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Australian Stocks Attempted to Break Losing Streak

Stock-Markets / Austrailia Jan 14, 2008 - 08:42 AM GMT

By: Geoffrey_Transom

Stock-Markets We mused on Friday if perhaps the Australian market might be able to break its losing spell this week - and it did its damnedest to do just that today, albeit after a very poor opening.

In the early part of the session, the All Ordinaries was down about 80 points - and then it turned in a ten cent piece and shot back towards the surface, lungs bursting. From a decline of 83 points it actually made it back above the unchanged level less than 90 minutes later. Pretty impressive, but also very worrying; the last thing the Australian economy needs is for its financial markets to have become the plaything for hot money.

Major Market Indices

The broad market - the All Ordinaries ( XAO ) - finished in the red, dropping 13.5 points (0.22%) to close the day at 6040.9 points. The index hit an intraday high of 6072.6 at 12:38 pm, while the low for the day was 5970.8 - set at 10:43 am.

Now read that last paragraph again - in two hours between about half-ten and half-twelve, the Ordinaries rose over a hundred points.

And what was the catalyst? Nothing. Someone decided to have a short squeeze in the SPI, is all.

One ought not complain - after all, this represents the sixth straight session of decline for the Australian market - but there is something seriously wrong when a financial market behaves like the Aust market behaved today. it is a sign that 'investors' really have no idea what they are doing. This is evidenced by the fact that once it got back to (roughly) unchanged, the Australian indices had no idea what to do with themselves. They wandered in a 40-point zigxag for the rest of the session.

Total volume traded on the ASX was a little below average at 1.5 billion units: there's your reason as to why the thing could be pushed as easily as it was during those two hours... someone spotted the soft volume, and took 'er up.

The ASX's daily listing of all stocks included 1447 different 3-letter FPO's which traded (i.e., had non-zero trade volume). Of these, 308 issues rose, with volume in rising issues totalling 435.5 million units. Conversely 881 stocks were dragged to a loss for the session, with aggregate volume traded of 834 million shares.

Of the 478 All Ordinaries components, 130 rose while 298 fell. Volume was tilted in favour of the losers by a margin of 1.3:1, with 295 million shares traded in gainers while 374.24 million shares traded in the day's losers.

The Index that forms the cash basis for the SFE's Share Price Index Futures - the S&P/ASX 200 ( XJO ) - fell mildly, losing 1.6 points (0.03%), closing out the session at 5980 points.

The "heavy hitters" of the Australian market - the ASX 20 Leaders ( XTL ) - actually managed a teensy gain for the day adding 1.8 points (0.05%), closing out the session at 3297 points.

Among the 20 big guns, 14 index components finished to the upside, and of the rest, 6 closed lower for the session. The 21 stocks which make up the index traded a total of 134.43 million units; 14 index components rose, with rising volume amounting to 88.36 million shares, while the 6 decliners had volume traded totalling 22.26 million units. The major percentage gainers within the index were

  • Wesfarmers Limited ( WES ), +$1.04 (2.74%) to $39.04 on volume of 1.6 million shares;
  • Brambles Limited ( BXB ), +$0.26 (2.54%) to $10.51 on volume of 10.8 million shares;
  • Foster's Group Limited ( FGL ), +$0.12 (1.91%) to $6.40 on volume of 5.7 million shares;
  • Suncorp-Metway Limited. ( SUN ), +$0.27 (1.76%) to $15.64 on volume of 4.3 million shares; and
  • Macquarie Group Limited ( MQG ), +$1.12 (1.6%) to $71.00 on volume of 2.2 million shares.

On the less salubrious side of the big-cap fence, the following stocks were the worst-performed within the index:

  • Stockland ( SGP ), -$0.14 (1.86%) to $7.38 on volume of 3.7 million shares;
  • Westpac Banking Corporation ( WBC ), -$0.37 (1.42%) to $25.63 on volume of 6.2 million shares;
  • Westfield Group ( WDC ), -$0.21 (1.13%) to $18.34 on volume of 4.1 million shares;
  • St George Bank Limited ( SGB ), -$0.18 (0.59%) to $30.45 on volume of 1.6 million shares; and
  • QBE Insurance Group Limited ( QBE ), -$0.1 (0.32%) to $31.50 on volume of 2 million shares.

At the other end of the market-cap spectrum lie the denizens of the ASX Small Ordinaries ( XSO ) - the place where non-mania excess returns lie. The small-fry swam in the opposite direction to the big fish today. The tiddlers stayed underwater while the Top20 posted a gain. The Small Ords slid to a much greater extent than the big caps, falling 15.2 points (0.42%) t0 3611.1 points.

Among the stocks that make up the Small Caps index, 59 index components finished to the upside, and of the rest, 126 closed lower for the session.

The 192 stocks which make up the index traded a total of 286.47 million units: volume in the 59 gainers totalling 87.93 million shares, with trade totalling 151.06 million units in the index's 126 declining components. The major percentage gainers within the index were
  • MFS Limited ( MFS ), +$0.45 (12.68%) to $4.00 on volume of 14.1 million shares;
  • Aditya Birla Minerals limited ( ABY ), +$0.28 (12.67%) to $2.49 on volume of 2.6 million shares;
  • Lynas Corporation Limited ( LYC ), +$0.12 (10.71%) to $1.24 on volume of 1.7 million shares;
  • Austereo Group Limited ( AEO ), +$0.23 (10%) to $2.53 on volume of 75.7 thousand shares; and
  • Murchison Metals Ltd ( MMX ), +$0.23 (8.21%) to $3.03 on volume of 3.6 million shares.

In the red-zone of the little-stock index, the following list represents the biggest downers (in terms of percentage decline):

  • Centennial Coal Company Limited ( CEY ), -$1.99 (40.61%) to $2.91 on volume of 2.3 million shares;
  • Resolute Mining Limited ( RSG ), -$0.2 (9.52%) to $1.90 on volume of 299.2 thousand shares;
  • Sundance Resources Limited ( SDL ), -$0.03 (7.69%) to $0.30 on volume of 45.8 million shares;
  • Gindalbie Metals Ltd ( GBG ), -$0.07 (7.61%) to $0.85 on volume of 3.3 million shares; and
  • Challenger Diversified Property Group ( CDI ), -$0.07 (7.53%) to $0.86 on volume of 612.1 thousand shares.
Index Changes

By Geoffrey Transom

GT is a private trader who lives in Central France. He was Head of Equities Research at Australia's premier independent research house (investorweb), and prior to that worked at an economic modelling think tank for 7 years. During that time he published articles related to the modelling of expectations in financial markets, and began a PhD thesis (not finished) which used a scenario-based sensitivity analysis within a computable general equilibrium model. Prior to the introduction of a new indirect tax in Australia, he advised major companies - 50 of the 100 largest companies in Australia - on the ramifications of tax mix change, and co-authored and presented papers to the Econometric Society and the Commonwealth Treasury on the modelling of financial markets in the Commonwealth Treasury's TRYM macroeconomic model.

GT predicted the CDO crisis way back in 2004 (April 29th to be precise - the relevant segment is re-quoted at /2008/01/cdorant-from-rantvault .html ) and has known that Greenspan was an idiot from about 1998 onwards.

Geoffrey Transom Archive

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