Overseas Market Report – U.S. Stocks End Higher as Oil Pares Losses
U.S. stocks closed higher on Thursday after a three-day losing streak, as energy-company shares rallied and oil prices pared their losses.
The S&P's energy-company index was up 1.5%, the biggest gainer. But a decline in materials and utilities companies kept the S&P 500's gains in check.
Initial U.S. unemployment claims rose 13,000 to 282,000 last week. The less volatile four-week moving average was up 1,500 to 270,750. Economists had expected claims to rise by only 1,000 in the week.
At the close the Dow was up 0.5%, the S&P 500 was 0.2% higher and the NASDAQ was up 0.4%.
For Australian ADRs listed on the NYSE, BHP Billiton added 19 cents (0.76%) to $25.13, ResMed gained 62 cents (1.13%) to $55.68, Telstra Corporation lost 4 cents (0.21%) to $19.03, Spark New Zealand slipped 8 cents (0.75%) to $10.57 and Westpac declined 15 cents (0.65%) to $22.85.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.23% and the 5-year yield was 1.68%.
AIG (AIG) has announced a number of changes to its management team. Most prominently, CFO David Herzog will depart, to be replaced by Sid Sankaran, who currently serves as chief risk officer. The company is also replacing and consolidating other top positions: Robert Schimek is taking over as CEO of commercial operations from John Doyle, and regional CEOs are being rolled into one position. The company had previously announced its intention to reduce senior management positions by about 20%.
European markets were mixed after a choppy trading session. The FTSE 100 was down 0.6%, the French CAC 40 was off 0.1%, while Germany's DAX was up 0.1%.
Asian shares were mostly lower on the day. The Nikkei 225 shed 1.3%, while the Shanghai Composite and Hang Seng were each 0.5% lower. India's Sensex was up 0.9%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 10 points lower at 5,028.
Thursday 10 December – close. The Australian market had a weak start to the day, following a weak performance on Wall Street overnight. Broad based sell-offs from financial stocks ensured the downward trend continued throughout the day, to close far below the red line, despite a rebound in the big miners. Most sectors performed negatively, with only materials ending higher. The Australian dollar appreciated against most major currencies.
The All Ordinaries slid 42.40 points to 5,087.50 while the S&P/ASX 200 dropped 42.80 points to 5,037.70.
In This Issue
Argonaut Research | Saracen (SAR) | BUY
Saracen (SAR) reported better than expected production and cost figures for October / November, producing ~29koz @ AISC ~A$980/oz. Argonaut increases its December Q forecast from 38koz to 41koz as a result. FY to date production (five months to 30th November) totalled 67koz @ ~A$1,005/oz (~161koz annualised), putting the Company firmly on track to achieve or exceed guidance of 150-160koz @ A$1,025-1,075/oz. Positive drilling results from Karari, focusing on the Inferred areas of the northern A1 and Hangingwall Lodes, reinforce Argonaut’s positive view on the deposit’s geology. Whilst SAR is approaching our valuation of A$0.60, the stock offers good operational visibility, strong margins, near term growth to ~300koz, a sound balance sheet and quality management. BUY and A$0.60 valuation maintained.
Fonterra Shareholders' Fund (FSF)
Fonterra Shareholders' Fund announced that Fonterra Co-operative Group maintained a forecast Farmgate Milk Price of $4.60 per kgMS. Along with the November 2015 announced estimated EPS range of 45-55c, this amounts to a total available for payout of $5.05-$5.15 kgMS and would currently equate to a total forecast Cash Payout of $4.95-$5.00. The Company's Board also reviewed the Fonterra Co-operative Support loan. The loan was made available on production from 1 June to 31 December 2015. The loan of 50c per kgMS is interest-free until 31 May 2017 with repayments triggered when the Farmgate Milk Price exceeds $6 per kgMS. FSF lost 1 cent to $5.27.
Whitehaven Coal Limited (WHC)
Whitehaven Coal announced that the NSW Department of Planning and Environment has granted approval to increase annual production from 8Mtpa to 11Mtpa and to install a 400 metre wide longwall face at the Narrabri mine. Mining is currently taking place in longwall panel LW05. The first 400 metre wide longwall panel currently being developed is LW07. This is expected to come into production in H2 FY2017. Key elements of the project include the purchase of additional longwall face shields, a new armoured face conveyor and drive motors, upgrades to the coal clearance systems and surface coal handling stockpile facilities. ROM coal production for FY2016 is expected to be in the range of 6.6Mt to 6.8Mt as two full longwall moves occur in FY2016. WHC slumped 9.5 cents to $0.725.
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)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF