Overseas Market Report – U.S. Stocks End Lower after Choppy Session
U.S. stocks finished lower on Tuesday as a late rally in materials and healthcare stocks was unable to help the main indexes reverse earlier losses that were fueled by a sharp drop in oil prices.
In economic news, wholesale inventories fell by 0.1% in December from the previous month. The third straight monthly decline is a sign that firms are cutting back on inventory levels in the face of lower sales.
At the close, the Dow was off 0.1%, while the S&P 500 and NASDAQ were off 0.1% and 0.3%, respectively.
Coca-Cola (KO) reported better-than-expected results. The firm said beverage volume was up 3% in the quarter and the firm was also to raise prices. Overall revenue was down 8% year over year due to fewer selling days and foreign currency headwinds. Management also said it would complete its effort to refranchise its bottling operations three years earlier than expected.
Shares of Viacom (VIAB) slipped after the media firm reported disappointing results. Earnings of US$1.13 per share were down from US$1.20 per share in the year-ago quarter and short of the US$1.18 per share expected by economists. Weakness was widespread across Viacom's film and cable businesses.
CVS Health (CVS) posted results that were in line with expectations, but provided guidance that was below views. The pharmacy business propelled earnings up to US$1.34 per share up from US$1.14 a share in the year-ago quarter.
Fox (FOX) posted a weak fiscal second quarter, as both revenue and EBITDA came in slightly below Morningstar's projections. The firm lowered fiscal 2016 guidance as a result of ongoing foreign exchange headwinds. Excluding the sold DBS business, quarterly revenue of US$7.64 billion was flat versus a year ago and 3.5% below Morningstar's estimate, as television growth (up 5%) was more than offset by declines at filmed entertainment (down 14%).
For Australian ADRs listed on the NYSE, BHP Billiton slipped 90 cents (3.96%) to $21.81, ResMed added 19 cents (0.33%) to $57.23, Telstra Corporation lost 11 cents (0.55%) to $19.82, Spark New Zealand gained 14 cents (1.27%) to $11.19 and Westpac declined 89 cents (4.21%) to $20.24.
At 8:00 AM (AEDT), the 10-year Treasury note yield was 1.73% and the 5-year yield was 1.16%.
European markets were broadly lower.
The FTSE 100 and Germany's DAX were off 1.0% and 1.1% respectively, while the French CAC 40 dropped 1.7%.
A rising yen hit Japanese stocks, sending the Nikkei 225 down 5.4% on the day. India's Sensex declined 1.1%. Chinese share markets remain closed for Lunar New Year holidays.
Australian Market Report – Local Market Expected To Open Flat
Ahead of the local open, SPI futures were 3 points higher at 4,778.
Tuesday 9 February – close. The local market opened lower today on the back of losses on Wall Street overnight with growing concerns over the health of the global economy. The negativity continued until close as stocks remained well below the flat-line, weighed down by the banking sector. There were poor results from all the sectors with healthcare, financials and energy the worst performers. The Australian dollar fell against most major currencies.
The All Ordinaries fell 139.50 points to 4,882.60 while the S&P/ASX 200 lost 143.30 points to 4,832.10.
In This Issue
Bank of Queensland (BOQ)
Bank of Queensland announced that it is embarking on a program to reshape its organisational structure to better affect the Group's strategy. To enable these organisational changes to be implemented, an investment in the order of $15m (pre-tax) is anticipated to be incurred over the course of FY16. This expense will not be excluded from Cash Earnings in FY16. The investment required to implement the change initiatives should deliver 100% payback through cost savings within 12 months. BOQ lost 103 cents to $11.66.
Southern Cross Media Group (SXL)
Southern Cross Media Group announced that the Company has entered into a long-term contract with Australian Traffic Network (ATN) for it to provide traffic reports for broadcast on the Company's radio stations. The Company will receive payment from ATN in return for its stations broadcasting advertising tags attached to news and traffic reports. ATN has been the Company's provider of traffic reports for over 10 years. This new contract will commence with effect from 1 February 2016. The term of the contract is for 20 years, with an option for ATN to extend by 10 years. The $100m up-front cash payment will be used by the Company to reduce leverage and financing costs and to provide future balance sheet flexibility. SXL gained 2 cents to $1.13.
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