The market is down 4 points. The Dow Jones finished down 64 on low volume. It was up 38 at best and down 66 at worst.

The S&P 500 closed down seven to 1657.

The UK closed for a bank holiday.

The LME was closed as well.

The main concern overnight was the mid-session speech from US Secretary Kerry that the international ban on chemical weapons cannot be violated without consequences and that Obama would hold the Syrian regime responsible and would make an informed decision about how to respond prompting speculation of an immediate US military response/surgical strike on chemical weaponry, literally expected last night. It hasn’t happened yet. There is a suggestion that you cannot surgically strike chemical weapons because it will effectively spread the chemicals.

Durable Goods orders came in below expectations down 7.3% in July, the biggest fall in a year. Consensus was for a 5.0% decline.

The US 10 year bond yield was down 2 basis points to 2.790% (recent high 2.9007%).

BHP was down 0.73% in the US on Friday. The stock closed in the US down 5c on the close here on Friday. RIO down 0.55% in the US.

Gold price down $2.70 to $1393.10.

The A$ at 90.28c is unchanged on the day. It is down from 92.34c a week ago and up from a low of 89.32c on the back of the stronger than expected Chinese PMI number last week. The lowest the A$ has been in recent history was 88.48c on 5th August.

European markets mostly down. UK closed, Germany up.

Oil price down 50c despite the Syrian developments. The suggestion is that the oil price will not be affected unless military action spilt over the Syrian border which seems unlikely. Clearly the risk appears to be on the upside for the oil price.

The Japanese market was down 0.18% yesterday. The Chinese market was up 1.90% yesterday.

The iron ore price is up 10c to $138.70.

LME closed so no move in metal prices overnight.

US performers — The Biotechnology ETF was up 2.1%. The Gold Miners ETF was up 0.9%. Silver was up 2.2%.

US Economics tonight — Case-Shiller Home Price Index for June. Consumer Confidence report for August.

In Europe tonight — German GfK consumer Confidence number and Italian retail sales.

US Economics on Friday:

Durable Orders: Actual -7.3%; Consensus -5.0%; prior 3.9%

Durable Orders, ex-transportation: Actual -0.6%; Consensus 0.6%; prior 0.1% (from -0.1%).

 RESULTS & STORIES

  • Quiet day — market waiting to see if the US respond to the Syrian use of chemical weapons.
  • London closed overnight.
  • BBGWSA and SVW all down 10% on results.
  • FLT up 5.6% on results.
  • Results season is 90% over.
  • UBS sees further weakness in the Aussie dollar and have retained exposure to companies that benefit from this such as CSL, Resmed, Twenty First Century Fox, Crown Limited. They are overweight the energy sector, neutral the mining sector and domestic cyclical stocks and underweight high yield stocks and consumer staples.
  • Beach Energy (BPT) — Underlying NPAT of $140.8 million up 15%. Total revenue of $700.5 million up 13%. Dividend 2.75c.
  • Flight Centre (FLT) — financial year underlying net profit $240 up 20% and above a broker forecast of $237 million. The company upgraded earnings guidance several times last year as Australia’s relatively strong economy and low unemployment rate supported demand for travel, while the company expanded into the US, UK and China, growing their revenue. The company has forecast pre-tax profit in the current financial year of $380 million. They say changes in the Aussie dollar wont affect travel demand as customers typically respond by changing destinations rather than stop travelling.
  • Billabong International (BBG) — Underlying profit $7.7 million which was below an expected $8.2 million. Total net loss of $867.2 million down 211.8%. Refinancing nearing final stages, focus will be on rebuilding the business.
  • Seven Group (SVW) — Underlying Net Profit of $396.7 million up 19% and above an expected $375 million but guidance is below expectations. They expect financial year 2014 underlying EBIT to fall 30%-40%. Financial year net profit was $486.4 million almost tripling from the previous year. The company is reviewing capital expenditure and costs. Final dividend 20c.
  • Western Areas NL (WSA) — financial year loss of $94.1 million compared to a profit of $40.2 million last year. The loss comes on the back of nickel prices falling to a 4 year low due to weaker Chinese demand. Impairment charges of $99.7 million which were for past exploration campaigns to find new nickel deposits.
  • Acrux (ACR) – Profit of $6.9m down 6%. Dividend 8c.   

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Peter Fray
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