Jun 30, 2014

Morning Market Report

A quieter day on the markets as the financial year draws to a close.

The market is down 27 points. The Dow Jones was up six points at 16,852 -- The market drifted lower throughout the day and was down as much as 72 points before a rally in the final hour, boosted by high volume due to rebalancing of the Russel indices. Consumer discretionary stocks were the best performers and technology stocks also performed well, led by Microsoft +1.27% and Apple +1.19%. US economic data was strong -- the University of Michigan Consumer Sentiment Index rose to 82.5 from a preliminary reading of 81.2 and up from 81.9 in May. European shares were mixed -- the German DAX was up 0.10% and the UK FTSE was up 0.34% but the French CAC was down 0.47%. The Aussie dollar was stronger and is currently trading at US94.20c. Gold rose US$3.00 or 0.23% to US$1320.00c a oz. Oil was down US$0.10 or 0.09% to US$105.74 a barrel. Base metals were mostly weaker -- Copper was down 0.15% and aluminium was down 0.67% but zinc was up 0.06% and nickel rose 0.65%. Iron ore fell US$0.40 to US$94.90 a tonne. US economic data -- Michigan Sentiment -- Final: Actual 82.5, consensus 81.7, prior 81.2 US earnings -- Commercial Metals -- down 4.04%, KB Home – up 4.53% Australian economic events today - TD Securities-Melbourne Institute inflation gauge for June, HIA New home sales for May, RBA financial aggregates for May. China: Manufacturing PMI Japanese data today -- industrial production. Global economic data tonight -- US Pending Home Sales and Chicago PMI. European inflation. STORIES
  • Dick Smith (DSH 193c) -- Has announced sales of $1.228 million for the financial year ended June 29 2014, ahead of forecast pro forma guidance. In Australia, the fourth quarter of the financial year pro forma sales increased over 15% and like-for-like sales growth was 4%. They noted challenging trading conditions, including further deterioration in Australian consumer sentiment.
  • Beadell Resources (BDR 61c) -- Has closed out its outstanding gold and currency hedges, realising US$16 million and has announced a new unsecured corporate facility with Banco Santander (Brazil). The closure of the hedges allows the company to benefit fully from gold price rises and positive USD:BRL exchange rate movements.
  • Henderson Global Investors (HGG 424c) -- Henderson Global Investors has acquired Geneva Capital Management. Founded in 1987, Geneva has US$6.3 billion assets under management (AUM) in mid and small-cap US growth equities. The acquisition adds a US investment capability and extends the US client base. The initial consideration was US$130 million with deferred consideration linked to revenue retention and growth. It should be earnings accretive in the first full year. HGG also provided a US business update saying AUM had doubled since 2011 and mutual fund inflows of US$1.4 billion increased the total to US$10 billion in May.
  • Sydney Airport (SYD 71c) -- The NSW Government and Sydney Airport will invest $500 million to improve traffic flow in and around Sydney Airport as part of new ground transport solutions and airport facility upgrades. The government will invest $282 million in off airport road projects in the surrounding precinct, including $40 million from the Federal Government. SYD capital expenditure for the ground access solutions invested by 2017 has been included in guidance provided at the annual results on 26 February 2014.
  • Country Road (CTY 1680c) – South African Woolworths said it 1700c a share offer for CTY was final,  would not be increased and was conditional on the success of its $2.2 billion bid to acquire David Jones.
  • David Jones (DJS 394c) -- South African Woolworths has also announced that the 400c offer is its best and final offer.
  • Stockland Property Group (SPG-34c) -- Has purchased the 12 hectare Brownes' dairy head office for $53.5 million. Browne’s will lease the land off Stockland, which should provide an initial funds from operations yield of 7.5% pa and initial underlying profit yield of 9.7% pa.. It’s the third major industrial acquisition this year after buying warehouses and industrial land at St Marys and Ingleburn in Sydney.
  • Fleetwood (FWD 226c) -- Has issued a trading update, saying consumer confidence remains weak.
  • Tattersalls (TTS) -- Not only did they get a $451 million payout award from the Victorian government last week (plus interest = $540 million). It has also announced the extension of its wagering and sports operations in Queensland for the next 30 years for race and sports betting. Some brokers were surprised by the development -- Macquarie and UBS have upgraded their recommendations. The Victorian Premier Dennis Napthine said the government will appeal the payout.

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