Jun 3, 2014

Morning Market Report

Quiet on local markets ahead of a few significant IPOs.

The market isdown 14 points. The Dow Jones was up 26 points at 16,744 -- the market dropped early in the session after a release of ISM data which showed manufacturing had fallen. The data was revised by ISM twice during the day and the market recovered, range trading before a final lift. The best performing sector was Consumer Discretionary, followed by Financials and Industrials. Consumer Discretionary and Energy sectors lagged. Apart from seasonal adjustment corrections to the ISM data, the session was generally uneventful. Volume was lower than average in a 74 point range. Company news -- Apple unveiled the news Mac computer, the Yosemite, as well as announcing a news iOS 8 operating system for its iPhone and iPad. Its shares were down 0.69%. Google shares fell 1.06% after the head of business development left. European share markets were mixed -- The UK FTSE rose 0.28% and the German DAX rose 0.07%, boosted by strong Chinese data over the weekend but the French CAC fell 0.08%. The Aussie dollar was weaker and is currently trading at US92.43c. Gold and oil were modestly weaker. Base metals were stronger -- Zinc rose 1.59%, copper rose 1.26%, aluminium rose 0.55% and nickel was up 0.46%. Iron ore rose US$0.30 to US$92.10 a tonne. US economic data -- ISM Index: Actual 55.4, consensus 55.6, prior 54.9, Construction Spending: Actual 0.2%, consensus 0.7%, prior 0.2% (revised 0.6%) US earnings -- Krispy Kreme -- down 10.21% in after-hours trade, Quiksilver -- down 28.67% in after-hours trade. Australian economic data today -- RBA Board meeting (no change is expected), retail trade, balance of payments, business expectations survey Chinese data -- two PMIs out on today -- the HSBC Manufacturing PMI (the flash number as a 5 month high of 49.7) and the official services PMI. Ex-dividend -- CSR 5c. STORIES
  • LNG up 8% in early trade.
  • LYC up 9% in early trade.
  • Seek Ltd (SEK) -- The planned IPO of their Chinese online jobs business Zhaopin will be valued at between US$700-816 million, giving an indicative price range of US1205c-US1450c. SEK wont be participating in the IPO, which means its stake will fall to 67.1% to 67.3% from 79%.
  • Mining and Industrials downgrading earnings -- Ausdrill (ASL 86.5c) -- Shares closed down 11.28% yesterday following yet another financial year profit downgrade, this time by nearly 30%. The company says its African underground mining services business was underperforming and ASL is now expecting a profit of $25-30 million down from $35 million. But ASL wasn’t the only mining services company to downgrade earnings. McAleese Group (MCS 49c) also issued a profit warning after June quarter revenue remained subdued. They expect to deliver EBITDA between $82-85 million compared to analysts’ expectations of $97m. MCS have also delivered a string of profit warnings, one before Christmas with two credit rating downgrades last month and in March.
  • UGL (710c) -- Shares rose 8.23% yesterday on rumours that TPG Capital is in ‘final negotiations’ to buy its DTZ property management business for $1.2 billion (in the AFR), with a deal potentially reached today. UGL came out yesterday and hosed down speculation by saying ‘while it has received confidential and conditional proposals from third.

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