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18/01/2016 Argonaut Morning Note

    Home Stockbroking & Research Morning Notes 18/01/2016 Argonaut Morning Note
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    18/01/2016 Argonaut Morning Note

    By admin | Morning Notes | 0 comment | 17 January, 2016 | 0

    Overseas Market Report – U.S. Stocks Fall amid Worldwide Rout

    U.S. stocks cratered on Friday, closing out the worst-ever two-week start to a calendar year after steep drops in oil prices and renewed Chinese market volatility heightened investor anxiety.

    Investors fled stocks and rushed into assets perceived as safe, sending the 10-year Treasury yield briefly below 2% and gold sharply higher.

    U.S. retail sales fell 0.1% last month on a seasonally adjusted basis, the Commerce Department said. Economists had expected a slightly steeper 0.2% decline.

    The government's producer price index fell 0.2% last month, which was in line with economists' expectations.

    Industrial production dropped 0.4% in December, according to data from the Federal Reserve. This was the third straight monthly decline. Economists had expected a more modest 0.2% decline.

    Consumer sentiment rose for the fourth straight month to 93.3 from 92.6 in January, according to a reading from the University of Michigan. Economists expected a reading of 93.0.

    At the close, the Dow was down 2.4%, while the S&P 500 and NASDAQ had dropped 2.2% and 2.7%, respectively.

    Shares of Intel (INTC) plunged 9.1% on concerns over its data-centre business and exposure to China.

    Citigroup (C) sank 6.4% despite reporting its biggest full-year earnings in nearly a decade.

    Wells Fargo (WFC) shares dropped 3.6% after the bank reported flat fourth-quarter profit but a rise in revenue.

    For Australian ADRs listed on the NYSE, BHP Billiton slipped $1.51 (6.96%) to $20.17, ResMed lost 88 cents (1.62%) to $53.29, Telstra Corporation lost 72 cents (3.83%) to $18.08, Spark New Zealand slipped 1 cent (0.09%) to $10.56 and Westpac declined $1.10 (5.00%) to $20.91.

    At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.03% and the 5-year yield was 1.45%.

    European markets slumped as energy companies were clobbered by declining oil prices.

    The FTSE 100 fell 1.9%, the French CAC 40 sank 2.4% and Germany's DAX dropped 2.5%.

    Stocks were lower across Asia as China's Shanghai Composite fell into bear-market territory with a 3.6% loss.

    The Nikkei 225 was down 0.5% and the Hang Seng fell 1.5%. India's Sensex declined 1.3%.

    Australian Market Report – Local Market Expected To Open Lower

    Ahead of the local open, SPI futures were 87 points lower at 4,745.

    Friday 15 January – close. The Australian market had a good start to the day, as resource stocks rallied this morning following an overnight rebound in iron ore and oil prices. However, local shares gave up all of early gains due to a late reversal in the big banks, to close slightly below the red line. There were mixed results from the sectors; health care gained most significantly while consumer staples lagged behind the rest. The Australian dollar gained against most major currencies.

    The All Ordinaries fell 15.60 points (-0.31%) to 4,948.50 while the S&P/ASX 200 lost 16.60 points (-0.34%) to 4,892.80.

    In This Issue

    BHP Billiton (BHP)
    BHP Billiton announced that it expects to recognise an impairment charge of US$4.9bn post-tax against the carrying value of its Onshore US assets. This charge will be recognised as an exceptional item in the financial results for the half year ended 31 December 2015. The impairment follows the bi-annual review of the Company's asset values and reflects changes to price assumptions, discount rates and development plans which have more than offset substantial productivity improvements. The impairment will reduce Onshore US net operating assets to US$16bn. The Group will reduce the number of operated rigs in its Onshore US business from seven to five in the March 2016 quarter. This will comprise three rigs in the Black Hawk and two rigs in the Permian. BHP added 19 cents to $15.07.

    Recall Holdings (REC)
    Recall Holdings reported that the United Kingdom's Competition and Markets Authority (CMA) has decided to refer Iron Mountain's anticipated acquisition of the Company for an in-depth phase 2 review. Iron Mountain has advised that it intends to cooperate fully with the CMA and looks forward to the opportunity to demonstrate that its proposed acquisition of the Company does not raise appreciable competition concerns in the United Kingdom. The Company and Iron Mountain believe that the transaction will be cleared in due course. Iron Mountain continues to work closely with regulatory authorities in the UK and other jurisdictions and both the Company and Iron Mountain continue to expect the transaction to close early in the second quarter of 2016. REC fell 7 cents to $6.38.

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