Overseas Market Report – U.S. Stocks Lose Ground after Data, Earnings
US. stocks finished lower on Wednesday after the release of disappointing earnings and economic data.
U.S. retail sales were up 0.1% in September. Economists had expected a 0.2% rise. August's sales numbers were revised down to show no growth in that month.Sales were dragged down by a 3.2% decline in sales at gas stations. On a year-over-year basis, overall sales were up 2.4% or 4.9% excluding gasoline.
The producer price index fell 0.5% in September, far steeper than the 0.2% decline expected by economists. Excluding food and energy prices, prices were down 0.3% versus expectations of a 0.1% increase.
At the close, the Dow, S&P 500 and NASDAQ were off 0.9%, 0.5% and 0.3%, respectively.
For Australian ADRs listed on the NYSE, BHP Billiton added 51 cents (1.41%) to $36.67, ResMed gained 73 cents (1.34%) to $55.25, Telstra Corporation lost 1 cent (0.07%) to $20.00, Spark New Zealand lifted 30 cents (2.98%) to $10.37 and Westpac remained unchanged at $21.97.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 1.98% and the 5-year yield was 1.27%.
JPMorgan Chase's (JPM) third-quarter results were marred by the volatility inherent in certain capital markets businesses and continued legal expenses. Revenue in the firm's investment management and wealth management businesses declined as assets under management fell 4% and the firm experienced a small amount of outflows. Principal transactions revenue declined 11% from the third quarter of 2014 on weaker fixed-income trading. However, these temporary headwinds were offset by solid loan growth and continued reductions in personnel expenses. Gross loan balances expanded by 9% during the year while headcount fell by 3% and compensation expense by 6.5%.
Intel (INTC) reported fairly solid third-quarter results which exceeded its guidance as well as Morningstar's expectations. The firm's recently released sixth generation core processors (Skylake) helped bolster its client computing group sales while revenue from other segments like data centre, internet of things, and memory, each grew at least 10% year over year. Although we were surprised with another cut to full-year capital expenditures, Morningstar's long-term forecast remains intact for Intel's process node transitions. Shares were off as a result of lowered fourth-quarter guidance for the data centre group.
Wide-moat-rated BlackRock (BLK) closed out the third quarter in slightly better shape than expected. BlackRock returned to positive flows during the third quarter, picking up $11.4 billion in flows from its actively managed funds (including $875 million from its equity operations and $8.7 billion from its fixed-income platform) and $23.5 billion from its iShares exchange-traded funds business (which generated $5.3 billion in equity inflows and an impressive $18.2 billion in bond ETF flows).
Shares of Wells Fargo (WFC) were off slightly after it reported results that were roughly in line with analyst expectations. The firm said its earnings rose to $1.05 a share from $1.02 in the year-ago quarter. Loans grew, but net interest margins remained under pressure due to the low-rate environment.
Bank of America (BAC) reported better-than-expected results. The firm said it earned 37 cents a share in the quarter, up from 4 cents a share in the third quarter of 2014. The upbeat results were a product of lower legal costs and a modest 3.8% decline in trading revenue, which many had feared would be much worse given the market volatility.
European markets were lower.
The FTSE 100 was down 1.1%, Germany's DAX was down around 1.2%, while the French CAC 40 was off 0.7%.
Asian shares were also lower.
The Hang Seng, Shanghai Composite and Nikkei 225 were off 0.7%, 0.9% and 1.9%, respectively. India's Sensex was down 0.3%.
Australian Market Report – Local Market Expected To Open Flat
Ahead of the local open, SPI futures were 1 point lower at 5,173.
Wednesday 14 October – close. Local stocks opened lower as commodity prices fell overnight and offshore markets' sell-off spilt over onto the local market. A recovery in the big banks managed to drag the index higher during afternoon trade, but failed to recoup heavy losses left by energy stocks. There were mixed results from the sectors; health care gained most significantly while energy was the biggest laggard. The Australian dollar appreciated against most major currencies.
The All Ordinaries lost 4.20 points to 5,230.40 while the S&P/ASX 200 fell 5.60 points to 5,197.30.
Domino's Pizza Enterprises (DMP)
Domino's Pizza Enterprises announced that it has executed a share sale agreement with the owner Mr Franck Guegan and Food Court Finance SRL to acquire the Pizza Sprint chain of pizza stores in France for EUR35m. The Pizza Sprint business to be acquired delivered network sales of EUR30.4m and achieved EBITDA of the order of EUR3.5m in its most recent financial year ended 31 March 2015, inclusive of normalisation adjustments. It is expected that the store count for the Company in France will increase to 330 stores, with an additional 80 net stores arising from the acquisition and further reinforce its position as the largest pizza chain in the French market. The purchase price comprises an Initial cash consideration of EUR31.5m with a further EUR3.5m in cash in instalments based on the satisfaction of certain criteria. DMP added 275 cents to $42.52.
Regis Resources (RRL)
Regis Resources announced that excellent gold results were received from a 190 hole RC programme completed during the September 2015 quarter at Baneygo, 12km south of Roseont. These results over a 3km strike are from 40m spaced infill traverses and continue to confirm a much larger mineralised system than previously identified in limited drilling in 4 discrete areas. RC drilling at Tooheys Well has confirmed a new structure with high grade gold mineralisation. Further RC drilling is planned along strike in the December 2015 quarter. Significant gold results were returned from a 40 hole AC and 9 hole RC drilling programme completed at Coopers. A 20,000m infill and extensional RC drill programme has commenced at the recently acquired Gloster Gold Deposit. RRL gained 4 cents to $2.00.
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