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Morning Market Report

The market rallies for the first time in five sessions.

The market is up 20 points. The Dow Jones was up 91 at 15,929. The market rose after five successive negative sessions. After an early dip on weak durable goods orders, the market recovered and was closed near its highs in a 105 point range.

The market recovered from last week’s losses due to a combination of better-than-expected earnings results, upbeat economic data and positive sentiment surrounding the FOMC meeting, which is expected to see the Fed continue with its US$10 billion per month tapering timetable.

The S&P rose 11 points to 1793.

Oil was up 1.61% at US$97.26.

Gold fell $8.50 to US$1254.90 per ounce.

The US$ was stronger against most major currencies in an uneventful trading session. The Aussie dollar was stronger after positive business conditions data yesterday, reaching a high of US88.20c.It is currently trading at US87.75c.

VIX Volatility index fell 9.18% to 15.82.

US treasury markets were stronger  —  the yield on the 10 year bond fell one basis point to 2.757%.

European shares were stronger  — the UK FTSE rose 0.33%, the German DAX rose 0.62% and the French CAC was 0.98%.

European bonds were weaker  —  the yield on the Euro 10 year rose one basis point to 1.674%. The UK 10 year bond yield was 3 basis points higher at 2.806% after fourth quarter GDP came in at 0.7% or 1.9% year on year, in line with expectations.

Base metal prices were generally weaker  —  zinc fell 0.34%, copper was down 0.13% and nickel was 0.09% lower but lead was 0.39% higher.

Iron ore fell US$0.40 to US$123.90 a tonne

STORIES

  • Atlas Iron (AGO) —  Up 7.33%. Has increased financial year production guidance after posting record December quarter shipments despite a cyclone in December. They have increased financial year 2014 production guidance to 10.2-10.7 million tonnes shipped. They shipped 2.7 million tonnes in the Quarter up from 1.75 million tonnes in the pcp. They forecast EBITDA to be $193-203 million.
  • Drillsearch Energy (DSL) —  Quarterly production report. The company says they are on track to triple their financial year production after increasing guidance to between 3-3.3mboe from previous guidance of 2.3-2.5mboe. Therefore production at the higher end of guidance would be triple the 1.1mboe last year.
  • Forge Group (FGE) —  Profit warning  — Will resume trading this morning after releasing an earnings guidance update. FGE now expects EBITDA loss to be between $20m-25 million. This is the third profit warning. Previous guidance was for pro-forma FY2014 EBITDA of $45m-50 million.
  • Healthscope IPO  —  Australia’s second-biggest private hospital operator has launched a $4 billion sale process which could lead to the biggest float in years. Healthscope’s owners; TPG and The Carlyle Group will either consider a float, selling the business to an offshore hospital operator or separate buyers. Healthscope has a 16% market share and is slightly behind Ramsay Health Care (RHC) who have a 28% share of the Australian market.
  • In company news  — quarterly production reports from Atlas Iron (AGO), Drill Search (DLS) and Roc Oil (ROC).
  • BHP and RIO up 1.31% and 3.27% in the US. CIMB cuts its price target on BHP by 4% to 4280c but retains an ADD recommendation.
  • Melco up 6.15% in the US.
  • The Australian expresses concerns about the UK operations of the NAB after RBS announces a 3 billion pound provision.
  • Boral (BLD) — Closed down 0.42% yesterday on their first half trading update. The building products maker expects strong profit growth for the first half of the financial year, but has flagged weaker earnings for the second half. See today’s STOCK BOX for more and for the broker research reaction.
  • GPT Group (GPTP) — Closed up 0.84% yesterday after flagging an increase in earnings for 2013.
  • JB Hi-Fi (JBH 1919c) — Closed up 4.92% yesterday after issuing a trading update.

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