Overseas Market Report – U.S. Stocks Slip into Negative Territory
U.S. stocks finished mostly lower on Thursday as investors weighed a downbeat jobless claims report.
The Labour Department reported that initial jobless claims in the 25 October to 31 October period increased by 16,000 to a seasonally adjusted 276,000. This is the highest level in two months and could indicate some softening in the labour market.At the close, the Dow was flat, the S&P 500 was down 0.1% and the NASDAQ had lost 0.3%.
For Australian ADRs listed on the NYSE, BHP Billiton slipped 99 cents (2.96%) to $32.44, ResMed fell 5 cents (0.09%) to $58.48, Telstra Corporation lost 10 cents (0.53%) to $18.88, Spark New Zealand lifted 2 cents (0.18%) to $11.22 and Westpac declined 4 cents (0.18%) to $22.36.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.24% and the 5-year yield was 1.64%.
Shares of Facebook (FB) rose after the social media company posted solid third-quarter results across all key performance metrics: revenue growth, user growth, engagement and monetization. Additionally, the company broadly opened up Instagram ad inventory to all marketers during the quarter, contributing to Facebook's reign as a dominant mobile advertising platform.
Whole Foods Market (WFM) shares fell after the grocery store chain said sales growth slowed sharply in the latest quarter and issued a tepid outlook for the current fiscal year. Management now expects sales to increase only 3%-5% next year, with flat comps.
European markets were mixed.
The FTSE 100 fell 0.8%, the French CAC 40 was up 0.6% and Germany's DAX was 0.4% higher.
Asian shares were also mixed.
The Shanghai Composite rose 1.8%, the Nikkei 225 gained 1.0% and the Hang Seng was flat. India's Sensex fell 0.9%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 11 points lower at 5,175.
Thursday 5 November – close. Local stocks plunged this morning as the US market retreated overnight and ASX heavyweight NAB traded ex-dividend. The negativity continued throughout the day, with the big banks and miners leading the way. Most sectors experienced losses, with only health care eking out a gain. The Australian dollar appreciated against most major currencies.
The All Ordinaries slid 46.90 points to 5,247.90 while the S&P/ASX 200 dropped 49.30 points to 5,193.00.
In This Issue
Gold Road (GOR) | SPEC BUY
Gold Road (GOR) recently delivered a number of encouraging regional exploration results from various Camp Scale Targets. These results validate that GOR’s systematic exploration approach is yielding results and confirm the prospectivity of the Yamarna Belt. The regional Camp Scale Targets complement GOR’s 5.6Moz Gruyere deposit, which is progressing through the study phases with an updated Resource and Pre-Feasibility Study (PFS) expected in early CY16. Gruyere’s scale, geometry, long life (10-15 years), and favourable metallurgical properties, combined with a low sovereign risk jurisdiction, will ensure the asset attracts market and corporate attention. The Company is catalyst rich (see below) and well-funded (A$43m cash) to progress studies on Gruyere and concurrently pursue a fertile exploration pipeline. SPEC BUY and A$0.70 target price maintained.
OZ Minerals (OZL) | BUY
OZ Mineral (OZL) released its annual Reserve and Resource update for Prominent Hill as of 30 June. On a contained copper basis, Resources declined largely in line with mining depletion (within 1%). However, on a contained gold basis, Resources remained constant benefitting from a change in modelling methodology. The copper cut-off of copper/gold ore was decreased from 0.30% to 0.25% in the Malu Open Pit resulting from lower cost and higher mill throughput.
Paringa Resources (PNL) | SPEC BUY
Paringa Resources (PNL) announced a US$22m reduction to the Buck Creek No. 1 mine development capex to US$106m. The initial PFS estimate of US$217m has been revised down following a competitive bidding process from highly experienced coal industry contractors, experienced in Illinois Basin mining. All major capital items including plant, infrastructure and mine development have been quoted upon. Final bid awards are expected upon completion of negotiations with financiers. As PNL moves towards the point end of negotiations with contractors, there may be further scope to ratchet down development costs.
Commonwealth Bank of Australia (CBA)
Commonwealth Bank of Australia announced that its unaudited cash earnings for the 3 months ended 30 September 2015 were $2.4bn. Statutory net profit on an unaudited basis for the same period was $2.3bn, with non-cash items treated on a consistent basis to prior periods. Income growth was similar to FY15. Underlying Group Net Interest Margin was stable, whilst overall Group NIM was slightly lower largely due to higher liquid assets. Credit quality remained sound, with arrears levels reducing across all consumer portfolios in line with seasonal expectations. The Group's Basel III Common Equity Tier 1 APRA ratio increased 70 basis points to 9.8%. Liquid assets totalled $137bn with the Liquidity Coverage Ratio standing at 123%. CBA lost 73 cents to $75.85.
M2 Group (MTU)
M2 Group announced that the Australian Competition and Consumer Commission (ACCC) has announced that it will not oppose Vocus Communication proposed acquisition of the Company. Vocus and the Company have limited overlaps in the supply of retail and wholesale fixed broadband services; the supply of retail and wholesale fixed voice services; the acquisition of transmission services and the supply of data centre services. Vocus and the Company tend to focus on different customer segments, with the Company's mainly focused on residential and small business customers and Vocus mainly focused on large enterprise and government customers. The proposed acquisition will not significantly increase vertical integration between wholesale and retail telecommunications services providers. MTU added 30 cents to $10.59.
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)