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Morning Market Report

Feb 25, 2014

Morning Market Report

The ASX is at its strongest point since 2008.

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The market is up 16 points.

The Dow Jones was up 106 points at 16,209 — The market rose strongly in early trade and drifted lower throughout the day, trading in a 200 point range.

There was little in the way of economic drivers. The market was lsupported by M& A activity, where RF Micro Devices agreed to acquire TriQuint Semiconductor for around $1.6 billion and Men’s Wearhouse increased its offer for Jos. A. Bank Clothiers. Healthcare stocks were also supported by lower than previously thought cuts to Medicare.

The S&P rose 14 points to 1851.

Oil rose 0.56% to US$102.75. 

Gold rose US$13.10 to US$1,336.70 per ounce.

The US$ was slightly lower against most major currencies in quiet trading and the Australian dollar was stronger, currently trading at US90.31.

VIX Index fell 3.75% to 14.13.

US treasury markets were slightly stronger — The yield on the 10 year bond fell one basis point to 2.746%.

European shares were generally stronger — The UK FTSE rose 0.54%, the French CAC rose 0.87% and the German DAX rose 0.54% after strong business sentiment data.

European bonds were mixed — The yield on the Euro 10 year bond yield rose two basis points to 1.679% and the UK 10 year bond yield was two basis points lower at 2.776%.

Base metal prices were weaker — Copper fell 1.07%, lead fell 0.96% and aluminium was 0.52% lower. Zinc rose 0.29%.

Iron ore fell US$2.50 to US$119.90 a tonne.


  • Atlas Iron (AGO) — half year underlying profit of $61.2 million up from a loss of $10.4 million last year. The result was slightly above a consensus forecast of $59 million. First half net profit of $73.7 million. Interim dividend of 3c. The miner said it will consider capital management initiatives. Mt Webber expansion to 6Mtpa approved.
  • Austbrokers (AUB) — NPAT of $12.8 million. Underlying profit of $14.6 million up 6.2% but below an expected $16.0 million.  Dividend was increased to 12c.
  • Charter Hall (CHC) – 1H Net Profit of $28.6m down 4.3% which was below an expected $39.2m. The company sees FY operating earnings growth of 7-9%. Interim Distribution 11c. The company has also announced a $140m equity raising.
  • IOOF Holdings (IFL) – Underlying NPAT of $58m up 14% but below an expected $61.1m. NPAT was $48.2m. Interim dividend of 22.5c. Total funds now $124.0 billion and total net flows are positive for the 2nd consecutive half. Outlook —  the company said “For the IOOF business, fewer regulatory headwinds will also allow us to pursue value adding activities for our clients and shareholders alike.”
  • QBE — Cash profit of $761 million compared with $US1.042 million previously. The figure was in line with guidance. The lower figure differed from their December announcement due to the foreshadowed one-off FPS restructuring costs being deemed ‘cash’ rather than ‘non-cash’ items. Financial year net loss of $US254 million due to large one off costs. QBE forecasts 2014 Net Earned Premiums of $Us14.7 billion-$US15.2 billion, 22014 insurance profit margin of 10% and gross written premiums of $US16.8 billion-$US17.3 billionn. Final Dividend 12c.
  • Ramsay Health Care (RHC) — Upgrades earnings guidance – first half net profit of $157.8 million core profit before items was $171.6 million up 15.8% and above an expected $161.1 million. Interim dividend 34c. Revenue was up 13.9% to $2.4 billion. RHC previously forecast Underlying Earnings Growth of 12%-14%. They now see full year underlying earnings to be between 16%-18%.
  • Cabcharge (CAB) – Reported net profit after tax of $36.0 million up 8% and in line with a broker consensus forecast of $34.4 million. Interim dividend of 15c down from 18c. Revenue increased to $103.3 million up 3.5%. Positive outlook for long term growth.
  • Mermaid Marine (MRM) — NPAT of $24.2 million down 25.5% but it was in line with $22.6 million profit forecast. Interim dividend of 5.5c.
  • Oil Search (OSH) — Shares in trading halt pending an announcement of an acquisition.
  • AWE — half year profit of $10.8 million which was lower than an expected $18.4 million. Statutory NPAT of $81.7 million. Production of 3.0 million BOE, up 28%. Sales revenue of $175 million, up 21%. Growth projects on track –goal to double production & triple cash flow in 3-5 years.
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