The market is up 9. Futures were up 3 this morning. Dow Jones finished down 42. The Dow was up 27 at best and down 60 at worst on a stream of mostly disappointing economic releases and further speculation that that the Federal Reserve will begin to wind down their stimulus package in the medium term.
A Federal Reserve official said that they could begin winding back monetary stimulus this summer. John Williams, president of the San Francisco Federal Reserve, highlighted that a further improvement in the labor market will be key to “ending the purchase program some time late this year”.
- The Philadelphia Fed manufacturing survey was down from +1.3 to -5.2 in May, missing the forecast of +3.0.
- US year-on-year housing starts were down 16.5% to 853,000 — well below expectations of 985,000.
- US building permits were up 14.3% to 1.017 million, beating the forecast of 950,000 — the highest level since June 2008.
- US consumer prices were down 0.4% in April to be +1.1% year-on-year. Core prices (excluding food & energy) were up 0.1% to an annual rate of 1.7%.
European markets mixed — UK FTSE down 0.09, Germany up 0.09%, France down 0.08%, Spain down 0.47%, Italy up 0.29%.
Metals mixed — copper up 1.13%, nickel down 0.01%, aluminium up 1.01%, lean up 1.42%. Spot iron ore was down $1.40 to $125.00.
- WorleyParsons (WOR) — Has issued a profit warning and is down 14% in early trade. The company expects profit to be between $320 million-$340 million, down from $345.6 million on the back of weaker commodity prices and delayed projects by the big miners. WOR is down 13.28% to 1933c.
- Wesfarmers (WES) — Has issued a profit warning for its Target business. Target’s earnings have been affected by lower sales performance. It now expects earnings to between $140 million-$160 million, down from $244 million. Yesterday Wesfarmers closed up 3.27% after Merrill Lynch released a report saying the company will increase their capital return by paying $2.4 billion-$3.6 billion of excess capital to shareholders by the end of 2014. Roughly 200c a share. It will be discussed in more detail at Wesfarmer’s briefing day on May 29. Merrills has raised its target price by 18% to 5300c and has kept its buy rating. WES is down 3.1% to 4283c.
- SP Ausnet (SPN) — State Grid has acquired a 19.9% stake in SPN from Singapore Power. SPN is up 1.965 to 130c.
- Virgin Australia (VAH) — Shares are up 9% after falling 17% yesterday on a profit warning. The market is seeing this as a buying opportunity. UBS analysts have raised their recommendation from neutral to buy and say yesterday’s sell off was overdone. VAH is up 7.24% to 40.75c.
- Fortescue Metals (FMG) — The railway line access issue in the Pilbara is heating up, with Brockman Mining applying for access yesterday under WA’s railway access laws. Merrill Lynch has a buy rating on FMG.