Overseas Market Report – Stocks End Sharply Lower as Oil Slide
U.S. stocks closed sharply lower on Friday after the oil price fell below US$36–the lowest it has been since February of 2009.
Retail sales were up 0.2% in November, held down by a drop in auto sales. Excluding cars, sales were up 0.4% in the month, outpacing the 0.2% rise expected by economists.
Consumer sentiment rose in December, according to the University of Michigan survey. The reading of 91.8 was up from 91.3 in November but slightly below the 92 that economists had been looking for.
The producer price index rose 0.3% last month, the biggest gain since June and well above the 0.1% rise that had been anticipated.
At market close the Dow, S&P 500, and Nasdaq were down 1.8%, 2.0% and 2.2%, respectively.
For Australian ADRs listed on the NYSE, BHP Billiton slipped $1.33 (5.29%) to $23.80, ResMed lost 37 cents (0.66%) to $55.31, Telstra Corporation fell 61 cents (3.21%) to $18.42, Spark New Zealand dropped 11 cents (1.04%) to $10.46 and Westpac declined $0.54 (2.37%) to $22.28.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.13% and the 5-year yield was 1.55%.
DuPont (DD) and Dow (DOW) confirmed they have agreed to a merger of equals. After the deal is completed, the firm will split into three new companies. The firms expect to realize around $3 billion in cost synergies.
European markets were lower. Germany's DAX fell 2.4%, while the FTSE 100 was off 2.2% and the French CAC 40 was down 1.8%.
Asian shares were mixed. The Nikkei 225 rose 1%, while the Shanghai Composite was off 0.6% and the Hang Seng was down 1.1%. India's Sensex fell 0.8%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 73 points lower at 4,948.
Local stocks started Friday lower as weakness in commodity prices outweighed an overnight rally in the US market. The local sharemarket fought its way back around midday, but lost its momentum again in afternoon trade, as early gains from the big lenders faded, with resource stocks weighing heavily. There were mixed results from the sectors; health care gained most significantly; while industrials were the worst performers. The Australian dollar depreciated against most major currencies.
The All Ordinaries slid 8.90 points to 5,078.60 while the S&P/ASX 200 dropped 8.20 points to 5,029.50.
Australian shares capped off the week with a fourth straight day of losses as resources stocks stumbled, countering a mild recovery by banks.
Investors across the region are bracing for next week's meeting of the U.S. Federal Reserve and what could be a long-awaited rise in interest rates. "While the global macro environment is very challenging at the moment, there does not look to be a compelling reason to see the ASX selloff substantially below the 5000 mark," Angus Nicholson, a market analyst at IG, said. "The hope is that the Fed rate hike next week will finally end the uncertainty, bringing some much needed stability to equities that could see them perform well into January."
In This Issue
Kingsgate Consolidated (KCN)
Kingsgate Consolidated announced that WPG Resources (WPG) and Diversified Minerals (DMPL), an entity related to the PYBAR Group have jointly exercised the option to acquire the Challenger gold mine and associated exploration assets in SA from the Company. WPG and DMPL will enter into a 50/50 JV in relation to these assets with WPG as JV manager. The acquisition will be effected by WPG acquiring all of the issued capital of the Company's subsidiary, Challenger Gold Operations. The purchase price is $1m payable as to $25,000 on signing the option agreement, $75,000 on execution of final transaction documents and $900,000 in a staged manner after milling operations recommence. DMPL has agreed to subscribe for a strategic investment in WPG by way of a placement of 25,806,452 shares at 3.1cps that will raise $800,000. KCN lost 0.5 cents to $0.38.
Woodside Petroleum (WPL)
Woodside Petroleum announced that the project participants have approved the Greater Western Flank Phase 2 (GWF-2) Project off the north-west coast of Australia. The GWF-2 Project will develop 1.6 TCF of raw gas from the combined Keast, Dockrell, Sculptor, Rankin, Lady Nora and Pemberton fields using subsea infrastructure and a 35 km, 16" pipeline connecting to the existing Goodwyn A platform. The total investment for the project is expected to be US$2.0bn with initial project start-up expected in 2H 2019. Gas delivery will initially commence from five wells in the Lady Nora, Pemberton, Sculptor and Rankin fields, followed by the remaining three wells in the Keast and Dockrell fields in 1H 2020. WPL added 19 cents to $27.04.
James Hardie Industries PLC (JHX)
James Hardie Industries PLC announced the closing of a US$500m unsecured revolving credit facility. The facility matures on 10 December 2020. The size of the credit facility may be increased by up to US$250m upon exercise of an accordion feature. The credit facility replaces the Company's existing bilateral loan facilities of US$590m, which were scheduled to mature in 2016, 2017 and 2019. The facility was arranged by HSBC Bank USA, National Association, Merrill Lynch, Pierce Fenner & Smith Incorporated, Wells Fargo Securities, LLC and Commonwealth Bank of Australia as Joint Lead Arrangers and Joint Bookrunning Managers. HSBC Bank USA, National Association is acting as the administrative agent of the credit facility. JHX fell 16 cents to $15.46.
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)