Overseas Market Report – U.S. Stocks End Sharply Higher After BOJ Move
U.S. stocks closed sharply higher on Friday, booking a second straight weekly gain but posting the worst January performance since 2009.
Friday's surge came amid a global equity rally following a surprise decision by the Bank of Japan to push a key interest rate into negative territory that some said could push the Federal Reserve to ease up on its plans to steadily raise interest rates.
The U.S. economy grew at a 0.7% rate in the fourth quarter, according to the advanced reading of GDP from the Commerce Department on Friday. That is well below the 2% rate the economy grew at in the third quarter and also below the 0.8% rise expected by economists. GDP was up 2.4% for the year. Inventories, trade and business investment all weighed on the number in the quarter.
Consumer sentiment fell in January, according the University of Michigan index. The reading of 92 was off from an earlier January reading of 93.3 and below the 93 expected by economists.
At market close the Dow and S&P 500 were each up 2.5%, while the NASDAQ was 2.4% higher.
For Australian ADRs listed on the NYSE, BHP Billiton gained 12 cents (0.55%) to $21.91, ResMed added 45 cents (0.80%) to $56.70, Telstra Corporation gained 17 cents (0.83%) to $19.93, Spark New Zealand gained 22 cents (2.07%) to $10.85 and Westpac added 43 cents (2.00%) to $21.95.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 1.92% and the 5-year yield was 1.33%.
Shares of Amazon (AMZN) tumbled after the company reported results. Morningstar's R.J. Hottovy says it is "difficult to find fault" in Amazon's net sales growth–up 22%–but the firm's 240 basis-point gain in gross margin to 31.9% was below expectations. This is the first time the company did not exceed the high end of its consolidated segment operating income target range (US$1.75 billion reported versus expectations of US$0.70 billion-US$1.90 billion) in four quarters.
Microsoft's (MSFT) 2016 continues to be defined by its ongoing shift into the cloud, and second-quarter results suggest that transition is moving full steam ahead. Second-quarter adjusted revenue fell 2% year over year (up 3% in constant currency) to US$25.7 billion, as Azure delivered triple-digit revenue gains. Shares were up on the day.
Chevron (CVX) reported an unexpected loss. The firm said it lost 31 cents per share in the fourth quarter, versus a 45 cent per share gain expected by analysts. The loss comes as declining profits in the firm's refining business were unable to make up for the impact of declining oil prices. Shares were up slightly on the day.
Shares of MasterCard (MA) rose after the firm reported better-than-expected results. The firm earned 79 cents per share, well above the 69 cents per share expected by analysts.
European markets were higher on Friday.
The FTSE 100, French CAC 40 and Germany's DAX were up 2.6%, 2.2% and 1.6%, respectively.
Asian shares rallied on Friday.
The Shanghai Composite rose 3.1%, the Nikkei 225 rose 2.8%, while the Hang Seng tacked on 2.5%. India's Sensex rose 1.6%.
Australian Market Report – Local Market Expected To Open Higher
Friday 29 January – close. The local market opened higher today on the back of gains on Wall Street overnight buoyed by energy shares as oil prices jumped. The positivity was short-lived as stocks fell below the red-line just before midday and only recovered late with Bank of Japan's decision to cut interest rates. There were mixed results from the sectors; energy posted the biggest gains by far while healthcare was the worst performer for this session. The Australian dollar gained against most major currencies.
The All Ordinaries rose 28.50 points to 5,056.60 while the S&P/ASX 200 lifted 29.30 points to 5,005.50.
In This Issue
Fletcher Building Limited (FBU)
Fletcher Building announced that it has completed the divestment of Rocla Quarry Products (RQP) assets to Hanson Construction Materials, following clearance from the Australian Competition and Consumer Commission and the Foreign Investment Review Board. The purchase price paid by Hanson to the Company for RQP is A$150m. In addition, the divestment to other third parties of JV quarry assets and other RQP assets excluded from the transaction with Hanson has generated a further A$44m. The aggregate consideration received for the entire RQP business is A$194m subject to customary completion adjustments. Completion of the sale of RQP will result in a post-tax profit to the Company of A$77m, reflecting the gain on sale of all RQP assets, offset by transaction costs and adjustments to asset carrying values. FBU added 1 cent to $6.30.
Origin Energy Limited (ORG)
Origin Energy provided Quarterly Production Report for its Integrated Gas business for the quarter to 31 December 2015. During the period, the Company recorded production of 54.4 PJe, representing a 14% increase on the prior 3 month period and a 63% increase on the corresponding period in FY2015. Revenue for the three months to 31 December was $212.2m, a 6% reduction on that achieved during the September 2015 quarter. In addition, production testing at Speculant 1 and Speculant 2 wells was completed during the quarter. Civil works continued on the Halladale and Speculant development and first gas is expected early in the FY2017. ORG rose 23 cents to $4.10.
Recent Contacts & Presentations
Troy Resources (TRY), Northern Star Resources (NST), Regis Resources (RRL), Medusa Mining (MML), Doray Minerals (DRM), Beadell Resources (BDR), Red 5 (RED), Kingsgate Consolidated (KCN), OBJ (OBJ), Sino Gas & Energy Holdings (SEH), TFS Corporation (TFC), Paragon Care (PGC), Austal (ASB), Orbital Corporation (OEC),Energia Minerals (EMX), Berkeley Energia (BKY) & Finders Resources (FND)