May 14, 2014

Morning Market Report

A record high finish for the Dow Jones kept investors on their toes.

The market is up 28 pointsThe Dow Jones was up 20 points at 16,715, another record closing high. The market rose on the opening despite weaker retail sales data but lost momentum to be little changed. Smaller cap companies were weaker and consumer discretionary and financial stocks were the weaker sectors. Volume was below average in a narrow 40 point range. The S&P 500 rose above 1900 but ended the day up one at 1897. US retail sales were weaker than expected in April (0.1% versus consensus 0.3%) but the March reading was revised upwards (to 1.5% from 1.2%). Another indicator of small business sentiment reached a 6-1/2 years in April, with seven of 10 index components rising. US bonds were stronger, with the yield on the benchmark 10 year bond falling five basis points to 2.61% due to weaker economic data. European share markets were stronger -- The UK FTSE rose 0.31%, the German DAX rose 0.54% and the French CAC was 0.25% higher. Indications Germany would support negative interest rates and loan purchases by the ECB increased hopes for policy action at the next ECB meeting. The Aussie dollar was lower and is currently trading at US93.59c. Oil rose US$1.11 or 1.10% to US$101.70 a barrel. Gold was down US$1.00 or 0.08% to US$1294.80 an ounce. Base metals were weaker -- Zinc fell 0.70%, copper fell 0.52%, aluminium fell 0.32% but nickel continued its advance, rising 0.53%. Tin also rose 1.44% Iron ore was unchanged at US$103.00 a tonne. Global economic data -- The German ZEW index fell to 33.1, the fifth consecutive fall. US Earnings --Take Two Interactive -- down 4.31% in after-hours trade, Fossil – down 5.20% in after-hours trade, URS -7.29% in after-hours trade. Fed Speak -- Atlanta Fed President Dennis Lockhart said there would have to be a major change to in the economy for the Fed to alter its current tapering timetable which should conclude by the October or December meeting. STORIES:
  • CBA (7990c) -- Third quarter cash earnings were $2.2 billion, up from $1.9 billion a year earlier as bad debt charges fell and costs were tightly controlled. Overall the result was pleasing with cash earnings ahead of expectations. Credit quality was stable, with impaired assets unchanged at $3.9 billion. CBA’s interest margin was marginally lower in the quarter. The bank had a cautious tone on margins and credit growth. CBA’s shares hit $80 for the first time during trading on Tuesday.
  • AGL Energy (AGK) -- CEO Michael Fraser will step down after being with the company for 30 years.
  • Emeco (EHL) -- Down 13% after an Indonesian strategic review and operational update.
  • CSR (CSR) -- Profit of $88.1 million up from a loss of $150 million a year earlier. The result was better than expected. The company has made a strong bounce back to profitability on the back of their property division coupled with as stronger performance from their mainstay building materials division.

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