Morning Market Report

The market is up 58 points. The Dow Jones finished up 66. breaking the run of six drops but on low volumes. It was up 91 at best but is still under 15,000.

The S&P 500 closed up 14 to 1657 above the 1655 resistance level. The NASDAQ market was halted for three hours on a technical glitch.

There was much anticipation but no developments out of the Jackson Hole Symposium, where the Fed Chairman is not talking for the first time since 1998.

The stronger-than-expected HSBC Flash Chinese PMI number (50.1 v Est 48.3) helped the materials sector. BHP was up 1.83% in the US yesterday. The stock closed in the US up 45c on the close here last night. RIO up 2.24% in the US.

Eurozone Flash Manufacturing (51.3 v Est 50.8) and Services PMI numbers (51.0 v Est 50.2) were mostly above expectations except for France.

The US 10-year bond yield was unchanged at 2.895% (recent high 2.9007%) having been down in seven of the last nine sessions. The 10-year bond yield is up 120bp (1.2%) since the proposed tapering timetable was first announced in May.

Economic data including weekly jobless claims and the FHFA House price index were bang in line with expectations, with leading indicators a touch higher than expected.

The A$ is back over 90c at 90.20c down from $92.34c on Monday and up from a low of 89.32c yesterday on the back of the stronger-than-expected Chinese PMI number. The lowest the A$ has been in recent history was 88.48c on August 5.

European markets mostly up. Italy up 2.56% and Spain up 1.98%. The Spanish 10 year bond yield fell 5bp to 4.48%. Oil price up 1.18%  yesterday. The Japanese market was down 0.44% yesterday. The Chinese market was down 0.28% yesterday. The iron ore price fell 10c to $$137.70. Gold price up 70c to $1370.80. Metals mixed — copper the best, up 1.15%.

US performers — Hewlett Packard down 12.5% on results and the comment it will see no revenue growth this year.

In Europe tonight — UK Second Estimate GDP, preliminary business investment, and BBA mortgage approvals.

US Economics tonight — Bullard speaks. New home sales. Jackson Hole Symposium in Kansas.   


  • Crown (CWN) — Up 6% on results. Net profit of $396 million — 23% down from $513 million last year. Underlying profit was $473 million above an expected $436 million. Booked a $99.4 million loss on sale of Echo stake. Revenue was up 3% to $2.89 billion. The share price has broken resistance at 1375c. Now 1452c. Skinny yield but great share price momentum.
  • IOOF Holdings (IFL) — Net profit of $108 milion, up 13% and bang on target, in line with an expected $108 million. Revenue was up 10%. ROE now 13.2%. Final dividend of 22.5c.
  • Lend Lease (LLC) — Financial year net profit $551.6 million, up 10% and above an expected profit of $547 million. Final distribution of 20c per security unfranked. Strong balance sheet with $2.6 billion of available liquidity. ROE of 13.4%. Funds under management of $15 billion.
  • Mirvac (MGR) — Financial year net profit $139.9 million, which was down 66%. Operating profit of $377.6 million up 3.1% and above an expected $366 million. Dividend per share of 4.5c. Profit result was affected by $273.2m worth of write-downs in the value of developments in Queensland and Western Australia. MGR said it was seeing signs of improvement in its residential business, although the outlook for the sector was mixed.
  • Mount Gibson Iron (MGX) – FY Net Profit $157.3m which was down -2.9%. The 2H was boosted by a stronger iron ore price and a weaker A$. FY13 Sales revenue at $852.9m up 32%. They expect FY14 Iron-ore sales of between 9m-9.5m tonnes and annual savings of over $50m. Final dividend 2c.
  • Sims Metal Management (SGM) — Underlying NPAT of $17 million -77% and in line with expectations. Sales revenue was down 20% to $7.193 billion. No dividend. Net debt $154 million.
  • Telecom NZ (TEL) — Second-half results — Net profit of $NZ236 million down 79.6%. Revenue of $4.18 billion down 8.5%. Interim dividend of 8c. Outlook —  it expects capital expenditure for the next three years to average between $NZ400 million to $NZ500 million.
  • Transpacific Industries Group (TPI) — Total net loss $218.7 million compared to last year’s $12.5 million profit. Underlying profit of $67.9 million up from $58 million last year and above an expected $60 million. Impairments were $276.8 million. It expects similar market conditions in the 2014 financial year to the second half of 2013. Net debt under $1 billion.
  • Infigen Energy (IFN) — Net loss of before impairments of $21.6 million, down from $55.9 million last year. Net loss after impairments of $80 million, increasing by 43%. Production increased by 2%. Revenue increased by 7%.
  • Bega Cheese (BGA) — Stock closed up 6.18% yesterday on the back of its financial year profit results. Profit was up 25% to $25.4 milion ahead of a small consensus at $23.5 million.
  • Fortescue Metals Group (FMG 426c) — Everyone’s a buyer of FMG this morning with glowing write-ups after yesterday’s results. All very well and we were thinking about adding a momentum trade in the stock today but the chart below makes it all too obvious that this is not really an “investment” in FMG the company as a trade on a volatile and unreliable commodity price. You really need to be bullish about the iron ore price, if you are … buy FMG. The momentum from the results may last a few days and the average target price suggests you could see 500c.

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Peter Fray
Peter Fray
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