May 30, 2014

Morning Market Report

Good results on local markets, despite mergers on the horizon for major retail and freight companies.

The market is up 28 points. The Dow Jones was up 66 points at 16,699 -- The market fell on the open, and was down as much as 13 points due to disappointing GDP data. But more encouraging weekly jobs data spurred a recovery and the market finished on its highs in a 79 point range. Volume was below average and the best performing sectors were Consumer Staples, Energy and Health Care while Financials lagged. US Economic Data was mixed -- first quarter GDP was revised down to a 1% contraction from an initial estimate of a 0.1% gain. This was weaker than the 0.5% contraction expected but a weak number has already been factored in and is generally explained by poor weather and adjustments to inventory. Pending home sales growth of 0.4% was also lower than the 1.0% expected. But weekly initial jobs claims fell to 300,000, bringing the 4 week average to 311,500, the lowest level since August 2007. US bonds were weaker, with the yield on the benchmark 10 year bond rising two basis points to 2.467%. European share markets were mixed -- the German DAX was flat, the French CAC was down 0.02% and the UK FTSE was up 0.38%. The Aussie dollar was stronger as the US dollar fell against major currencies and is currently trading at US93.06c. Gold fell US$3.00 or 0.24% to US$1256.30 an ounce. Oil fell US$0.86 or 0.84% to US$103.58 a barrel. Base metals were mostly weaker -- Nickel fell 2.16%, copper fell 1.02% and zinc fell 0.59% but aluminium rose 0.49%. Iron ore fell US$1.10 to US$95.70 a tonne. US Earnings -- Costco -- down 0.12% in after hours trade, Abercrombie & Fitch -- up 5.75%. STORIES
  • Australand Property (ALZ) -- Have upped their profit guidance and agreed to open their books to Stockland Group (SGP). They have increased earnings per share for the year through December to grow by 20%-25% from 17%-20%. They also expect the value of their properties to go up by $76 million which increases their book value by 3% to 368c. The announcement is a sign that ALZ are trying to extract a higher bid from SGP, who declared its offer "final".
  • Lynas (LYC) -- Down 16% in early trade after their SPP and placement was completed.
  • Tassal Group (TGR) -- Major shareholder Pacific Andes Group has sold 26.5 million shares last night. UBS are seeking buyers for the 25 million shares at 365c each. Pacific Andes Group retained about a 5.5% stake in the company.
  • WDC (1085c) & WRT (324c) -- Plans for a $70 billion restructure of WDC were put on hold after a meeting of WRT shareholders was adjourned yesterday. Shareholders agreed to postpone the vote only minutes before the scheme was to be voted on and was certain to be defeated. Another vote is planned within a fortnight. Under the restructure plan, WDC's Australian and New Zealand businesses would come together with WRT to create a new entity called Scentre. Shareholders in WRT appeared set to reject the overall restructure plan. The plan needs to be approved at both company EGMS for it to go ahead.
  • Toll Group (TOL 553c) -- Closed up 4.9% on the back of the announcement of a business restructure which included cutting jobs to save $10-12 million in costs from 2015. The company will now reallocate their five usiness units in order to reduce costs and improve efficiency.
  • Oil Search (OSH 942c) -- An article in the AFR talks about the number of shares traded hitting 15 million on Tuesday, well above the 3 million average. 8 million shares were traded on Monday and the same amount again on Wednesday. In comparison WPL and STO hardly moved. It the momentum related to OSH starting shipments from their PNG LNG venture or is it a possible corporate play in action? This volume has reignited the WPL takeover rumour, which is still yet to be of any substance. Either way, UBS says OSH still has legs. The early start of the PNG LNG project means there’s a big possibility OSH will beat 2014 output guidance. They have a Buy recommendation with a target price of 980c. Output guidance is 14.5-17.5 mboe. UBS says OSH could hit 18.6 mboe.

Free Trial

You've hit members-only content.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions


Leave a comment

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details