The Dow Jones was down 11 at 16,340 — The market dropped at the start of trading following on from weaker European markets and was down as much as 91 points before recovering throughout the day to finish down only slightly in a 115 point range.
Once again there was little economic news. The key influences were concerns about the health of the Chinese financial system following a bond default last week and resulting weakness in the copper prices. The situation in Ukraine was also a focus, with a referendum on Crimea joining the Russian Federation to be held this Sunday. Volume was modest and stock news was limited, apart fromHerbalife which fell 7.4% after the company received a Civil Investigative Demand from the Federal Trade Commission.
The S&P fell one point to 1868.
Oil fell 1.96% toUS$98.07.
Gold rose US$20.50 to US$1367.20 per ounce.
The US$ was weakeragainst most major currencies. The Australian dollar was slightly stronger and is currently trading at US89.88c.
VIX Index fell 2.23% to 14.47.
US treasury markets were stronger — The yield on the 10 year bond fell four basis points to 2.733%.
European shares were weaker — The UK FTSE fell 0.97%, the German DAX fell 1.285 and the French CAC fell 0.1.0%.
European bonds were stronger — The yield on the Euro 10 year bond yield fell four basis points to 1.598% and the UK 10 year bond yield was three basis points lower at 2.751%.
Base metal prices were mixed — Copper recovered from earlier weakness, rising 0.56%, nickel rose 0.63% and aluminium rose 0.45% but zinc fell 1.14%.
Iron ore rose US$2.50 to US$107.40 a tonne.
Leighton Holdings (LEI) — Hochtief have improved their bid. The offer is now for three out of every eight shares increased to $22.50 per share from $22.15 per share. Shareholders retain 60c dividend per share. The improved offer is the outcome of negotiations between Hochtief and the independent board committee. The bid is at a 21% premium to 5-Day average before offer. The new bid is worth $1.205 billion. CEO Hamish Tyrwhitt and CFO Peter Gregg have been terminated. Hochtief CEO Marcelino Fernandez Verdes has been appointed CEO of Leighton.
The Reject Shop (TS) — Has announced the departure of its long serving CEO Chris Bryce who has resigned and will leave at the end of the current financial year. TRS also said they remain on track to meet full year profit guidance for fiscal 2014.
Interestingly New Zealand has raised interest rates by 25 basis points this morning to 2.75%. They are the first Western economy since the GFC (other than Australia) to raise rates. The main thrust of their statement is about containing ‘future inflation’. It’s only New Zealand but it helps feeds the idea that the bottom of the global interest rate cycle is ‘in’. There’s not much for you to do about it although some borrowers might be thinking about fixing interest rates.