Overseas Market Report – U.S. Stocks End Lower After Data
U.S. stocks finished lower on Monday after the release of some economic data and ahead of a key European Central Bank meeting later this week and jobs data due on Friday.
The Chicago PMI, which measures the strength of the Midwest manufacturing sector, fell to 48.7 in November from 56.2 in the previous month. Any reading below 50 indicates a contraction in activity.
Pending U.S. home sales were up 0.2% in October, a smaller-than-expected increase. The National Association of Realtors, which produces the report, says the gains are being held back by higher prices and small inventories.
At the close the Dow, S&P 500 and the NASDAQ were all around 0.4% lower.
For Australian ADRs listed on the NYSE, BHP Billiton slipped 30 cents (1.11%) to $26.68, ResMed fell 45 cents (0.75%) to $59.57, Telstra Corporation lost 3 cents (0.13%) to $19.30, Spark New Zealand gained 18 cents (1.73%) to $10.85 and Westpac lifted 32 cents (1.40%) to $23.25.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.21% and the 5-year yield was 1.65%.
There was limited corporate news on Monday.
European shares finished mostly higher ahead of the ECB meeting. The FTSE 100 was down 0.3%, while the French CAC 40 and Germany's DAX were up 0.6% and 0.8%, respectively.
Asian markets ended mixed. The Shanghai Composite was up 0.3%, the Hang Seng was off 0.3%, while the Nikkei 225 lost 0.7%. India's Sensex added 0.1%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 2 points lower at 5,188.
Monday 30 November – close. The local market had a choppy session, with mid-morning gains being reversed sharply, led by falls in BHP, RIO and Dick Smith shares halving in value. There were mixed results from the sectors; healthcare gained most significantly while materials were the biggest laggard. The Australian dollar gained against most major currencies.
The All Ordinaries fell 33.20 points to 5,218.20 while the S&P/ASX 200 fell 36.10 points to 5,166.50.
In This Issue
Argonaut Research | Austin Engineering (ANG) | HOLD
ANG has downgraded FY16 EBITDA from $20m to $14-16m, weighted to the 2H. Given the difficulty in predicting the timing of a turnaround we have been more conservative with our 2H numbers and have concerns over the impact on cash flow and balance sheet metrics. We believe property sales, put off for some time now, will be necessary in the near term. With the balance sheet once again our point of focus we downgrade to hold (prior buy) despite the longer term earnings potential.
Dick Smith Holdings Limited (DSH)
Dick Smith Holdings announced that following the trading update at the Company's AGM on 28 October 2015, management initiated a review of inventory. The review, which is being conducted with the assistance of external consultants, remains in progress. Whilst this review was prompted by the disappointing October 2015 performance, November 2015 trading was below expectations and stock holdings remain above management's preferred levels. Significant marketing activity continues in an effort to stimulate consumer demand during the all-important Christmas trading period. The benefits of this activity on inventory levels are, at this time, uncertain. While the inventory review has not concluded, the Board has determined that a non-cash impairment of $60m (pre-tax) is required. DSH lost 38 cents to $0.28.
BHP Billiton Limited (BHP)
BHP Billiton provided a further update following the breach of the Fundao tailings dam and Santarem water dam at the Samarco Mineracao S.A (Samarco) iron ore operation in Minas Gerais, Brazil which occurred on 5 November 2015. The Company and Vale each hold a 50% interest in Samarco. Samarco continues to work with the Government authorities in Brazil to relocate displaced people from temporary accommodation to rented housing. Relocation is expected to be completed in February 2016. Clean-up work has commenced in the Barra Longa area, focusing on access roads, housing and bridge repairs. The Brazilian Federal Government and certain State governments have announced that, on 30 November 2015, they intend to commence legal proceedings against Samarco, Vale and the Company for clean-up costs and damages. BHP lost 68 cents to $18.09.
Slater & Gordon Limited (SGH)
Slater and Gordon announced that assessment of the impact of any changes to the law relating to road traffic accident Whiplash cases on the FY2017 and beyond is difficult given the lack of detail available at this stage, the fact that the Ministry of Justice has foreshadowed that the consultation process will not commence until January 2016 and that the earliest date of implementation for any changes to the recoverability of general damages in minor whiplash cases will likely be April 2017. Given that the consultation process is yet to begin, it would be premature for the Company to provide financial guidance post FY16 and it will not do so until details of the final form of any changes are released by the UK Government. SGH added 23.5 cents to $0.93.
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