Overseas Market Report – U.S. Stocks End Higher; ECB Stimulus Hopes, Oil Eyed
U.S. stocks closed mostly higher Thursday on hopes of further stimulus from the European Central Bank and after oil prices stabilised.
ECB head Mario Draghi said the bank could expand its stimulus efforts as soon as the bank's next meeting in March. Draghi said there was "no limit" to measures the bank might take to boost the economy.
Initial U.S. unemployment claims rose by a larger-than-expected 10,000 to 293,000 last week. The less volatile four-week moving average was up by 6,500 to 285,000.
The Dow finished up 0.7%, while the S&P 500 ended 0.5% higher and the NASDAQ closed flat.
Verizon (VZ) added 449,000 net new post-paid phone customers during the fourth quarter despite continued competitive pressure from Sprint (S) and T-Mobile (TMUS). Shares rose on the earnings report.
GM (GM) reported it sold a record number of cars in 2015. North American deliveries were up 6% while strong sales of SUVs in China drove deliveries up 5% year over year there.
For Australian ADRs listed on the NYSE, BHP Billiton climbed $1.62 (8.36%) to $21.00, ResMed added 42 cents (0.74%) to $54.14, Telstra Corporation gained 58 cents (3.10%) to $19.30, Spark New Zealand slipped 5 cents (0.47%) to $10.48 and Westpac gained 23 cents (1.11%) to $21.02.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.02% and the 5-year yield was 1.44%.
European markets rallied after Draghi's comments.
The FTSE 100, French CAC 40 and Germany's DAX rose 1.8%, 2% and 1.9%, respectively.
Asian shares fell after a choppy trading session.
The Shanghai Composite dropped 3.2%, while the Nikkei 225 was off 2.4% and the Hang Seng lost 1.8%. India's Sensex fell 0.4%.
Australian Market Report – Local Market Expected To Open Higher
Ahead of the local open, SPI futures were 29 points higher at 4,856.
Thursday 21 January – close. The Australian market made a good start to the day on the back of gains on Wall Street overnight amid falling crude oil prices. However, local shares gave up early gains due to the mining sector and relied on the big banks to provide some late stability to close slightly above the flat line. Most sectors ended higher, with only financials closing in the red. The Australian dollar fell against most major currencies.
The All Ordinaries rose 20.70 points to 4,917.60 while the S&P/ASX 200 added 22.50 points to 4,864.00.
In This Issue
South32 (S32)
South32 announced that it has delivered a significant reduction in net debt during the December 2015 half year, despite the challenging external environment. Its current estimate for net debt at 31 December 2015 is US$115m. A significant increase in ore grades and recoveries underpinned a 13% increase in Cannington zinc production to a record 41.8kt. Ore production at South Africa Manganese was impacted by the temporary suspension of operations during the period. The strategic review, which is nearing completion, will define the optimal configuration and production profile for the South Africa Manganese mines and smelter to ensure cash outflows are mitigated in this difficult pricing environment. The Appin Area 9 project is 95% complete, with commissioning expected to start in the March 2016 quarter. S32 remained unchanged at $0.89.
Origin Energy (ORG)
Origin Energy provided clarification of misunderstandings in the market in respect of some matters related to Company's financing arrangements. The Company confirmed that it has excess of $6.5bn of committed undrawn debt facilities and cash. It has no material refinancing requirements until FY2019. Earnings from existing businesses have minimal exposure to oil price and provide significant headroom on debt financial covenants. There are no cash flow financial covenants in Australia Pacific The impact on the Company of a credit rating below BBB- / Baa3 is limited to an increase in the margin on drawn bank facilities of 0.30% and additional collateral requirements. The Company expects that the remaining contributions to Australia Pacific will be consistent with prior guidance of $1.8bn. ORG lifted 23 cents to $3.69.
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