Overseas Market Report – U.S. Stocks End Little Changed after Choppy Session
U.S. stocks tracked volatile oil prices on Thursday, switching between small gains and losses in afternoon trade before closing modestly higher.
The intraday swings in the stock market over the past few days are puzzling some analysts. Volatility in oil and currency markets might be driving rapid change in strategies, causing wild swings in the S&P 500.
At the close, the Dow was up 0.5%, while the S&P 500 and the NASDAQ were both around 0.1% higher.
In economic news, initial unemployment claims were up by 8,000 last week to 285,000. The less volatile four-week moving average of claims was up 4,000 to 284,750. The data comes ahead of tomorrow's closely watched jobs report.
Shares of ConocoPhillips (COP) were down after the firm reported disappointing results and lowered its dividend. The company's adjusted loss of 90 cents per share was worse than the 64 cents a share loss that analysts were expecting. The dividend was slashed to 25 cents a share from74 cents a share and the capital expenditure budget was lowered.
Yum Brands' (YUM) profit was ahead of analyst expectations, but sales fell short of views. There were signs the firm's Chinese restaurants were performing better (same-store sales there were up 2%), but the firm's overall revenue was down 1.2% year over year. Shares were down on the day.
For Australian ADRs listed on the NYSE, BHP Billiton gained $1.50 (7.01%) to $22.89, ResMed added 24 cents (0.42%) to $57.82, Telstra Corporation added 34 cents (1.71%) to $20.26, Spark New Zealand slipped 9 cents (0.79%) to $11.24 and Westpac gained 57 cents (2.67%) to $21.88.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 1.86% and the 5-year yield was 1.25%
European markets finished mixed.
The FTSE 100 was up 1%, the French CAC 40 was flat, while Germany's DAX was off 0.4%.
Asian shares were also mixed.
The Shanghai Composite rose 1.5%, while the Hang Seng gained 1% and the Nikkei 225 was off 0.9%. India's Sensex rose 0.5%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 14 points lower at 4,919.
Thursday 04 February – close. The local market opened higher today on the back of gains on Wall Street overnight. Stocks continued to rise throughout the day, with a lift in resource stocks after a jump in oil prices, to end the day higher. There were mixed results from the sectors; energy rose most significantly whilst health care were the biggest laggard. The Australian dollar fell against the Japanese Yen but gained against most other major currencies.
The All Ordinaries rose 98.50 points (2.00%) to 5,029.30 while the S&P/ASX 200 rose 103.60 points (2.12%) to 4,980.40.
In This Issue
Argonaut Research| Energia Minerals (EMX) | SPEC BUY
Argonaut conducted a site visit of Energia Resources (EMX) Gorno zinc project in Italy. The project benefits from extensive underground development with established access to unmined mineralisation in the high grade Zn/Pb Fortuna and Zorzone mines. EMX is currently undertaking drilling and metallurgical studies ahead of a Scoping Study, due for release in late Q1 2016. SPEC BUY recommendation and a $0.08 target price.
South32 Limited (S32)
South32 announced the outcome of the South Africa Manganese strategic review and its intention to substantially reduce cash costs at a number of operations. As a result of a downward revision to forecast commodity demand and prices, it also advised that it expects to book pre-tax, non-cash charges of US$1.7bn (post-tax US$1.7bn) when it reports its December 2015 half year financial results. In response to a sharp decline in manganese ore and alloy prices, the Company, as 60% owner and operator of the largest manganese business globally, suspended mining activity at the Hotazel Manganese Mines in November 2015. Pre-tax restructuring costs, including redundancies, of US$10m are anticipated in FY16. Annual sustaining capital expenditure is expected to decline by 80% to US$7m in FY17. S32 added 14 cents to $1.09.
AGL Energy Limited (AGL)
AGL Energy announced that following a review, it has taken a strategic decision that exploration and production of natural gas assets will no longer be a core business for the Company due to the volatility of commodity prices and long development lead times. There is no change to its commercial or retail gas activities. The FY16 cash impact of this strategic decision, excluding potential sale of assets, is expected to be less than $10m and relates to rehabilitation, redundancy and other associated costs. Primarily due to the fall in long-term Qld price forecasts, it has impaired its Qld natural gas assets at Moranbah, Silver Springs and Spring Gully. In NSW, it will not proceed with the Gloucester Gas Project and will cease production at the Camden Gas Project in South West Sydney in 2023. AGL added 40 cents to $18.91.
Computershare Limited (CPU)
Computershare announced that it has agreed to acquire Capital Markets Cooperative, LLC (CMC), based in Florida, USA. The acquisition is subject to US regulatory approvals which are expected to be obtained within 3 months. The total acquisition price is US$71.2m. The price comprises US$44.0m for the CMC business plus US$27.2m for its current mortgage servicing rights (MSR) portfolio of US$5.4bn in unpaid principal balances. The MSR purchase price of US$27.2m is net of the sale of an associated excess servicing strip. The initial consideration is US$57.2m payable on closing along with a maximum of US$14.0m in deferred consideration payable over 3 years. CPU added 15 cents to $10.61.
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), 4DS Memory Ltd (4DS) , Bionomics Ltd (BNO)
