Overseas Market Report – Stocks Give Up Gains as Oil Rally Fades
U.S. stocks swung to sizable losses in afternoon trade to close lower Wednesday after a rally in crude-oil prices evaporated.
A rebound in oil and commodity prices boosted energy and materials stocks and helped extend advances for the main indexes on Wednesday morning, following a two-day slump largely driven by oil's tumble. But oil futures turned decidedly lower as a big weekly climb in U.S. distillate supplies dragged prices for heating oil down.
At market close the Dow was down 0.4%, the S&P 500 was down 0.8%, while the NASDAQ was 1.5% lower.
For Australian ADRs listed on the NYSE, BHP Billiton gained 50 cents (2.05%) to $24.94, ResMed lost $1.36 (2.41%) to $55.06, Telstra Corporation fell 12 cents (0.63%) to $19.07, Spark New Zealand gained 36 cents (3.50%) to $10.65 and Westpac declined 6 cents (0.26%) to $23.00.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.21% and the 5-year yield was 1.63%.
DuPont (DD) and Dow Chemical (DOW) are close to a merger agreement, according to a report in The Wall Street Journal. Each firm has a market cap of over $60 billion, meaning this would be one of the most sizeable deals in an M&A heavy year. After the merger, the firms plan to split into three new businesses.
Kinder Morgan (KMI) announced that it would cut its dividend by 75% starting in the fourth quarter. The steep cut comes as the firm was finding it difficult to raise outside capital to fund its expansion plans. Management will now use the cash to fund these projects internally.
Shares of Yahoo (YHOO) were little changed on news the firm had decided against spinning off its Alibaba (BABA) stake into a new company. Instead, the firm will look to spin off or sell Yahoo's core business and its stake in Yahoo Japan. The move is designed to potentially minimise the tax burden on shareholders.
Costco (COST) reported worse-than-expected results. The firm said its fiscal first-quarter earnings were off 3.2% year over year. One of the drivers of the disappointment was membership fees, which rose only 1.9% year over year versus the 6% growth seen in the first quarter of 2015.
European markets were lower.The FTSE 100 was down 0.1%, Germany's DAX was off 0.8% while the French CAC 40 was off 1.0%.
Asian shares were mostly lower. The Shanghai Composite was up 0.1%, the Nikkei 225 fell 1%, while the Hang Seng was off 0.5% on the day. India's Sensex was down 1.1%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 23 points lower at 5,058
The Australian market opened lower yesterday morning, following soft leads from global equity and commodity markets. Local stocks reversed early losses around lunchtime, but dipped below the red line again during afternoon trade, led by a late sell-off from the major lenders. There were mixed results from the sectors; energy gained most significantly while consumer staples were the biggest laggard. The Australian dollar depreciated against most major currencies.
The All Ordinaries fell 28.10 points to 5,129.90.
A recovery in Australian resources stocks wasn't enough to buoy the wider equities market, which declined for a second straight day.
Financial shares, which have a hefty weighting in the local market, led a broad fall outside the energy and materials sectors. The declines came after the release of data showing a decline in Australian consumer confidence in December from the month before and a sequential fall in home-loan approvals in October.
The S&P/ASX 200 finished down 28.1 points, or 0.6%, at 5080.5. The index had been as low as 5069.6 early in the day following a weak finish for shares on Wall Street overnight, before paring losses.
Australia & New Zealand Banking Group slipped 1.5%, National Australia Bank lost 1.2% and Westpac shed 0.6%. Still, Commonwealth Bank of Australia managed to add 0.2%.
Among energy shares, Woodside Petroleum rose 0.5%, Oil Search gained 1% and Santos jumped 5.7%. BHP Billiton, which began the day at a fresh decade low, recovered to advance 0.7%, while South32 added 1.5% and Fortescue Metals Group was 0.8% higher.
The basket of energy shares rose 0.4% and the materials subindex inched up 0.1%.
In This Issue
Spotless Group Holdings (SPO)
Spotless Group Holdings provided investor presentation and market update. The Company announced that the outlook for FY16 has been affected by several short term factors occurring concurrently. The Company acquires Aladdin Laundry, ILS and Prime Laundries since September 2014. A difference in customer product mix and increased volume have caused operating challenges and resulted in higher than expected overtime to ensure the Company continues to meet customer expectations. The Company's largest customer sector, Health, Education and Government, has performed well, whilst Commercial & Leisure and Base & Township are experiencing a slowdown. No change to its dividend policy of paying out 65-75% of Adjusted NPAT, to be determined by the Board having regard to the outlook and capital requirements of the business. SPO lost 4 cents to $1.10.
Mirvac Group (MGR)
Mirvac Group announced that the Company and an affiliate of Blackstone Real Estate Asia (co-owners of 275 Kent Street, Sydney) have finalised documentation and entered into an agreement for lease with leading Australian bank and financial services provider, Westpac. Extending Westpac's commitment as majority tenant of the tower until 2030, Westpac has secured 58,500 sqm across levels 1 to 23 of the 32 level premium grade tower for a 12-year term, commencing November 2018. The Company will utilise its in-house development, construction and asset management expertise to deliver further enhancements to the premium grade asset. MGR added 0.5 cents to $1.925.
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)