Overseas Market Report – U.S. Stocks Turn Lower as ECB Disappoints
U.S. stocks closed lower on Thursday after the European Central Bank's announced stimulus measures were smaller than the market had been anticipating.
ECB head Mario Draghi said the bank would expand its quantitative easing program to March 2017 in an effort to combat persistently low inflation. The bank also moved the deposit rate on bank deposits to -0.3% from -0.2%.
Initial U.S. unemployment claims rose 9,000 last week to 269,000. The less volatile four-week moving average was down by 1,750 to 269,250. Claims remain near a 15-year low and are consistent with an improving labour market.
The ISM Nonmanufacturing Index, which measures the strength of the service sector, fell to 55.9 in November from 59.1 in October. Economists had expected a reading of 58.4 and any value over 50 indicates expansion. The report comes after the ISM manufacturing gauge showed that part of the economy moving into contractionary territory earlier in the week.
At the close, the Dow and S&P 500 were each down 1.4%, while the NASDAQ was off 1.7%.
For Australian ADRs listed on the NYSE, BHP Billiton slipped 64 cents (2.38%) to $26.25, ResMed fell $1.57 (2.62%) to $58.32, Telstra Corporation added 4 cents (0.20%) to $20.01, Spark New Zealand slipped 1 cent (0.09%) to $10.83 and Westpac declined 16 cents (0.67%) to $23.73.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.32% and the 5-year yield was 1.74%.
Shares of Kroger (KR) were up after the firm reported upbeat results. The grocery store chain made 43 cents a share in the third quarter, up from 36 cents a share in the year-ago quarter and above expectations it would earn 39 cents a share. Management also raised full-year earnings guidance.
European shares sank sharply after the ECB moves. The French CAC 40 and Germany's DAX each sank 3.6%, while the FTSE 100 shed 2.3%.
Asian markets were mixed. The Shanghai Composite rose 1.4%, the Nikkei 225 was flat and the Hang Seng fell 0.3%. India's Sensex was off 0.9%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 67 points lower at 5,164.
Thursday 3 December – close. Local stocks had a weak start this morning as the big miners weighed heavily on the market due to falling commodity prices overnight. The Australian market failed to claw out of the hole created by resource stocks, to close mildly below the red line. Most sectors experienced negative results, with only information technology and utilities posting small gains. The Australian dollar appreciated against most major currencies, with the exception of the Canadian dollar.
The All Ordinaries slid 28.00 points to 5,276.70 while the S&P/ASX 200 dropped 30.60 points to 5,227.70.
In This Issue
Santos announced the successful completion of the retail shortfall bookbuild for the retail component of its fully underwritten 1 for 1.7 pro rata renounceable Entitlement Offer with retail entitlements trading of new Company ordinary shares. The Retail Shortfall Bookbuild represents the final stage of its $2.5bn equity raising, announced on 9 November 2015. The total amount to be paid by successful participants in the Retail Shortfall Bookbuild is $4.10 per New Share. The settlement date for New Shares to be issued under the Retail Entitlement Offer and the Retail Shortfall Bookbuild is expected to be 9 December 2015. New Shares are expected to be issued on 10 December 2015 and commence trading on ASX on 11 December 2015. STO added 7 cents to $4.13.
Oil Search (OSH)
Oil Search provided exploration and appraisal drilling update for November 2015, reporting that Antelope 4 ST1 well was drilled to a total depth of 2,326 metres and wireline logging was completed. Log interpretations confirm that a thick, high quality dolomite reservoir unit continues to this southern location. Due to well integrity issues, long-term production testing could not be undertaken. Preparations to plug and abandon the well are underway. Drilling on Antelope 6 and production testing of Antelope 5 is expected to commence shortly. OSH lost 18 cents to $8.10.
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)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF