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Morning Market Report

Markets stabilise as results season draws to a close.

The market is up 27 points. The Dow Jones was up 64 points at 16,028 — the market was weaker at the start, down as much as 100 points, before rising through the day in a 175 point range.

Markets overlooked weaker than expected economic data, with retail sales falling 0.4% (a flat result was expected) and an increase in the weekly jobless claims believed to have been weather-affected, and instead focused on better than expected earnings results.  

The S&P rose 11 points to 1830.

Oil was unchanged at US$100.37.

Gold rose US$7.20 to US$1302.20 per ounce.

The US$ was stronger against most major currencies. The Australian dollar was weaker yesterday after a poor employment report but rose overnight on weaker US economic data and is currently trading at US89.85c.

VIX Volatility index fell 1.89% to 14.03.

US treasury markets were stronger —  the yield on the 10 year bond fell three basis point to 2.733%.

European shares were mixed  — the French CAC rose 0.17% and the German DAX rose 0.60% but the UK FTSE fell 0.23%.

European bonds were stronger —  the yield on the Euro 10 year bond fell five basis point to 1.666% and the UK 10 year bond yield was 3 basis points lower at 2.791%.

Base metal prices were mixed —  aluminium rose 0.46% and zinc rose 0.25% but nickel fell rose 1.67% and copper was 1.27% higher.

Iron ore rose US$1.00 to US$122.00 a tonne.

STORIES:

  • Newcrest Mining (NCM) — Half year profit of $40 million down 88% on the $323 million profit in the pcp. Underlying profit was $207 million down 36% but was lower than a consensus forecast of $260 million. The company maintained full year production guidance and are on track to be free cash flow positive this year. The result included an income tax expense of $120 million. Revenue was $2.016 billion up 12%. NCM declined to pay an interim dividend.
  • Transpacific Industries (TPI) — Half yearly results — Underlying profit of $41.7 million up 16.5% and above an expected $34 million. Net profit of $158.6 million up 391% on the $32.3 million. Total revenue of $1.003 billion. No dividend declared. Trading conditions in Australia remained subdued. Debt reduction will continue.
  • Paladin Energy (PDN) — Gross loss for the six months of $US29.3 million which was better than an expected loss of $34.2 million. The loss was due to a 21% lower uranium price achieved during the period. Total sales volume was 4.448Mlb U3O8 reflected an 11% increase. Sales revenue totalled US$171 million for the six months from sales of 4.448Mlb U3O8. Placed Kayelekera Mine on care and maintenance post quarter end. Debt repayments totaling US$43.8 million. The group declined to pay an interim dividend. At December 31, Paladin said its cash position was $US99.4 million.
  • Automotive Holdings (AHE) — Profit of $39.3 million for the six months to 31 December 2013 up 2% but was slightly below an expected $40.1 million. Revenue of $2.32 billion up 6.8%. EBITDA of $88 million up 2.4%. Interim dividend of 8.5c.
  • SCA Property Group (SCP) — Statutory net profit after tax of $43 million which was better than an expected $39.5 million. Distributable Earnings of $39.5 million and a distribution of 5.4c has been paid. Financial year 2014 Distributable Earnings guidance increased to 12.3c. Financial year 2014 cash Distributions guidance increased to 11c.
  • Sims Metal Management (SGM) — Underlying NPAT was $42.1 million up 347.9%. Sales Revenue was $3.593 billion up 4.8%. No interim dividend declared due to absence of meaningful statutory NPAT and other factors. The company says US scrap generation remains weak.
  • Sirius Resources (SIR) — Patersons have released a report on the miner after an announcement to acquire Creasy’s 30% of Nova-Bollinger Project. Patersons says this is a positive development for SIR which now owns 100% of the Nova/Bollinger Deposit. The effective payment of $188 million for the acquisition of Mark Creasy’s 30% in the Nova-Bollinger project was done at approximately fair value. Based on their analysis the transaction is net neutral. Patersons have SIR ‘under review’ with a price target of 214c.
  • David Jones (DJS) — After releasing second quarter sales yesterday, Paul Zahra  said he has not resigned and had only given an “intention to resign” last October - post the recent departure of the Chairman Peter Mason and two other directors he seems in no mood to resign anymore and with the support of institutional shareholders who were upset at his shock resignation last year he is now odds on the retain the CEO role. It didn’t do much for the share price yesterday. One broker pointed out last week that Myer’s merger approach to David Jones is a sign that the department store concept is struggling. If Myer’s best option is to merge with its major rival and presumably rationalise (shrink) the total entity then things must be tough. DJS closed down 3c or 1% to 311c yesterday after sales in the three months to January 25 rose by almost 5% to $618 million.
  •  Regis Resources (RRL) is in a trading halt and is expected to make an announcement about heavy rainfall affecting the company’s Duketon project near Laverton.
  • Nine Entertainment (NEC) is scheduled to be added to the ASX 200 index following the removal of Forge Group (FGE) which is to be de-listed after entering voluntary administration.

Womens Agenda

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Smart Company

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StartupSmart

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Property Observer

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