The market remains buoyant, but many companies aren’t as fortunate.
The Market isup 28 points.Dow Jones was up 141. It was up 166 at best. S&P 500 was up 17 to 1672. The threat of military action in Syria subsided a touch as Syria said they welcomed a plan put forward by Russia for Syrian chemical weapons to be put under international control. The US followed the lead of the Japanese market that was up 2.48% yesterday in response to the Tokyo 2020 Olympics win and the revision of a second quarter GDP number from +0.6% to +0.9% with the annual number up to +3.8%.
The US also responded to the Chinese market that was up 3.38% on a string of positive economic releases the main one being trade numbers in which imports grew 7.0% (Est +11.3%) and exports were up 7.2% (Est +6.0%). Mining stocks up on the Chinese data. Caterpillar up 2.6%. Tapering also seems less likely post the weak jobs numbers on Friday. Gold was up 20c. The A$ is still above $92c at 92.26c as the US$ index dropped below 82. Recent support for the A$ has come from good Chinese numbers, a fall in the US$ post the weak jobs numbers on Friday and some optimism about Australian growth post-election. Technical resistance on the A$ is at 93c. NAB Business confidence numbers and Chinese industrial production numbers today will have some bearing. Iron ore price up 70c to $134.80 after a $3 fall yesterday. The US bond market was up — 10 year yield down two basis points to 2.918%. Obama says he will address the American people tonight on Syria after the vote in Congress tonight. The media is giving a lot of airtime to Americans that are against it and to Syrian citizens that fear it. Potash stocks up as Vladimir Putin said the potash cartel dispute needs to be resolved. Mosaic up 5.1%. Apple up 1.6% ahead of the product refresh announcement tomorrow. BHP was up 2.16% in the US overnight. The stock closed in the US up 31c on the close here yesterday. RIO was up 2.56% in the US. The oil price down 1.01%. European markets mixed. Greece up 4.05%, Italy up 1.16% with FTSE down 0.25%. Metals mostly down. Copper up 0.46%. Tonight in Europe — French industrial production. US Economics overnight — Consumer Credit: Actual $10.4B, consensus $13.0B, prior $13.8B (revised $11.9B)
The threat of military action in Syria subsided as Syria said they welcomed a plan put forward by Russia for Syrian chemical weapons to be put under international control. The US is considering the plan. Breaking news is that Obama sees some merit in discussing a plan to avoid military action. The suggestion is that Congress will not now vote for military action. Not good for oil stocks but good for the uncertainty in the market.
We await Obama’s address to the American people tonight on Syria after the vote in Congress tonight. Support for action is waning as the media give a lot of airtime to Americans that are against it and to Syrian citizens that fear it and implore Obama to call it off.
Incitec Pivot (IPL) — potash stocks up as Vladimir Putin said the potash cartel dispute needs to be resolved. Fertiliser stock Mosaic up 5.1% in the US. Should push IPL this morning.
Elders (ELD) — Have put out a market update extending terms with its financiers until the end of the 2014. The statement includes a trading outlook saying seasonal conditions have improved with improved sales after a very poor first half. They give guidance for a full year loss of $32-39 million.
Leighton Holdings (LEI) the main ex-dividend today — 45c.
BHPBilliton (BHP) — An oil platform in the Bass Strait, part of their JV with ExxonMobil, was shut down following an oil spill.
Beach Energy (BPT) — MD Reginald Nelson has had his contract extended to July 2015.
Billabong (BBG) — Will look to sign a $325m refinancing deal with private equity group Altamont Capital. This will put an end to the Centerbridge and Oaktree consortium. The existing lenders have put through a rival re-capitalisation deal but its chances of success look slim. Then there are New York hedge fund managers Coastal Capital who are pushing for a board spill. All a bit messy.
Virgin Australia (VAH) — Patersons Securities was heavily trading the stock again yesterday triggering speculation that Etihad Airways was again lifting their stake. Patersons did 80% of the trade yesterday including one line of 15 million shares (0.5% of the company) worth $6.5 million. Etihad is looking to lift their stake to 19.9%
Sydney Airport (SYD 377c) — A report by JP Morgan says the fall in the Aussie dollar is a negative for the company as it raised the prospect of fewer international flights and lower earnings for Sydney airport. A 15% fall in the Aussie has already seen a 15% reduction in forward bookings.
A report in the AFR says shareholders are short covering as the market gets more bullish. CBA said short-selling positions fell 1.25% in the past week. Mining, media and banking stocks are the main shorted stocks. FairfaxMedia (FXJ) had 12.5% of its shares on issue shorted on Friday. FlightCentre (FLT) is another heavily shorted stock but after their recent results the stock jumped and short positions fell by more than half to 6.1% from a high of 26%.
BHPBilliton (BHP) — Has established a corporate office in New York. The company has had a small profile in the US but over the past 2 years they have actively increased their presence in the US by investing $US20 billion into US shale gas and their decision to build a multibillion-dollar potash mine in Canada. BHP will soon move their headquarters from Lonsdale Street Melbourne to 171 Collins Street in Melbourne.
Sydney’s CrossCityTunnel is on the verge of receivership after running into difficulties in refinancing $79 million worth of debt.