Mar 28, 2014

Morning Market Report

Markets stay stable in the face of mixed economic data from the US.

The market is up four points. The Dow Jones was down 5 at 16,264 -- the market was quite volatile, opening lower, rising quickly and then range trading for the rest of the day in a 100 point range. Volume was just above average. US economic data was mixed -- December quarter GDP was revised up to 2.6 % from the previous 2.4% projection last month but less than the 2.7% expected by some economists. Pending home sales fell for an eighth month, down 0.8% for the month and 10.5% over the year. Weekly jobless claims fell 10,000 to 311,000. The trend in the weekly series seems to have shifted lower over the past four weeks, with initial claims level consistently falling below 330,000. The Fed rejected Citigroup's plans to buy back $6.4 billion of shares, saying they would be unprepared to handle a potential crisis. Citibank shares closed 5.4% lower. European banks were also affected by US Fed stress tests -- including the US units of HSBC, Royal Bank of Scotland and Santander. The Australian dollar was stronger and is currently trading at US92.61c following the positive comments on the economy earlier in the week by RBA Governor Glenn Stevens. Gold fell US$11.30 or 0.87% to US$1292.10 UK retail sales rose 1.7%, above expectations of a 0.5%. The yearly figure was 3.7%, significantly ahead of analysts' predictions. Treasury auctions $29B seven year notes, draws 2.258%  STORIES
  • G8 Education (GEM 501c) -- Deutsche Bank released a report on the company yesterday, with a Buy recommendation and a target price of 620c, up from 520c. This week the company announced a capital raising to help fund the purchase of 91 childcare centres from Sterling Early Education for $228 million. This takes the total number of new childcare centres to 154, double the 70 purchased last year. The purchase increases their market share to 6%. Deutsche Bank has forecast the purchase to be 27% EPS accretive in 2015 and view the acquisition as positive and a one off opportunity.
  • Woodside Petroleum (WPL) -- Have confirmed that its entry into the Leviathan offshore gas project in Israel has been delayed once again. The company said in a statement this morning that the parties have not executed the definitive agreements contemplated in the MOU.
  • Medibank IPO -- The government has given prospective investment banks 10 days to draw up their pitches for the IPO before interviews to begin the fortnight after.
  • Lend Lease (LLC 1174c) -- Have appointed Morgan Stanley to sell their Bluewater (British shopping centre) for roughly $1 billion. They have now initiated a formal sales process.

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