% to 286.9

Making news today

There is no major economics news scheduled for today.

In company news:

·Alinta Energy Group extraordinary general meeting
·James Hardie date payable
·G.U.D. Holdings full yer results
·Panaust quarterly production data

Offshore overnight

United States

US stocks closed higher as soaring Facebook shares were up 30 per cent, boosting sentiment.

Key numbers:

·Dow Jones Industrial Average added 0.08% to 15,555,45
·Standard & Poor’s 500 added 0.26% to 1,690.31
·Nasdaq Composite added 0.71% to 3,605.19

London

European stock markets slid, dragged down by a string of disappointing company earning reports, analysts said.

Key numbers:

·London’s FTSE 100 lost 0.49% to 6,587.95
·Frankfurt’s DAX 30 lost 0.96% to 8,298.98
·In Paris the CAC 40 lost 0.17% to 3,956.02

Asia

·Asian markets slipped after a sell-off on Wall Street fuelled by US housing data that raised concerns about the ·Federal Reserve’s stimulus program.

Key numbers:

·Japan's Nikkei lost 1.14% to 14,562.93
·Hong Kong's Hang Send lost 0.31% to 21,900.96
·China's Shanghai lost 0.60% to 2,021.17

Commodities

Energy

Oil prices rose on bullish sentiment in the commodity and weakness in the US dollar, even as rising US oil production hit a new landmark.

·US benchmark West Texas Intermediate for September delivery rose 10 cents to $US105.49 a barrel on the New York Mercantile Exchange on Thursday
·European benchmark Brent oil added 46 cents at $US107.65 a barrel on the Intercontinental Exchange in London

Precious metals

Gold futures have settled higher, helped by a weaker US dollar and easing worries about the longevity of the US monetary stimulus measures.

·Gold for August delivery, the most active contract, on Thursday settled $US9.30, or 0.7 per cent, higher, at $US1,328.80 a troy ounce on the Comex division of the New York Mercantile Exchange

Base metals

Copper has closed lower on the London Metal Exchange (LME), weighed by concern over Chinese demand for the metal, although losses were pared in afternoon trade following some stronger-than-expected US economic data.

·At the PM kerb close on Thursday, LME three-month copper was down 0.6 per cent at $US7,010 a metric ton
·Aluminum was down 1.4 per cent at $US1,823.50 a ton

How we fared yesterday

The Australian share market ended the day flat as resources stocks were hit by weaker metals prices and financial stocks rose.

The benchmark S&P/ASX200 index was up 0.5 points, or 0.01 per cent, at 5,035.6. The broader All Ordinaries index was down 3.5 points, or 0.07 per cent, at 5,018.3.

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TODAY’S FINANCIAL CALENDAR:

·(JP) - CPI, Jun
·(US) - UMich consumer sentiment, Jul (final)
·(AEJ) - EGM
·(KOV) - Full Year Results
·(LOM) - AGM
·(PNA) - quarterly production report
·(SGT) - EGM
·(SNY) - EGM

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Most regional markets are down today, with Japan leading the way as the stronger yen weighs on exporters:

·Japan (Nikkei): -1.5%
·Hong Kong: -0.1%
·Shanghai: -0.4%
·Taiwan: -0.1%
·Korea: +0.1%
·ASX200: +0.1%
·Singapore: +0.1%
·New Zealand: flat

‘‘Stocks have already priced in the weaker yen’s effect on an earnings recovery,’’ says Yoshihiro Ito, chief strategist at Okasan Online Securities. ‘‘Now the yen is stronger, and China’s economy is slowing. The optimism for earnings is waning.’’

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THE OVERNIGHT REPORT: REVENUE GROWTH ELUSIVE:

The Dow closed up 13 points, or 0.1%, while the S&P gained 0.3% to 1690 and the Nasdaq jumped 0.7%, spurred on by a 30% surge in Facebook shares.

Facebook was certainly the talk of the town last night, after blowing away the naysayers with evidence the company actually can make money out of its mobile platform. Elsewhere profit results were again mixed, leaving Wall Street to ponder a common theme of quarterly profit results ever since 2009. At around the half-way mark, net S&P 500 earnings are up a better than forecast 4.6% for the quarter, but revenues are down 0.5%.

