Mar 14, 2014

Morning Market Report

Concerns over China and the Ukraine kept investors on their toes.

The market is down 81 points. The Dow Jones was down 231 at 16,109 -- The market opened higher but fell steadily during the day, trading in a 320 point range on lower than average volume. The key influences were increasing tension in the Ukraine as well as concerns about the Chinese economy. Economic data was general positive, with better than expected retail sales and a bigger than expected drop in weekly jobless claims. The S&P fell 22 points to 1846. Oil rose 0.26% to US$98.24. Gold rose US$0.40 to US$1367.90 per ounce. The US$ was stronger against most major currencies, with the exception of the Yen. The Australian dollar was stronger, reaching a high of US91.05c before coming back to US90.33c. VIX Index rose 12.09% to 16.22. US treasury markets were stronger -- The yield on the 10 year bond fell eight basis points to 2.646%. European shares were weaker -- The UK FTSE fell 1.01%, the German DAX fell 1.86% and the French CAC fell 1.29%. European bonds were stronger -- The yield on the Euro 10 year bond yield fell six basis points to 1.539% and the UK 10 year bond yield was seven basis points lower at 2.685%. Base metal prices were mostly lower -- Copper fell 1.37%, aluminium fell 0.98% and lead fell 0.47% but nickel stood out, rising 0.83%. Iron ore rose US$4.10 to US$111.50 a tonne. STORIES
  • Wall St down 231, our futures down 58.
  • Big bounce in iron ore.
  • Gold up again on Ukrainian issues.
  • The S&P 500 closes at the technically significant 1845 level.
  • The US ignored better than expected weekly jobless numbers and retail sales numbers.
  • Chinese retail sales numbers came in at +11.8% against consensus of 13.5%.
  • Chinese industrial production came in at +8.6% against consensus of 9.5%. Lowest since 2009.
  • Lend Lease (LLC) -- Goldman Sachs has retained its Buy recommendation with a target price of1211c. It has largely dismissed concerns over the fire at Barangaroo which broke out on Wednesday. It says the risk to the structural integrity is low and the site could be open again by the end of the week. Insurance is also in place to cover any losses. If the heat-affected areas need to be demolished and rebuilt this could cause a delay but this seems to be an outside risk.
  • Leighton Holdings (LEI) -- According to the ABC, a report suggests the board has been considering the possible writedown of more than $2 billion due to cost blowouts at its Gorgon LNG project in WA. It’s Australia’s largest gas project and is almost 80% complete. The company’s Middle East AL Habtoor Group is also believed to be contributing to the writedown. The news comes after Hochtief CEO Marcelino Fernandez Verdes became CEO, effective immediately. Ex CEO Hamish Tyrwhitt and CFO Peter Gregg were discharged yesterday.
  • Qantas Airways (QAN) -- Greens senator Lee Rhiannon will grill CEO Alan Joyce over his decision to dismiss 5000 jobs at a hearing today.
  • Origin Energy (ORG) -- Has suspended drilling at 12 rig sites in south east Queensland as it investigates an asbestos contamination incident.
  • Candy Crush -- A floor salesman in Britain who left school at 16 is set to become one of the country’s richest men when he pockets £520 million when his Candy Crush game floats on the stock market. Candy Crush creator King Digital thinks it's worth up to $8.5 billion. King Digital will price its IPO of 22.2 million shares at between 2100 and 2400 per share.

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