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Morning Market Report

Markets down slightly, thanks to tension between the US and Russia.

The market is down 45 points. The Dow Jones was down 99 at 16,269 — the market opened higher after a rise in European markets and was up as much as 98 before falling throughout the day and closing on its lows in a 200 point range. Volume was just above average. The market fell after US President Obama cautioned about complacency regarding Russia’s actions, saying they should be condemned. Obama also told the EU that it needed to reduce its energy dependency on Russia, although it could not rely on the US entirely.

Further sanctions possible by the US and European if Russia escalates the crisis after annexing Crimea.

US economic data was mixed  — durable goods rose 2.2%, but excluding transport it was a more modest 0.2%, and the US PMI was stronger at 55.8 in March from 54.1 a month earlier.

European shares rallied after Bundesbank President and ECB council member Jens Weidmann said yesterday that an asset purchase — or quantitative-easing — program had not been ruled out. The German DAX was up 1.18% while the French CAC rose 0.94%.

The Chinese central bank is also thought to be considering stimulus in the form of a cut in the reserve requirement ratio after recent weak data.

Ukraine and the IMF are involved in bailout discussions.

The Australian dollar was stronger and is currently trading at US92.23c after reaching a high of US92.46c overnight following positive comments on the economy by RBA Governor Glenn Stevens.

US treasuries were stronger following a well-received US$35 billion five year note auction. The benchmark 10 year bond yield fell five basis points to 2.692%

Gold fell US$6.40 or 0.49% to US$1,305.00 an ounce.

Base metals were weaker  — Nickel fell 1.84%, copper fell 1.44% and aluminium was down 1.39%

Fed Speak: St Louis Fed President James Bullard and Chicago Charles Evan both speak.

US Earnings: Paychex — up 2.72% in after-hours trade.

STORIES

  • Sigma Pharmaceuticals (SIP 61c) — Full Year results. Underlying profit was down 2.2% to $52.3 million but above broker forecasts for a $47.6 million profit. Sales for the year were up 1.1% to $2.9 billion driven by a 3.3% increase in the volume of products delivered to pharmacies during the year. Analysts were expecting sales of just over $3 billion. EBITDA came in at $70.3m up from $23.1m last year. Analysts were expecting $75.6 million. Net cash of $67.5 million with no debt at year end. Final dividend 2c.
  • Lynas Corp (LYC 18c) — Shares are up 8.3% on a production update. The company has reiterated guidance of achieving the target 11,000 tonnes per annum production rate during the June quarter.
  • AMP Capital presented to super funds at an industry conference this week and warned there is substantial risk in having high exposure to the nation’s banks. It believes it is more ‘vulnerable than prudential stress tests show’ and the average super fund has a 12% weighting towards banks.
  • 21st Century Fox (FOX) and News Corp (NWS) — Rupert Murdoch has promoted his two sons, Lachlan and James Murdoch, into senior roles within FOX. Lachlan Murdoch was named nonexecutive co-chairman alongside his father, who is chairman and chief executive. James Murdoch was named co-chief operating officer.
  • Medibank Private IPO  — The $4 billion Medibank Private IPO is looking likely to be in the first quarter of 2015. Media reports are saying bankers will receive a formal pitch request soon. Bankers tipped to be included in the IPO are Goldman Sachs, UBS, Credit Suisse and Bank of America Merrill Lynch.
  • JB Hi-Fi (JBH 1880c) — Shares rallied 6.4% yesterday after Merrill Lynch upgraded their recommendation to a Buy (from Neutral) and upped their target price 15% to 2100c. The upgrade came after revisions to earnings forecast - it raised financial year 2015 and financial year 2016 forecasts by 6% and 12% respectively.

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