Overseas Market Report – U.S. Stocks Slide into Red on Mixed Reports
U.S. stocks finished lower on Friday as investors weighed some mixed economic reports.
Consumer spending rose a seasonally adjusted 0.1% last month, the Commerce Department said. This is the smallest increase since the beginning of the year and owes partly to the fact that consumers spent less on gasoline after a price drop.According to the Labour Department's employment-cost index, U.S. labour costs rebounded in the third quarter, but evidence of a broad acceleration remains elusive.
At the close, the Dow and the S&P 500 had each shed around 0.5%, while the NASDAQ was down 0.4%.
For Australian ADRs listed on the NYSE, BHP Billiton added 17 cents (0.52%) to $32.89, ResMed gained 31 cents (0.54%) to $57.61, Telstra Corporation lost 22 cents (1.13%) to $19.20, Spark New Zealand lifted 37 cents (3.38%) to $11.32 and Westpac declined 16 cents (0.71%) to $22.37.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.14% and the 5-year yield was 1.52%.
Shares of LinkedIn Corp (LNKD) rose after the social networking firm posted strong third-quarter results, above expectations and driven by strong performance across all three segments: talent solutions, marketing solutions and premium subscriptions.
Valeant Pharmaceuticals International Inc. (VRX) shares slid after the beleaguered pharmaceutical firm said it has cut ties with Philidor, which will shut down operations as soon as possible.
Shares of Exxon Mobil Corporation (XOM) rose after the company posted its worst third quarter in 12 years due to low oil prices. However, it still managed to beat earnings expectations.
Chevron Corp (CVX) rose after the oil giant beat profit and sales expectations, and said it would cut spending and up to 7,000 jobs in the coming years.
European markets were mixed.
The FTSE 100 fell 0.5%, while the French CAC 40 was up 0.2% and Germany's DAX was up 0.5%.
Asian shares were mixed.
The Shanghai Composite lost 0.1%, the Nikkei 225 rose 0.8% and the Hang Seng was down 0.8%. India's Sensex fell 0.7%.
Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 25 points lower at 5,211.
Friday 30 October – close. The local market opened lower today on the back of losses on Wall Street overnight. Stocks remained below the red line all day, with the big 4 banks and WOW leading the market lower. Macquarie's positive half year results led the stock to gain 2.01% but the market still closed lower. There were mixed results from the sectors; healthcare gained most significantly whilst consumer staples were the biggest laggard. The Australian dollar appreciated against most major currencies.
The All Ordinaries fell 21.60 points to 5,288.60 while the S&P/ASX 200 fell 27.50 points to 5,239.40.
In This Issue
Fortescue Metals (FMG) | HOLD
Argonaut attended Fortescue Metals (FMG) site visit encompassing a tour of port, rail, the Solomon Hub and the Christmas Creek Mine. The visit included a comprehensive walk through of the Christmas Creek ore processing facilities (OPFs), a key driver for the reduction in mine grade cut-off and subsequent lower strip ratios. The Company has reduced costs well beyond expectation, and the market is looking for comfort that these levels are sustainable. Argonaut’s key takeaway is that FMG will be able to sustain current low costs (C1 <US$18/wmt) for the medium term. Upgrade from SELL to HOLD.
Troy Resources (TRY) | BUY
Troy Resources (TRY) announced the completion of commissioning at its Karouni project in Guyana, with first gold anticipated in early November and a ramp up to nameplate capacity expected by early CY16. The stock remains deep value and offers higher valuation upside compared to peers (Page 3). A smooth ramp up and / or exploration success from the commenced A$12m exploration campaign should see the stock re-rate. However, further delays during the ramp up period could put pressure on working capital. The September Q results are softer than expected. BUY maintained.
Flight Centre Travel Group Limited (FLT)
Flight Centre Travel Group announced that the Company has agreed to acquire a 51% interest in AVMIN, a Brisbane-based private company. AVMIN specialises in complete fly-in fly-out logistics, ad hoc charter aircraft, VIP travel both within Australia and internationally. AVMIN founder and MD Paul O'Brien and the business's general manager, Amrit Wijesuriya, will retain the remaining 49% interest and will continue to oversee day-to-day operations. This acquisition will give the Company access to a new and profitable revenue stream and will significantly enhance the offering that the Company provides to corporate and leisure travelers. The acquisition's terms are not material to the Company and have not been disclosed. The Company will use company's cash to fund the acquisition. FLT lost 28 cents to $37.95.
Transpacific Industries Group Ltd (TPI)
Transpacific industries Group announced that it has commenced implementation of a program to simplify its current operating model which is supported by a cost reduction program. The new operating model allows for a clearer focus on empowering staff, reducing management layers and overall complexity across the Company. Consistent with the new operating model the Company is also moving to one customer facing brand and implementing an organisational restructure. TPI added 3 cents to $0.68.
Recent Contacts & Presentations
Tox Free Solutions (TOX), AWE Limited (AWE), Ausdrill (ASL), GR Engineering (GNG), Medusa (MML), Resolute (RSG), Kingsgate (KCN), Troy (TRY), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), FAR Limited (FAR), Central Petroleum (CTP), Senex Energy (SXY), Fortescue Metals (FMG)