Overseas Market Report – Stocks Turn Lower; Falling Oil Prices, Fed in Focus
Stocks moved lower as oil fell below $35 a barrel again and as the Fed's rate hike decision remained in focus.
Initial unemployment claims fell by 11,000 to 271,000. The less volatile four-week moving average dropped by 250 to 270,500. Claims for the full-year are on track to be, on average, at the lowest level since 1973.
At the close the S&P 500, Dow and NASDAQ were down 1.5%, 1.4% and 1.4% respectively.
For Australian ADRs listed on the NYSE, BHP Billiton slipped 96 cents (-3.91%) to $23.62, ResMed fell 94 cents (-1.67%) to $55.19, Telstra Corporation gained 1 cent (0.05%) to $19.26, Spark New Zealand lost 21 cents (-1.97%) to $10.43 and Westpac declined 22 cents (-0.96%) to $22.65.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.23% and the 5-year yield was 1.72%.
FedEx (FDX) increased its fiscal second-quarter revenue 4.3% and expanded its operating margin 100 basis points to 9.6% after adjusting for costs linked to the pending TNT Express acquisition and a legal settlement concerning historical ground employee classification. Net income improved 17% to $2.58 after adjustments, beating the consensus estimate by $0.08.
Oracle (ORCL) announced its fiscal 2016 second-quarter results late Wednesday, and we believe the key tenets of our investment thesis are intact. Continued resilience in the software maintenance stream and growth in its cloud software and platforms businesses outweigh our concerns about declines in revenue from traditional on-premises software licenses.
Shares of Avon (AVP) were up after confirmation that Cerberus Capital would invest $605 million in the beauty company. Avon North America will be spun off into a private company that will be over 80% owned by Cerberus. Avon shares are up 58% over the last month.
European markets were higher. Germany's DAX rose 2.6%, the Paris CAC was up 1.1% while the FTSE 100 was 0.7% higher.
Asian shares were also up after the Fed's rate hike. The Shanghai Composite, Nikkei 225 and Hang Seng were up 1.0%, 1.6% and 0.8% respectively. India's Sensex gained 1.2%.
Australian Market Report – Local Markets Are Expected To Open Lower
Ahead of the local open SPI futures were 26 points lower at 5,029.
Thursday 17 December – close. The Australian market continued its upward trend this morning, encouraged by positive results from global equity markets after the US Fed hiked interest rates overnight. Local stocks hovered well above the flat line throughout day, buoyed by strong gains from the major banks. All sectors posted gains, with health care being the biggest winner. The Australian dollar fell against most major currencies.
The All Ordinaries added 71.90 points to 5,150.60 while the S&P/ASX 200 jumped 73.60 points to 5,102.00.
The benchmark S&P/ASX 200 advanced for a second day running, after snapping a six-session losing streak that had taken it to its lowest closing level in more than two years as commodity prices continued to slump.
"The reaction in Asia has been thoroughly convincing, with the ASX 200 smashing through the 5100 level. Even the energy sector has gained despite oil prices being savaged," said Chris Weston, chief market strategist at IG in Melbourne.
In This Issue
Caltex Australia (CTX)
Caltex Australia provided 2015 Full year profit Outlook. The Company expects an after tax profit in the range of $560m to $580m for the 2015 full year, including a profit relating to significant items of $29m after tax. This compares with the 2014 full year profit of $20m, which included a loss relating to significant items of $112m after tax. The 2015 outlook includes a forecast product and crude oil inventory loss of $85m after tax, reflecting the fall in Brent crude oil prices and the offsetting impact of the lower Australian dollar. On an RCOP basis, the Company forecasts an after tax profit for the 2015 full year of $615m to $635m, excluding significant items. Supply & Marketing is expected to deliver an EBIT result of $670m. CTX rose $2.05 to $36.50.
Stockland announced an estimated distribution for the 6 months to 31 December 2015 of 12.20c per ordinary Stapled Security. The estimated distribution at the half-year reflects its previous guidance that its full year distribution for FY16 will be 24.5cps, assuming no material decline in market conditions. The Record Date for determining entitlement to the half-year distribution is 31 December 2015. The distribution payment will be made on 29 February 2016. The Company's Distribution Reinvestment Plan will operate for this payment. As foreshadowed in the Group's first quarter market update in October 2015, it has elected to undertake revaluations of the majority of its commercial property portfolio for the half year ending 31 December 2015, given market evidence of a tightening capitalisation rate environment. SGP lifted 2 cents to $4.20.
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)