May 7, 2014

Morning Market Report

A quiet day on the market, with trading marred by uncertainty in Ukraine.

The market is down 34 points. The Dow Jones was down 130 points at 16,401 -- the market opened weaker due to escalating violence in Ukraine and continued to fall during the day, pressured by some weaker than expected earnings and selling of internet and momentum names. Volume was a little below average and the market closed on its lows in a 130 point range. Twitter shares fell 17.81% as a lock-up period expired and insiders got their first opportunity to sell since the company's initial public offering. More than 80% of the company’s shares are affected (nearly 500 million shares). Ukraine – Continued violence weighed on markets. Clashes broke out in the East and pro-Russian militants have taken control of a dozen cities in the region. Corporate Activity -– In another deal in the pharmaceutical space, German Bayer announced it will acquire the consumer care business of US Merck & Co for US$14.2bn. European share markets were weaker -- The UK FTSE fell 0.35%, the German DAX fell 0.65% and the French CAC fell 0.78%. The Aussie dollar is stronger after the RBA Board left interest rates unchanged and is currently trading at US93.43c. Iron ore rose US$0.10 toUS$106.00 a tonne. Base metals were stronger -- Nickel rose 1.53%, lead rose 0.89% and zinc was 0.33% higher. Aluminium bucked the trend and was 0.22% lower. US economic data -- Trade Balance: Actual -$40.4B, consensus -$40.6B, prior -$42.3B (revised -$41.9B) Global Economic data -- Eurozone composite PMI rose to 54.0 in April from 53.1, the highest since 2011. The results in Italy and Spain were particularly positive. Australian economic data today -- Retail sales and the AiG Performance of Construction Index Chinese HSBC services PMI today. Company news today -- the Paydirt Resources and Energy conference continues today and tomorrow in Adelaide. Other key events this week -- Australian retail trade tomorrow and employment data on Thursday, a few AGMs (RIO, AMP, CTX), Chinese HSBC Services PMI (today). STORIES
  • ASX -- Profit has risen by 10% in the 9 months ended March to $US286.9 million. Revenue rose 6.8%. Total capital raised in listings increased 32.3%.  The average daily on market valued traded in the ASX cash market increased 5.4% to $US3.3 billion.
  • Amcor (AMC) -- Has purchased Indonesia's Bella Prima Packaging business for $27 million. Bella Prima has two plants in Jakarta and specialises in shrink sleeves, labels and lidding, with sales of $30 million.
  • Goodman Group (GMG) -- Expects to sell assets worth $1 billion in the fiscal year starting July 1 which comes on top of the $1.3 billion of assets either sold or under offer in the current fiscal year so far.
  • Insurance Australia Group (IAG) -- The Commerce Commission has cleared the purchase of Wesfarmer's Lumley General Insurance unit for $1.845 billion. This will add Wesfarmers' WFI and Lumley Insurance brands to its portfolio which include NZI, AMI and State.
  • Kathmandu (KMD) -- Has given a trading update.

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