The failure to show improvement on the top line is one factor holding the broad index back from punching through the never before seen 1700 level, but at the same time the downside appears equally elusive as the buyers move in on any sign of a dip. As was the case on Wednesday, the Dow average was down over 80 points during the session last night before recovering towards the close.

US bond yields are another factor working against a fresh leg-up in stocks, with the ten-year yield rising another 2 basis points to 2.61% last night. A steepening yield curve might indicate faith in the US economy (and thus expectation of Fed tapering), but aside from the banks the higher rates will act as a headwind against attempts to lift corporate revenues ahead. As will the higher oil price.

An announced 4.2% increase in June durable goods orders, in the wake of Wednesday night’s strong PMI but surprisingly poor Richmond Fed index, maintained a theme of mixed economic data releases. The bulk of the durable goods gain was due to lumpy aircraft orders, while non-transport growth provided a disappointingly flat result.

Talk now is of a necessary pullback in the stock indices, but too much talk usually implies it’s just not going to happen. Not unless something out of the blue pops up. Outside of earnings, the yield curve and a major insider trading case now unfolding on Wall Street, attention last night turned to – of all places – New Zealand. At its policy meeting yesterday the RBNZ elected to maintain a 2.5% cash rate, but traders concluded from the accompanying statement that the next move in rates would be up, perhaps as soon as early 2014.

The Kiwi jumped 1% as a result against the greenback, helping to drag up the Aussie in its wake. Again the Aussie moved by 1%, this time up, but at US$0.9258 remains stuck in a definitive range. Neither the Aussie nor Kiwi are included in the trade-weighted basket that determines the US dollar index, but it was down 0.6% last night to 81.76. Gold thus rose US$12.10 to US$1322.40/oz.

The weaker greenback was not enough to excite metals traders, who at present are contemplating mixed global data in a summer-thin market. Last night’s first estimate of the UK’s June quarter GDP came in right on the money at 0.6% growth, so no signals there. Aluminium and nickel were both off 1% while the other metals were little moved.

The energy market is nevertheless keen on stronger transport orders, so Brent crude rose US44c to US$107.63/bbl and West Texas rose US30c to US$105.69/bbl.

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BROKER ALERTS (1 x BHP, 3 x NCM, 4 x OZL, 1 x SBM):

Macquarie rates BHP as Outperform (1) -

BHP now has four pillars, in Macquarie's view. Petroleum contributes 21% of group earnings and 31% of group net asset value and is entrenched along with coal, copper and iron ore.

The broker values the petroleum portfolio at US$58.6 billion,making it the second largest division by value after iron ore. 2014 and 2015 earnings estimates have been raised 4% and 2% respectively. Notwithstanding the margin compression from growing US gas production, this exposure also assure medium-term reserve replacement and offers flexible high returning growth options in Macquarie's view.

The Outperform rating is maintained and the price target is raised to $40.00 from $39.00.

Target price is $40.00 Current Price is $34.77 Difference: $5.23
If BHP meets the Macquarie target it will return approximately 15% (excluding dividends, fees and charges).

The company's fiscal year ends in June. Macquarie forecasts a full year FY13 dividend of 113.82 cents and EPS of 236.56 cents. At the last closing share price the estimated dividend yield is 3.27%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 14.70.

Market Sentiment: 0.5

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CIMB Securities rates NCM as Downgrade to Neutral from Outperform (3) -

The broker was happy to see such a strong finish to what wasn’t a great year for the company. June quarter production came in within the updated guidance range and 16% above the broker, although admittedly below initial guidance that was set 11 months back.

FY14 net profit is trimmed 3% to account for some minor revisions to the production profile, while the $13.20 price target is maintained. The recommendation, on the other hand, is dropped to Neutral from Outperform, CIMB of the view that the 38% recovery in Newcrest’s share price since the end of June now has the stock looking pretty fairly priced.

Target price is $13.20 Current Price is $12.53 Difference: $0.67
If NCM meets the CIMB Securities target it will return approximately 5% (excluding dividends, fees and charges).

The company's fiscal year ends in June. CIMB Securities forecasts a full year FY13 dividend of 12.00 cents and EPS of 57.00 cents. At the last closing share price the estimated dividend yield is 0.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 21.98.

