The market is down 19.5 points.  

The Dow Jones was down 26 at 16,277 — the market opened strongly but quickly moved into negative territory. Some late afternoon buying brought the market off its lows in a 165 point range. Volume was average.

The US Markit flash PMI was weaker than expected.

G7 meeting at The Hague — The G7 issued a joint statement announcing they are suspending their participation in the G8 until “Russia changes course.”

European equity markets weaker — the UK FTSE down 0.56%, the German DAX down 1.65% and the French CAC down 1.36%.

Russia’s Micex index fell 0.7% — Russian troops have forced their way into a Ukrainian marine base in the Crimean city of Feodosia, using stun grenades and firing automatic weapons.

Concerns about China after yesterday’s Chinese HSBC Manufacturing PMI fell to 48.1 from 48.5, hitting an eight month low. Analysts had expected an improvement to 48.7 following seasonal weakness due to Chinese Lunar New Year. The forward indicators within the report were seen as particularly disappointing. Economists are now increasing their expectations for further economic stimulus. Hongbin Qu, chief China economist at HSBC, said, “We expect Beijing to launch a series of policy measures to stabilise growth. Likely options include lowering entry barriers for private investment, targeted spending on subways, air-cleaning and public housing, and guiding lending rates lower.”

Gold fell US$27.0 or 2.02% to $1309.00 an ounce.

The Australian dollar was stronger, reaching a high for the year of US91.52c. It is currently trading at US91.32c.

Fed Speak: Atlanta Fed President Dennis Lockhart will discuss the economic outlook and Philly’s Charles Plosser presents on the economy and monetary policy.

STORIES

  • Premier Investments (PMV 848c) — Profit results beat expectations. First half profit up 12% to $52.1 million thanks to solid sales growth in its retail businesses. Sales from its retail business were up 5.3% thanks to good results from Peter Alexander, Smiggle, Dotti, Portmans, Jacqui E, Just Jeans and Jay Jays. Like-for-like sales up 4.4%. The company opened its first Smiggle store in the UK and plan to open another 8 to 10 stores by July. Fully-franked interim dividend of 20c up from 19c.
  • TPG Telecom (TPM 621c) — Has posted a 15% rise in half year profit on the back of solid growth in broadband subscribers. Profit came in at $90.1 million up from $78.3 million and above expectations. TPM also upped their FY guidance to $325-330 million which was $25-45 million higher than previously expected. The company’s solid numbers were driven by a 17% increase in earnings from their consumer division because of higher subscriber growth and revenues per user. Fully franked interim dividend of 4.5c from 3.5c.
  • G8 Education (GEM 476c) — Share are expected to come out of trading tomorrow. The company announced yesterday that they are acquiring the issued capital in Sterling Early Education and 91 new centres. The transaction is earnings accretive and gives the company a bigger footprint in Australia.
  • Iluka Resources (ILU 966c) — Closed up 0.4% yesterday after the miner denied any wrongdoing after disgruntled shareholders threatened a class action against the company. The potential class action centres on a 24% share price fall on 9 July 2012. The share price fall wiped $1.1 billion from the company’s market value. The fall came after the company downgraded sales forecasts for mineral sands — just seven weeks after giving an optimistic view at the AGM. ACA lawyers say Iluka had failed to comply with their continuous disclosure obligations and engaged in misleading or deceptive conduct.
  • AGL Energy (AGK 1513c) — Will challenge the ACCC over its rejection of the $1.5 billionn takeover of NSW state-owned Macquarie Generation. Earlier this month the ACCC said the proposed acquisition would result in the largest source of generation capacity in NSW being owned by one of the 3 largest retailers in NSW and that the largest 3 retailers would own up to 80% of generation capacity, raising barriers to entry and reducing competition.
  • Kathmandu (KMD 345c) — Shares closed up 11.3% yesterday after a 10.7% increase in profit that beat analyst expectations. Sales were up 10.5%, lifted by 14.8% growth in sales in Australia. The solid result was achieved through continuing strong same store sales growth, particularly in Australia, combined with improved gross margins and effective management of costs. KMD expects to outperform this year. Interim dividend of NZ3¢ will be fully franked for Australian investors.
  • Macquarie Group (MQG) — Closed up 2.9% yesterday after shareholders cheered the announcement of a profit upgrade. The investment bank rose their profit forecast by 40-45%, which means the company is on track to posting an annual profit of $1.23 billion. This is a lot better than their previous guidance which implied that they would beat last year’s $851 million profit and its higher than what brokers had forecast.

Peter Fray

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