Overseas Market Report – U.S. Stocks End Lower After Choppy Session
U.S. stocks retreated Wednesday after two straight days of gains that sent the main benchmarks to their highest levels since August.
Analysts said the moderate pullback is a function of October's outsize gains–the biggest monthly climb since 2011–rather than comments by Federal Reserve chief Janet Yellen. Yellen testified before the House Financial Services Committee and hinted that a rate hike in December wouldn't derail the economy or the housing market.
The U.S. private sector added 182,000 jobs in October, according to an ADP report. That was slightly above the 180,000 jobs expected by economists but below the 190,000 jobs added in September. The data comes ahead of Friday's official payroll and unemployment rate report.
The U.S. trade deficit shrank 15% in September from the previous month. Exports were up 1.6% in the month, but are still off 3.8% year to date. Imports were down 1.8%, mostly due to lower oil prices.
The ISM nonmanufacturing index, which measures the strength of the services sector, rose to 59.1 in October from 56.9 in September. Economists had expected the measure to drop to 56.8.
At the close, the Dow was down 0.3%, the S&P 500 was 0.4% lower and the NASDAQ was down 0.1%.
For Australian ADRs listed on the NYSE, BHP Billiton slipped 23 cents (0.68%) to $33.41, ResMed lost 3 cents (0.05%) to $58.53, Telstra Corporation shed 43 cents (2.22%) to $18.98, Spark New Zealand dropped 27 cents (2.35%) to $11.20 and Westpac declined 21 cents (0.93%) to $22.40.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.23% and the 5-year yield was 1.64%.
Tesla Motors (TSLA) reported third-quarter results that missed consensus but management mostly kept to its full-year 2015 delivery guidance as well as 2016 production and delivery guidance for the Model S and Model X combined of 1,600 to 1,800 vehicles per week. This rate could be achieved as soon as first-quarter 2016.
Shares of Chesapeake Energy (CHK) were down after the firm reported quarterly results. Overall, the firm reported a loss of $7.08 a share in the quarter versus a profit of 26 cents in the year-ago quarter. The firm lost only 5 cents a share, excluding a hefty a $4.51-billion impairment charge and other one-time items. Revenue was down 49% year over year. Management also said it plans major cuts to its capital spending budget in 2016.
European markets were mixed.
The FTSE 100 was up 0.5%, the French CAC 40 gained 0.2% and Germany's DAX was down 1%.
Asian shares were mostly higher.
The Shanghai Composite jumped 4.3%, the Hang Seng gained 2.2% and the Nikkei 225 was up 1.3%. India's Sensex lost 0.1%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 2 points lower at 5,215.
Wednesday 4 November – close. The Australian market started the day on a high point, following strong gains from the US market and rising oil prices overnight. However, the market lost its momentum as early gains in the big banks faded in afternoon trade that closed marginally higher. There were mixed results from the sectors; materials gained most significantly while health care lagged behind the rest. The Australian dollar appreciated against most major currencies.
The All Ordinaries rose 3.60 points to 5,294.80 while the S&P/ASX 200 added 3.10 points to 5,242.30.
Domino's Pizza Enterprises (DMP)
Domino's Pizza provided its 2015 AGM presentation and Chairman's Address reporting an Underlying NPAT of $64.0m up by 40% as compared to previous year. The Group's revenue was up 19.3% to $702.4m driven by record store growth, strong operations in all six markets and industry-shifting digital innovation. the strong operating performance in all regions has resulted in Underlying EBITDA growth up 34.4% to $127.8m. The Company paid shareholders a final dividend of 27.2cps (fully franked), bringing the full year dividend to 51.8cps. The Company added 177 new stores to the Group. Due to the strong financial performance of ANZ and Europe and favourable foreign exchange translation benefits, the Company will be upgrading EBITDA and NPAT guidance to be in the region of 25% on an Underlying basis. DMP lost 24 cents to $47.65.
Stockland announced that it will undertake a $377m redevelopment and expansion of its Green Hills Shopping Centre at East Maitland in the Lower Hunter Valley of NSW. The Company will more than double the size of the centre from just under 33,000sqm of Gross Lettable Area (GLA) that exists to create around 70,000sqm of GLA when the redevelopment is complete in mid-2018. As an integral part of the redevelopment, it has secured an agreement for lease with David Jones, which will open a new, single-level, 6,225sqm department store at its Green Hills in 2018. In addition to introducing David Jones to the Lower Hunter Valley, the expanded centre will include Big W and an exciting, new format Target with its latest products and customer service innovations. SGP fell 2 cents to $4.01.
In This Issue
Dacian Gold (DCN) | SPEC BUY
A recently completed 382km, high resolution (50m spaced lines) ground magnetics survey has generated additional proximal targets (see below) at Jupiter, enhancing Dacian Gold’s (DCN) exploration pipeline. Successful conversion of these targets into mining inventory could deliver upside to our A$1.05 valuation. These targets are in additional to the Company’s regional syenite targets, including Callisto (drilling scheduled in the coming weeks) and Cameron Well. DCN remains one of Argonaut’s preferred emerging gold producers given AUD denominated costs, exploration upside and proven management. Given scalable inventory and proximity to infrastructure, DCN is likely to attract corporate attention. SPEC BUY and A$1.05 target price maintained.
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)