Market Sentiment: 0.3

Citi rates NCM as Sell (5) -

June quarter production came in ahead of Citi’s estimates, seeing full-year production of 2.1moz at $750/oz, which is in line with the downgraded guidance range. September quarter production is expected to come in lower, but then to improve after that.

The FY14 production guidance was maintained and will make for a small lift over FY13 given high cost ounces from Telfer, Lihir and Cadia are being wound back. Citi sees a risk to FY17 production guidance given it looks pretty unlikely under the new strategy. The Sell call and $9.00 price target are maintained.

Target price is $9.00 Current Price is $12.53 Difference: minus $3.53 (current price is over target).
If NCM meets the Citi target it will return approximately minus 28% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June. Citi forecasts a full year FY13 dividend of 12.00 cents and EPS of 52.80 cents. At the last closing share price the estimated dividend yield is 0.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 23.73.

Market Sentiment: 0.3

UBS rates NCM as Sell (5) -

Newcrest's June quarter production was 7% above the broker's expectations. Aft first appearance it looks strong but the additional ounces were primarily from the high-cost Telfer mine which would have added little to cash flow. Cash costs of $762/oz were in line with UBS' expectations.

The broker maintains a Sell rating based on valuation. UBS notes Newcrest's delivery on original guidance has a poor track record with an average miss of 9% since 2005. The price target is unchanged at $9.00.

Target price is $9.00 Current Price is $12.53 Difference: minus $3.53 (current price is over target).
If NCM meets the UBS target it will return approximately minus 28% (excluding dividends, fees and charges - negative figures indicate an expected loss).

The company's fiscal year ends in June. UBS forecasts a full year FY13 dividend of 12.00 cents and EPS of 63.00 cents. At the last closing share price the estimated dividend yield is 0.96%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 19.89.

Market Sentiment: 0.3

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CIMB Securities rates OZL as Outperform (1) -

June quarter copper production was down 15% on the previous quarter, with 1H total indicating the company needs a 25% stronger 2H to hit FY targets. This puts a lot of pressure on Prominent Hill. The problem is, the CY13 gold production guidance has been cut by 11%.

Lower grade forecasts see CY14-15 EPS forecasts cut by 40% and 32%, although the broker has also extended the open cut mine life by three calendar quarters, which offsets at least some of the higher near-term cost assumptions. Value is on offer and the Outperform call and $7.40 price target are maintained, although CIMB admits it’s hard to see any clear operational catalysts.

Target price is $7.40 Current Price is $4.30 Difference: $3.1
If OZL meets the CIMB Securities target it will return approximately 72% (excluding dividends, fees and charges).

The company's fiscal year ends in December. CIMB Securities forecasts a full year FY13 dividend of 20.00 cents and EPS of minus 19.00 cents. At the last closing share price the estimated dividend yield is 4.65%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 22.63.

Market Sentiment: 0.4

Citi rates OZL as Downgrade to Neutral from Buy (3) -

Target $4.70 (was $5.00). June quarter production fell short of the broker because of the elevated waste stripping and remediation work going on in the South pit. This saw lower grade ore through fed through the mill and thus lower recoveries.

Gold production was lowered to 120-130koz from130-150koz, the company now preferring a higher margin copper blend for the mill. Rising cash costs, lower production and uncertainty about the long-term strategy have the broker feeling jumpy. The recommendation is downgraded to Neutral from Buy.

Target price is $4.70 Current Price is $4.30 Difference: $0.4
If OZL meets the Citi target it will return approximately 9% (excluding dividends, fees and charges).

The company's fiscal year ends in December. Citi forecasts a full year FY13 dividend of 0.00 cents and EPS of minus 0.80 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 537.50.

Market Sentiment: 0.4

Deutsche Bank rates OZL as Hold (3) -

There's a lot riding on the second half, in the broker's opinion. Copper production guidance is unchanged at 82-85,000 tonnes but requires a 21% improvement in the second half to achieve this. Cash costs need to be reduced by 16% half-on-half to meet guidance as well.

Deutsche Bank suspects more lateral and depth continuity will be required at Malu before a meaningful underground operation can be justified. The Hold rating is retained and the price target is reduced to $4.30 from $4.50.

Target price is $4.30 Current Price is $4.30 Difference: $0
If OZL meets the Deutsche Bank target it will return approximately 0% (excluding dividends, fees and charges).

