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Overnight: Local Focus

World Overnight
SPI Overnight (Mar) 5869.00 – 34.00 – 0.58%
S&P ASX 200 5941.60 + 37.60 0.64%
S&P500 2732.22 + 1.02 0.04%
Nasdaq Comp 7239.47 – 16.96 – 0.23%
DJIA 25219.38 + 19.01 0.08%
S&P500 VIX 19.46 + 0.33 1.73%
US 10-year yield 2.88 – 0.01 – 0.48%
USD Index 89.20 + 0.06 0.07%
FTSE100 7247.66 – 47.04 – 0.64%
DAX30 12385.60 – 66.36 – 0.53%

Earnings Domain

It’s not often these days that the ASX200 opens in one direction and sticks with it – computers seem to have funny ideas in the first half hour – but that was the case yesterday. Confidence has returned as Wall Street has recovered, so far in what appears to be a V-bounce.

The index rose swiftly from the open before decelerating through lunch, but the direction was always up until right at the death when profits were taken at 5950 resistance. The easing of fear allowed the market to focus on individual stock earnings reports, and yesterday was a net positive.

The rally would have been even more impressive if it were not for Woodside Petroleum ((WPL)) coming out of its trading halt, having completed the institutional placement component of its $2.5bn capital raising. The stock fell -7%, reflecting the dilutive impact of the rights issue, sending the energy sector down -1.3% to be the only losing sector on the day.

Brokers are not convinced about Woodside’s Scarborough plans and the magnitude of the raising, but instos were apparently very keen. Mind you, most have little choice. Woodside is Australia’s biggest energy company by a margin and the only standalone energy company in the ASX Top 20 (BHP being diversified) so the stock is a default must-have for any index-based fund.

In order to take up their share of the new Woodside capital, instos typically have to reduce their weightings in other energy stocks in order to keep their sector weightings intact, hence a capital raising of this size reverberates through the sector.

Having said that, there was no stopping Beach Energy ((BPT)) yesterday, which jumped 7.1% following its result release. Wind farmer Infigen Energy ((IFN)) also pleased the punters and jumped 9.9%, but the top ASX200 performer on the day was kitchen/bathroom fittings and garage door manufacturer GWA Group ((GWA)), which enjoyed an 11.4% pop.

There was concern recent recent spin-off Domain Holdings ((DHG)) might start poorly in a cooling housing market but it managed a 4.3% gain after reporting, ending the recent slide of major shareholder Fairfax Media ((FXJ)), which responded in kind.

Other reporting winners on the day include Brambles ((BXB)), nib Holdings ((NHF)), oOh!media ((OML)), and Seek ((SEK)).

The biggest loser prize went to funeral director InvoCare ((IVC)), which fell -7.5% following a guidance downgrade. The stock is very popular with defensive yield-seekers but often gets ahead of itself.

Brokers talked up casino operator Star Entertainment ((SGR)) yesterday but it didn’t prevent a second share price drop post result, of -3.9%. Meanwhile, intellectual property lawyers IPH ltd ((IPH)) continued their slide (-3.1%) while there’s at least one Myer ((MYR)) shareholder looking for the light switch (-5.5%).

All in all a very healthy session, but it’s not looking quite so flash this morning. The futures are down -34 points despite Wall Street being closed for Presidents’ Day.

As to why is unclear. European indices fell around -0.5% but then (a), we usually don’t pay too much attention to Europe in isolation and (b), the falls largely reflected some poor domestic earnings results rather than anything macro.

Base metal prices dipped overnight for the most part, but nothing spectacular, while gold is steady and oil is up a percent.

It may come down to today’s local reporters, of which there is a decent list.


Spot Metals,Minerals & Energy Futures
Gold (oz) 1346.00 – 2.20 – 0.16%
Silver (oz) 16.64 – 0.02 – 0.12%
Copper (lb) 3.20 – 0.03 – 0.84%
Aluminium (lb) 1.01 + 0.02 1.76%
Lead (lb) 1.17 – 0.01 – 1.14%
Nickel (lb) 6.16 – 0.11 – 1.80%
Zinc (lb) 1.62 – 0.00 – 0.04%
West Texas Crude (Mar) 62.32 + 0.69 1.12%
Brent Crude (Apr) 65.40 + 0.50 0.77%
Iron Ore (t) 77.85 0.00 0.00%

As suggested, really not a lot to highlight. The US dollar index was a tad higher but that’s all.

The greenback will be in focus this week nonetheless, as will US yields, as the US Treasury auctions some US$250bn of debt via two, five and seven-year notes. Will there be any buyers? Maybe we’ll see 3.00% in the tens this week. Poor demand could see the US dollar tumble further, and that would be supportive of commodity prices.


The SPI Overnight closed down -34 points or -0.6%.

The minutes of the February RBA meeting will be released today.

Today’s earnings reporters include Aconex ((ACX)), APN Outdoor ((APO)), Bapcor ((BAP)), Greencross ((GXL)), Monadelphous ((MND)), Oil Search ((OSH)), Vocus Communications ((VOC)) and Western Areas ((WSA)).

BHP ((BHP)) also reports, but not until after the closing bell.

Rudi will connect with Sky Business today, probably around 11.15am, via Skype to discuss broker calls, reporting season and market moves.

The Australian share market over the past thirty days…

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The content of this information does in no way reflect the opinions of FN Arena, or of its journalists. In fact we don't have any opinion about the stock market, its value, future direction or individual shares. FN Arena solely reports about what the main experts in the market note, believe and comment on. By doing so we believe we provide intelligent investors with a valuable tool that helps them in making up their own minds, reading market trends and getting a feel for what is happening beneath the surface. This document is provided for informational purposes only. It does not constitute an offer to sell or a solicitation to buy any security or other financial instrument. FN Arena employs very experienced journalists who base their work on information believed to be reliable and accurate, though no guarantee is given that the daily report is accurate or complete. Investors should contact their personal adviser before making any investment decision.



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