Overseas Market Report – U.S. Stocks Unsure of Direction after Strong Jobs Report
U.S. stocks finished mixed Friday, as investors considered the implications of a stronger-than-expected jobs report.
The Labour Department reported that the economy generated 271,000 new jobs in October, pushing the unemployment rate down to a seven-year low of 5%. Many market watchers speculate that this unexpectedly high number means the Federal Reserve is likely to raise interest rates in December.
The Dow ended up 0.3%, the S&P 500 was flat and the NASDAQ was up 0.4%.
For Australian ADRs listed on the NYSE, BHP Billiton slipped $1.71 (5.29%) to $30.73, ResMed lost 12 cents (0.21%) to $58.36, Telstra Corporation fell 30 cents (1.56%) to $18.58, Spark New Zealand dropped 37 cents (3.25%) to $10.85 and Westpac added 3 cents (0.13%) to $22.39.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.33% and the 5-year yield was 1.73%.
Shares of Walt Disney (DIS) rose after the company reported a strong final quarter of fiscal 2015. Adjusted bottom-line results came in ahead of expectations. The debut of the new Star Wars film in December and the opening of the Shanghai resort next spring are seen as catalysts with long-term implications for the stock.
European markets closed mixed.
The FTSE 100 fell 0.2%, the French CAC 40 was up 0.1% and Germany's DAX gained 0.9%.
Asian shares were also mixed.
The Shanghai Composite rose 1.9%, the Nikkei 225 gained 0.8% and the Hang Seng was down 0.8%. India's Sensex fell 0.2%.
Australian Market Report – Local Market Expected To Open Lower
The Australian market looks set to open lower despite Wall Street closing mainly higher following better-than-expected jobs data. At 0805 AEDT on Monday, the December share price index futures contract was down 28 points at 5,194.
Locally, in economic news on Monday, the Australian Bureau of Statistics releases overseas arrivals and departures figures for September while the ANZ job advertisements series for October is also due out. The Australian Financial Review Business Summit 2016 launches in Sydney. In equities news, Recall Holdings has its annual general meeting in Sydney.
In This Issue
Metro Mining (MMI) | SPEC BUY
Metro Mining (MMI) released a positive BFS for the Bauxite Hills project. The study delivered standout IRR of 148% owning to low upfront capex and high margins. Production of 1.95Mtpa direct shipping bauxite ore (DSO) generated a NPV15 of A$235m, largely in line with the February 2015 PSF. The Company is now evaluating an optimised production case of 4-5Mtpa in the wake of the State Governments request for a full Environmental Impact Statement (EIS), requiring a longer dated permitting process than the original Environmental Assessment (EA). While this clearly sets back first production, Argonaut believes MMI now has the opportunity to right-scale the project and explore partnership options with neighbour Gulf Alumina to maximise project value. SPEC BUY with a $0.20 target price.
Did the earth move for you? | Contract mining vs owner-operator
Contract miners have had a torrid time. In response they have had to aggressively cut costs, write down assets, and accept lower margins. Yet outside of iron ore, their services and surplus equipment must be looking more attractive to miners, and we wouldn’t be surprised to see opportunities slowly begin to emerge. Arguably most offer value, but those with lower-risk balance sheets are likely to respond first.
Asciano announced that Brookfield Infrastructure Partners L.P. has acquired 188m shares in the Company representing a 14.9% interest in it, via a series of off-market share purchases following the close of trading on the ASX. It has also entered into arrangements giving it economic interests in a further 4.3% of the Company. Subject to agreeing a bid implementation agreement with the Company, which is being progressed, Brookfield Infrastructure intends to make a takeover offer for the Company for the same consideration as the standard consideration under the existing scheme of arrangement announced on 17 August 2015. The takeover offer would be subject to a 50.1% minimum acceptance condition and would have similar conditions to the scheme of arrangement, including ACCC merger clearance. AIO soared 67 cents to $8.95.
News Corporation (NWS)
News Corporation reported financial results for the 3 months ended 30 September 2015. The Company reported fiscal 2016 first quarter total revenues of $2.01bn, a 4% decline as compared to 2014. Adjusted revenues declined 1% compared to the 2014, as strong growth in the Digital Real Estate Services segment from REA Group was offset by lower advertising revenues at the News and Information Services segment. The Company reported first quarter Total Segment EBITDA of $165m, a 15% decline as compared to $194m in the 2014. Adjusted Total Segment EBITDA declined 7%, or $14m, compared to the 2014. Income from continuing operations was $143m compared to $109m in the 2014. Reported EPS from continuing operations were $0.22 compared to $0.15 in the 2014. NWS dropped 38 cents to $21.33.
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)