The company's fiscal year ends in December. Deutsche Bank forecasts a full year FY13 dividend of 0.00 cents and EPS of minus 18.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is minus 23.89.

Market Sentiment: 0.4

UBS rates OZL as Neutral (3) -

June quarter output was 9% below UBS' forecasts, but cash costs at US$1.95/lb beat the broker. Production was weak as OZ Minerals finalised remediation work on a pit wall failure.Lower copper output led preferential treatment of copper stockpiles over gold stockpiles in the half.

Although the share price makes the stock look increasingly attractive from a valuation perspective, the broker is concerned that, in the absence of a significant discovery, acquisition or decision to mine Carapateena the company could become a value trap.

The Neutral rating is retained and the price target is reduced to $4.80 from $4.90.

Target price is $4.80 Current Price is $4.30 Difference: $0.5
If OZL meets the UBS target it will return approximately 12% (excluding dividends, fees and charges).

The company's fiscal year ends in December. UBS forecasts a full year FY13 dividend of 4.00 cents and EPS of 3.00 cents. At the last closing share price the estimated dividend yield is 0.93%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 143.33.

Market Sentiment: 0.4

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Deutsche Bank rates SBM as Downgrade to Hold from Buy (3) -

Deutsche Bank has downgraded the stock to Hold from Buy. Gwalia may have had a record quarter in June but Deutsche Bank believes the Pacific assets are taking too long to generate cash. Following the fall in the gold price and slower turnaround at the acquired assets St Barbara has indicated a write down is likely.

Deutsche Bank expects negative free cash flow in FY14 on gold price estimates. The target price is reduced to 65c from 80c.

Target price is $0.65 Current Price is $0.52 Difference: $0.135
If SBM meets the Deutsche Bank target it will return approximately 26% (excluding dividends, fees and charges).

The company's fiscal year ends in June. Deutsche Bank forecasts a full year FY13 dividend of 0.00 cents and EPS of 8.00 cents.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 6.44.

Market Sentiment: 0.0

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A FEW CHARTS ON GOLD AND DOLLAR:

Gold broke resistance at $1300/ounce, penetration of the descending trendline indicating that a bottom is forming. Reversal below $1300 would suggest another test of primary support at $1200. Respect of support at $1300 and breakout above $1350 is unlikely, but would target $1400.

The Dollar Index is headed for a test of the rising trendline after a false break above 84.00. Respect of the trendline would indicate the primary up-trend is intact, while reversal below 80.50 would warn of a primary down-trend. Bearish divergence on the Momentum indicates trend weakness. Recovery above 84.50, however, would signal an advance to 90.00.

Nymex WTI light crude is in a primary up-trend, with the current retracement likely to find support around $100/barrel. Rising Nymex crude prices reflect a stronger US economy. Expect the spread with Brent crude to narrow. Target for the current Nymex advance is the 2012 high of $110/barrel.

The Shanghai Composite Index continues to consolidate above its 2012 low (of 1950). Failure would signal a decline to its 2008 low (at 1660). China is the primary driver of commodity prices and decline of the Shanghai Index would drag prices lower. Dow Jones-UBS Commodity Index reversal below long-term support at 126 would confirm, targeting the 2009 low at 100. Not good news for Australian resources stocks, even if the impact is cushioned by a falling Aussie Dollar.

A monthly chart of the Aussie Dollar displays a similar pattern against the greenback, with a broad top followed by breakout below primary support at $0.95. Support at $0.90 provides temporary respite, but the long-term target is $0.80. Again, declining 13-week Momentum indicates a primary down-trend.

The Aussie/Kiwi cross has exceeded its target of $1.15, steady decline on the weekly chart reflecting the impact of falling commodity prices. Breakout above the descending trendline would indicate a rally to test resistance at $1.21, but that seems a way off with the decline in 13-week Momentum accelerating.

The Euro continues to test medium-term resistance at $1.32. Respect of primary support at $1.27 is likely, following bullish divergence on 13-week Momentum. Breakout above $1.32 would strengthen the signal, while follow-through above $1.37 would confirm a fresh advance, offering a target of $1.50. Reversal below $1.27 is unlikely, but would warn of a primary down-trend.