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Morning Market Report

Markets are shaky across Europe, as the Ukraine crisis continues to escalate.

The market is up 18 points. The Dow Jones was up 89 at 16,263 —  The market opened higher, rising 100 points before falling 110 points on news of escalating tension in Ukraine. The market rose in the afternoon, almost recovering earlier highs. Trade was above average in a 210 point range.

US earnings were generally in line or better than expected  — Johnson & Johnson beat expectations and shares rose 2.12%. Coca-Cola profit fell 8% but this was in line with expectations and shares were 3.74% higher.

US economic data was disappointing  —  the New York manufacturing index fell to 1.29 in April from 5.61 previously and a key housing market index came in below expectations at 47. CPI rose 0.2% in March, higher than expected due to food and rent increases.

European shares were weaker  —  The UK FTSE fell 0.64%, the German DAX fell 1.77%, the French CAC fell 0.89% and Italy’s FTSE MIB was 2.33% lower.

Ukraine —  Ukraine’s acting president, Oleksandr Turchynov, said an airfield in Kramatorsk had been taken back from separatists. Russia President Vladimir Putin responded, saying they expect a clear condemnation by the UN and international community of “Kiev’s anti-constitutional actions in Eastern Ukraine.”

Energy concerns  — The Ukraine crisis has prompted fears that Russia may halt gas supplies to Kiev, disrupting flows to the European Union. German energy company RWE has begun deliveries to Ukraine, reversing the usual east-west flow in one central European pipeline.

Russian stocks on the MICEX fell 2.5%.

Japan expected to downgrade the economic outlook  — prompting expectations of stimulus measures from the Bank of Japan.

The Aussie dollar is weaker and is currently trading at US93.60c.

Gold fell US$27.20 or 2.05% to US$1300.00 an ounce after the World Gold Council said consumer demand could be limited this year, particularly in China.

Base metals were weaker —  copper fell 1.75%, aluminium fell 1.65% and nickel was 0.73% weaker.

Iron ore rose US$0.10 to US$117.10 a tonne.

Fed Speak  —  Janet Yellen spoke at the 2014 Financial Markets Conference, saying the Fed were considering measures to force big banks to hold more capital.

STORIES

  • BHP (3778c) — March quarter production report. BHP has increased financial year iron ore guidance by five million tonnes. Production of iron ore will reach 217 million tonnes in the 2014 financial year rather than 212 million tonnes. BHP produced 49.5 million tonnes of iron ore from the Pilbara in the March quarter, slightly better than the consensus forecast. Petroleum products output was also solid at 60.9MMboe. Guidance for financial year 2014 was reduced by 5MMboe to 245MMboe due to the divestment of the Liverpool Bay asset and lower natural gas output from the onshore US operations. Copper production was 413.9kt and guidance was maintained at 1.7Mt for financial year 2014. There was a small increase in financial year 2014 guidance for Metallurgical coal output from 41Mt to 43.5Mt whilst all other commodity groups met expectations. Capex remains on track to reduce by 25% to US$16.1 billion in financial year 2014 over financial year 2013. All-in-all a positive quarterly report for BHP. BHP is trading on a PER of 13.5x and a fully franked yield of 3.5%.
  • Iluka Resources (ILU 933c) — March quarter activities report. Production (combined zircon, rutile and synthetic rutile) was 110.9kt which was 22% higher than the December quarter. Zircon was up 13.6%, Rutile up 49%, Ilmenite down 5% and Mineral Sands was $130.7 million lower than the pcp at $139.9 million which reflects lower sales volumes and prices. Total first quarter production 221,200 metric tonnes down 19% on year.
  • Bank of Queensland (BOQ) — Up after the completion of the Institutional component of a capital raising.
  • Challenger Limited (CGF) — Assets and Funds Under Management - 31 March 2014.
  • Chorus (CNU) — UFB rollout ahead as fixed connections increase.
  • Silver Lake Resources (SLR) — March 2014 Quarterly Report.
  • Australian Pharmaceutical Industries (API) — Shares have been suspended from trade while the company assesses the carrying value of its assets.
  • Whitehaven Coal (WHC) — Maules Creek Biodiversity offsets Package.

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