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Morning Market Report

The market is up 1. SFE Futures were down 15 this morning. Dow Jones up 4. The Dow was down 68 at worst and up 79 at best on the back of some better then expected economic data from the US. With some pleasing economic data coming in last week global markets were still cautious post the US election, with gaining speculation on their fiscal restructure that is scheduled to be set early 2013. President Obama said in a press conference last week, he will agree to a balanced approach on the fiscal cliff, but he wants more tax revenue from the wealthy. President Obama has invited Democratic and Republican party leaders in Congress to the White House this week to begin talks on a plan to avert the “fiscal cliff”. US consumer sentiment was up from 82.6 to a 5-year high of 84.9 in November. US import prices were up 0.5% in October while export prices were flat. US wholesale sales and inventories both came in better than expectations. Over the week, US two year bond yield was down 2bpts and the US 10 year bond yield was down 10.5bpts, Gold was up $55.70, Oil was up $1.27 and the Dow was down 278pts. Best sectors  — Technology (+0.6%), Telecoms (+0.4%) and Health Care (+0.4%). Worst sectors — Utilities (-0.7%), Consumer Services (-0.3%) and Basic Materials (-0.2%). European markets mixed  — UK FTSE down 0.11%, German DAX down 0.58%, France up 0.47%, Spain up 0.16%, Italy down 0.09% and Greece up 0.92%. Reports continue to come through that the next round of bailout funds to the Greeks will be delayed, the EU is looking for a way to stop an “accidental default” for Greece when 5 billion euro of bonds mature on 16 November. The Stoxx Europe 600 down slightly with Financials (-1.0%), Utilities (-0.6%) Technology (-0.2%), Health Care (+1.0%), Consumer Goods (+0.4%).

  • The number of home loans approved in September rose 0.9% to 46,395. Economists were expecting a rise of 1.0% in September. Total housing finance by value rose 3.8% in September to $21.203 billion.
  • Orica (ORI) — FY result — Profit fell by 37% to $402.8 million in the 12 months to September 30 down from $642 million. The result includes a $247 million impairment on their specialty bolts and chemicals business Minova. Net profit excluding one-off items was $650 million up 1% and in line with a consensus forecast of $648 million. Final dividend of 54c. Patersons has reduced their group EBIT forecasts by 6%-8%, price target of around $2800c and downgraded their recommendation from Buy to Hold. ORI is down 3.24% to 2419c.
  • QBE  — Hurricane Sandy cost update  — Has issued a profit warning and reduced their insurance profit margin to 8% from 12%. They expect to report a net profit in excess of $US1 billion for the year to December 31, an increase of around 30%. But QBE said their preliminary estimate of losses from hurricane Sandy will be in the range of $US350 million to $US450 million. QBE is down 8.31% to 1178c.
  • Oil Search (OSH) — Exxon Mobil Corp says the cost of building a massive natural gas-export project in Papua New Guinea has blown out to $US19 billion from a previous estimate of $US15.7 billion. This is the second cost blowout announced by the JV which includes — Oil Search (OSH) and Santos (STO). OSH is down 3.94% and STO is down 2.04%.

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