Overseas Market Report – U.S. Stocks End Lower on Disappointing Data
U.S. stocks finished lower on Friday after the release of some disappointing data.
U.S. retail sales were up only 0.1% in October from the previous month, well below expectations. Excluding gas and auto, sales were up 0.3%. Restaurant sales and home furnishing sales were strong in the month.
The producer price index was down 0.4% last month. Economists had expected a 0.3% gain. Core prices, which exclude food, energy and trade, were down a more modest 0.1%. Overall, producer prices are down 1.6% year over year.Consumer sentiment rose in November, according to the University of Michigan survey. The reading of 93.1 was above both the 90 reading seen at the end of October and expectations that the survey would come in at 91.
At market close the S&P 500, Dow and NASDAQ were down 1.1%, 1.2% and 1.5%, respectively.
For Australian ADRs listed on the NYSE, BHP Billiton added 23 cents (0.83%) to $28.42, ResMed fell 4 cents (0.07%) to $57.32, Telstra Corporation lost 33 cents (1.78%) to $18.18, Spark New Zealand slipped 24 cents (2.25%) to $10.45 and Westpac declined 11 cents (0.51%) to $21.58.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.27% and the 5-year yield was 1.65%.
Shares of Mylan (MYL) rocketed after Perrigo (PRGO) shareholders rejected the firm's hostile bid.
Cisco (CSCO) reported fiscal first-quarter results that were in line with Morningstar's expectations but guided for a weaker fiscal second quarter. Notably, while revenue for the switching segment increased, the routing segment disappointed. Overall profitability improved as a result of solid expansion in gross margins, and Morningstar's overarching thesis on the name hasn't changed.
Nordstrom's (JWN) third-quarter earnings report showed a significant deceleration in comparable sales growth and margin pressure as a result of discounting. Third-quarter comp sales grew only 1%, a significant deceleration from six straight quarters of mid-single-digit comp increases. This resulted in 7% overall sales growth. Weakness was across geographies, formats, and products, leading Morningstar to believe that the subpar traffic levels were a result of an overarching weaker consumer, not company-specific factors. In Morningstar's opinion, management reacted quickly to this weakness, immediately using markdowns to clear excess merchandise and finished the quarter with inventory growth roughly in line with revenue growth.
European markets were lower.
The FTSE 100 and French CAC 40 were each down around 1% while Germany's DAX was off 0.7%.
Asian shares were also under pressure.
The Hang Seng dropped 2.2%, the Shanghai Composite was off 1.4% and the Nikkei 225 was down 0.5%. India's Sensex fell 1.0%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 37 points lower at 4,997.
The Australian market looks set to open lower after US and european stocks fell, pulled down by concern over US retail figures, weak eurozone data and lingering concerns over China. At 0754 AEDT on Monday, the December share price index futures contract was DOWN 37 points at 4,997. Locally, in economic news on Monday, Assistant Treasurer Kelly O'Dywer is slated to attend a Financial Services Council event in Sydney. The Australian Bureau of Statistics releases October's new motor vehicles sales figures while the ACCI Small Business Survey for the September quarter is due out.
Friday 13 November – close. The Australian market plunged this morning, following weak leads from global equity markets and weakness in commodity prices overnight. The negativity continued throughout the day, as a broad-based selloff from resource stocks and the big lenders dragged the market back towards the 5,000-point level. Most sectors ended lower, with only information technology closing in the green. The Australian dollar gained against most major currencies.
The All Ordinaries fell 70.40 points to 5,111.80 while the S&P/ASX 200 dropped 74.40 points to 5,051.30.
In This Issue
BHP Billiton (BHP)
BHP Billiton provided information on the incident at the Samarco Mineracao. Samarco has advised that there are 9 fatalities and 4 people previously unaccounted for have been found and 19 people remain unaccounted for. The Company offered deepest sympathies to the families and friends of those who have died as a result of this tragic incident. The Company's immediate priority is the welfare of the Samarco workforce and the community. Samarco and authorities are providing water and food aid to affected communities. Samarco operations were immediately stopped following the incident and Samarco's operating licence has been suspended. The Samarco operations will remain suspended as authorities commence investigations and rectification work plans are developed. BHP lost 38 cents to $20.23.
Nine Entertainment Co. Holdings (NEC)
Nine Entertainment Co. Holdings announced that it refers to speculation in press regarding merger discussions with Southern Cross Media. The Company confirms that from time to time over the past few years there have been discussions with Southern Cross Media on various commercial and broader business transactions. The Company and Southern Cross Media have not reached any agreement on any transaction. The Company will make an appropriate announcement to the market in accordance with its disclosure obligations. NEC slid 6 cents to $1.50.
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