The market is down 9.8 points. The Dow Jones was up 110 at 15,849 — rising from the day’s start, the market lost some momentum in the afternoon and traded in a 160 point range.

The market was initially supported by mostly strong economic data and positive earnings results. Fourth quarter GDP grew 3.2%, ahead of estimates of a 3.0% increase. But the weekly jobless claims rose 19,000 to 348,000, ahead of expectations of 328,000, and pending home sales fell 8.7%. Debate about the Fed continued, but combined with the strong GDP number, the view was positive. Analysts were happy that the Fed had “stuck with its original plan”, and remained focused on the economy and not distracted by the emerging market issues.

The S&P rose 20 points to 1,794.

Oil was up 0.63% at US$97.97.

Gold fell $19.30 to US$1242.90 per ounce.

The US$ was stronger against most major currencies and the Australian dollar was stronger, currently trading at US87.85c after testing US88.00c overnight.

VIX Volatility index fell 1.10% to 17.16.

US treasury markets were weaker — the yield on the 10 year bond rose one basis point to 2.696% after the better-than-expected GDP number. Treasury held auctions of five year and seven year notes. The five year note was average but the seven year auction fared better.

European shares were stronger — the German DAX rose 0.39% and the French CAC was up 0.55% but FTSE was slightly lower, falling 0.09%.

European bonds were stronger — the yield on the Euro 10 year fell two basis point to 1.620% and the UK 10 year bond yield was one basis point lower at 2.749%.

Base metal prices were generally weaker — lead was down 1.30%, nickel fell 1.24%, aluminium was 0.72% lower and copper was down 0.27%.

Iron ore was unchanged at US$122.60 a tonne.


  •  David Jones (DJS) — Says it was recently approached by Myer (MYR) to consider a possible merger deal to create one company. The offer was quickly dismissed by DJS, who believe the transaction did not represent sufficient value for DJS shareholders.
  • Shell announces results down 39% in the fourth quarter and confirms its intention to sell down non core assets worth US$15 billion including Australia downstream assets (Geelong refinery and retail petrol outlets – Macquarie and private equity said to be interested in a $3 billion purchase). Shell also holds 23.1% of Woodside (WPL) worth $7.5bn and have NOT denied that it is for sale, so it probably is depending on the level of interest. It creates a bit of an overhang for WPL shares
  • Morningstar has a SELL on JB Hi-Fi (JBH 1773c) — results are on Monday. They have already given an earnings update that was well received this week. Fair value price of 1100c. Morningstar have a rather cautious stance following profit downgrades from Super Retail Group (SUL) and The Reject Shop (TRS). The entire retail sector seems to be doing it tough and Morningstar are awaiting more details from management when they release their first half results. They have said “we do not view the company as having a sustainable competitive advantage.”
  • Beach Energy (BPT) — Closed down 2.1% yesterday despite upwardly revising its oil production and capital expenditure forecasts.
  • Bluescope Steel (BSL) — Closed down 0.9% yesterday after receiving approval to buy one of its competitors in the building products market.
  • Navitas (NVT 657c) — Closed up 2.2% yesterday after increasing its profit by 3% to $36.1 million. The company said it is on track to deliver a full year profit of between $138-148 million. CEO Rod Jones said “The underlying Navitas operating model remains intact, as such we are confident that leverage from anticipated revenue growth in 2015 and beyond will deliver sound margin growth.” The stock has just broken out and looks to be heading higher.
  • Coca-Cola Amatil (CCL) — closed down 11c or 0.9% yesterday at $11.79. The government has said no to a request for $25 million from SPC Ardmona to restructure its operations. They argued it was difficult to compete with a high Australian dollar and cheap imports. Prime Minister Tony Abbott said parent company Coca-Cola Amatil had the resources to carry out the restructure without the need for government funding.

Peter Fray

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