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The market is up 30 points. The Dow Jones was up 20 points at 16,976 — The market rose strongly on the opening with good economic data but then traded in a narrow range for the rest of the day. The S&P rose one point and the NASDAQ was down one. Consumer stocks were the best performers, while Energy and Financials lagged. Volume was below average and the market traded in a 37 point range, the narrowest for the year.

US economic data was stronger — The ADP was much stronger than expected (281K actual v. 200K expected), increasing assumptions that tomorrow’s jobs report will beat estimates. But factory orders and the MBA Mortgage Index were below estimates.

Fed Chair Janet Yellen spoke at the IMF, saying that monetary policy has limitations in addressing financial stability risks and that no change was needed in monetary policy as it is not the best financial stability tool. But her comments were deemed to provide nothing new and had little weight on markets.

European shares were mostly stronger — The UK FTSE was up 0.20% and the German DAX was up 0.09% but the French CAC was 0.37% lower. Euro zone PPI fell 0.1% in May, the fifth consecutive monthly fall.

US bond markets were weaker,with the yield on the benchmark 10 year bond up six basis points to 2.626%.

The Aussie dollar was weaker and is currently trading at US94.42c.

Gold rose US$4.30 or 0.32% to US$1330.90c an ounce.

Oil was down US$0.86 or 0.82% to US$104.48 a barrel after Libyan rebels signed a deal to reopen two key oil ports currently blockaded.

Base metals were stronger — Copper was up 1.41%, nickel was up 2.69%, aluminium was up 2.29% and zinc was up 2.89%.

Iron ore rose US$0.50 to US$94.70 a tonne.

US economic data — MBA Mortgage Index: Actual -0.2%, prior -1.0%, ADP Employment Change: Actual 281K, consensus 200K, prior 179K, Factory Orders: Actual -0.5%, consensus -0.4%, prior 0.7% (revised 0.8%)

Australian economic events today — ABS building approvals for May, ABSretail trade for May, Australian Industry Group Australian Performance of Services Index (PSI) for June, RBA governor Glenn Stevens speaks at the Australian Conference of Economists and the Econometric Society Australasian Meeting

Company events today –WorleyParsons (WOR) chief executive Andrew Wood is speaking at Melbourne Mining Club.

No dividends today.

Chinadata today — both the HSBC services PMI and the official non-manufacturing PMI.

ECB meeting tonight as well as retail sales and a services PMI.

US non-farm payrolls (employment) data tonight in a shortened trading session ahead of Friday’s Independence Day holiday.

The trade deficit widened yesterday to $1.9 billion in May from $780 million in May, above market expectations of $100 million and the largest since January 2013. Exports fell 5% and imports fell 1%.

National Australia Bank’s online retail sales index yesterday grew 0.2% in May and is up 5.1% yoy. In the 12 months to May, Australians spent $15.3 billion on online retail, which is 6.6% of the total spending at traditional retailers over the period.


  • Cromwell Property Group (CMW 99c) — Has responded to market speculation by confirming it is in discussions for the sale of 321 Exhibition Street, Melbourne but a contract has not yet been concluded.
  • Silver Lake Resources (SLR 55.5c) — Advised that gold sales for the year ended 30 June 2014 from its Mount Monger Operations totalled 172,838 ozs compared with guidance of 160-170,000 ozs. Full year gold sales for the group were 217,349 ozs which included sales from the Murchison Gold Operation of 44,511 ozs. The Murchison Gold Operation will be placed on care & maintenance in July 2014 once the gold in circuit has been recovered.
  • WorleyParsons (WOR 1751c) — Merrill Lynch has upgraded WorleyParsons to a Buy recommendation with a target price of 2060c (from 1725c). They point to a strong outlook for hydrocarbons investment and the need for engineering expertise in more complex projects, margin improvement and excellent cash generation, including strong free cash flow yield and balance sheet flexibility allowing takeovers or dividend surprises. They also note WOR is around 20% below its 10 year PE and 10% below its 3 year historical P/E.

Peter Fray

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