Overseas Market Report – Stocks Pare Gains Ahead of Fed
Stocks pared early gains ahead of the Fed's rate decision.
Industrial production fell 0.6% in November, the third straight monthly decline. Capacity utilization fell to 77% from 77.5%. Economists had expected much more modest declines in both metrics.
Housing starts jumped 10.5% in November to an annualized rate of 1.173 million. Building permits were up 11% from the previous month and are up 13.4% year-over-year. Single family starts were at the highest level in nearly eight years.
At market close the Dow, Nasdaq and S&P 500 were up 1.4%, 1.6% and 1.6% respectively.
For Australian ADRs listed on the NYSE, BHP Billiton gained 81 cents (3.40%) to $24.61, ResMed gained 35 cents (0.63%) to $56.06, Telstra Corporation jumped 43 cents (2.28%) to $19.26, Spark New Zealand rose 26 cents (2.52%) to $10.58 and Westpac gained 55 cents (2.47%) to $22.85.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.30% and the 5-year yield was 1.74%.
There was limited corporate news today.
European markets were higher ahead of the Fed. The FTSE 100 was up 0.7% while the Paris CAC and Germany's DAX were each up 0.2%.
Asian shares were also up on the day. The Nikkei 225 jumped 2.6%, the Hang Seng rose 2% while the Shanghai Composite was 3% higher. India's Sensex gained 0.7%.
Australian Market Report – Local Markets Are Expected To Open Higher
Ahead of the local open SPI futures were 46 points higher at 5,069.
Wednesday 16 December – close. The local market opened higher today on the back of gains on Wall Street overnight. Stocks rose steadily throughout the day, led by mining stocks and the big four banks, to bring the ASX back over the 5000 mark. There were mostly positive results from the sectors with only health care and information technology in the red. The Australian dollar gained against the greenback but had mixed results against other major currencies.
The All Ordinaries rose 114.80 points to 5,078.70 while the S&P/ASX 200 rose 118.80 points (2.42%) to 5,028.40.
Australian shares broke a six day losing streak with a strong rally, as higher oil prices provided relief for battered energy stocks and a global rebound in equities propelled the broader market higher.
The bounce was broadly-based across the sectors, with financials and mining stocks rising, and retailers, property trusts and telcos all making good ground. The energy sector was the best performer, gaining 3.4%. Oil Search rose 4.7% and Woodside rose 3.2%,
The materials sector gained 3.7%, with diversified miner BHP Billiton up 5.6% after several days of heavy selling, Rio Tinto up 3% and Whitehaven Coal up 6.6%.
Among the major banks, Commonwealth Bank of Australia gained 2.9%, Westpac rose 2.8%, ANZ rose 2.7% and National Australia Bank rose 2.6%.
Casino operator Crown Resorts' shares surged 10% after reports majority owner James Packer was in talks to take some of the company's assets private. Spokespeople from Crown and James Packer's private company Consolidated Press Holdings weren't immediately available for comment on the reports.
Domino's Pizza Enterprises also surged ahead, ending up 8.3%, after announcing it has teamed up with London-listed Domino's Pizza Group to buy Germany's Joey's Pizza.
One sector to end the day in negative territory was healthcare after the federal government announced cuts to funding for pathology and diagnostic imaging services. Sonic Healthcare fell 5.6% and Primary Healthcare fell 9.7%.
However, IG's Nicholson said the cuts being factored into the stock prices are "by no means a done deal", with political positioning in the lead up to a 2016 election providing plenty of potential for changes.
In This Issue
Kingsgate Consolidated Limited (KCN)
Kingsgate Consolidated announced that Tyranna Resources has completed a capital raising of $250,000 before costs. It will issue 11,363,636 FPO shares at $0.022 per share and subscribers will be issued one free attaching option for every two shares, with an exercise price of $0.04 expiring 24 August 2017. Proceeds of the capital raising will be used to fund drilling at the Jumbuck Project (at Golf Bore), assays and metallurgical testing, advancement of feasibility studies for Golf Bore and general working capital. The latest phase of reverse circulation drilling at the Golf Bore Prospect in SA's Western Gawler Craton has been completed with 1,300m drilled. Drilling will restart in mid-January 2016 when an additional 1,500m is planned. KCN remained unchanged at $0.38.
Domino's Pizza Enterprises Limited (DMP)
Domino's Pizza Enterprises announced that it has entered into binding agreements for a two-thirds equity interest in a newly formed JV by partnering with UK-listed Domino's Pizza Group PLC (DPG), the existing holder of the Domino's Pizza Master Franchise Agreement for Germany, to acquire the Joey's Pizza chain of 212 stores in Germany. Joey's Pizza is the largest pizza delivery chain in Germany by system sales (EUR143m) and number of stores. Initial consideration for the Joey's Pizza transaction of EUR45m is payable by the JV on completion of the transaction, with subsequent tiered payments for up to a further EUR34m contingent on earn-out criteria. The transaction is subject to regulatory and other customary approvals and is expected to complete in the first quarter of 2016. DMP added 408 cents to $53.44.
Flight Centre Travel Group Limited (FLT)
Flight Centre Travel Group announced that it plans to significantly boost its presence in both the online and student and youth travel sectors. The Company announced on 16 December 2015 that it had made an offer to acquire the StudentUniverse.com group of companies (SU), a move that would fast-track its growth in these two key travel sectors. Under the terms of the offer, which has been communicated to Travelonomy's shareholders on 16 December 2015, the Company will pay $US28m for 100% of SU. For the proposed transaction to become unconditional, the Company requires shareholders who hold at least 90% of Travelonomy's issued shares to accept the offer within the next 17 days. The Company plans to use its cash to fund the acquisition, which is expected to be accretive to its earnings during 2015/16. FLT added 94 cents to $35.10
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)