Jan 28, 2014

Morning Market Report

Markets were skittish over the weekend as China effectively shut down for the Chinese New Year.

  • The market is down 56 points. The Dow Jones was down 41 at 15,838. The market had a volatile day, recovering from early losses due to a good earnings result and outlook statement from Caterpiller, then weakening into the close in a 160 point range.
  • The market extended Friday’s losses due to concern about emerging market economies and Chinese liquidity in light of fears the People's Bank of China halted bank cash transfers ahead of Chinese New Year. Debate also continued about the likely outcome of this week’s FOMC meeting and whether the Fed would continue to reduce its quantitative easing program. US data was weaker than expected.
  • The S&P fell nine points to 1782.
  • Oil was down 0.88% at US$95.79.
  • Gold fell $9.20 to US$1255.10 per ounce.
  • The US$ was mixed against most major currencies. The Aussie dollar recovered from early weakness and is currently trading at US87.45c.
  • VIX Volatility index fell 5.68% to 17.11.
  • US treasury markets were weaker -- the yield on the 10 year bond rose 3 basis points to 2.761%.
  • European shares were weaker -- the UK FTSE fell 1.70%, the German DAX fell 0.46% and the French CAC fell 0.41%.
  • European bonds were weaker -- the yield on the Euro 10 year rose one basis point to 1.662%. The UK 10 year bond yield was flat at 2.773%.
  • Base metal prices were weaker -- led by nickel, down 2.39%. Lead fell 0.96%, zinc was 0.50% lower and aluminium and copper were both weaker, down 0.48% and 0.31% respectively.
  • Iron ore was flat at US$124.30 a tonne (but was up $0.40 on Friday evening).
  • Perseus Mining (PRU) -- Has released its Quarterly Production report. Second quarter gold output was 48,360 oz up 6%. It expects January-July gold output to be 99,000oz-109,000oz. Full year gold output expected to be 190,000oz-210,000oz. Financial year all in costs are expected to be in the range $US1050-$US1250 oz.
  • Oil Search (OSH) -- Has released its quarterly production report. Production slightly beat forecasts. Production in the fourth quarter was 1.77mboe which takes production for the year to 6.74mboe above guidance of 6.2-6.7mboe and 6% higher than the pcp. They expect the financial year output to be 12mboe-15mboe.
  • Boral (BLD) -- Has given a first half trading update. It expects profit for the first half of 2014 to come in around the $90 million mark due to favourable weather conditions in Australia, strong volumes from major projects, a significant turnaround in the performance of the Building Products division and benefits from prior year restructuring activities. They also expect first half profit to be higher than second. BLD will released their results Wed 12th Feb.
  • JB Hi-Fi (JBH) -- Shares up 9% in early trade. Has released a half year trading update. Total sales up 6.8% to $1.94 billion and NPAT up 10% to $90.3m. EPS up 9%. They have maintained its financial year sales guidance for growth in total sales of between 6%-8%.
  • Treasury Wine Estates (TWE) -- Shares have gone into trading halt pending a review of their earnings forecasts. The company, which was affected by earnings downgrades and writedowns last year, said it would provide more details by Thursday morning.
  • WAM Capital (WAM) -- Is up 1.3% on HF profit results. They recorded half-yearly profit of $69.5 million up 119% and 6.5c fully franked interim dividend up 8.3%.
  • Seven Group (SVW) -- the Australian distributor of Caterpillar may react to the late Caterpillar results in the US -- Caterpillar jumped 5.62%.
  • RIO bounced 1.5% in the US overnight and BHP bounced 0.56%.

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