Overseas Market Report – U.S. Stocks Follow Oil Prices Higher
U.S. stocks rallied Tuesday as investors scooped up bank and technology stocks, highlighting a renewed appetite for assets considered risky as oil stormed higher.
Bolstering investor sentiment was a key report from the Institute for Supply Management that showed American manufacturers shrank their business at a slower pace in February.
The closely-watched ISM Manufacturing Index rose to 49.5 in February from 48.2 in January. Any reading below 50 indicates a contraction in the manufacturing sector.
At the closing bell the Dow, S&P 500 and NASDAQ were up 2.1%, 2.4% and 2.9%, respectively.
Honeywell (HON) announced on Tuesday that it is dropping its bid to purchase rival United Technologies (UTX). United Tech management did not want to enter into negotiations as they believed any deal would have faced insurmountable regulatory hurdles.
Workday's (WDAY) fourth-quarter results were largely in line with expectations, as the firm continues to carve out its competitive position. Fourth-quarter revenue rose 43% to US$323.4 billion as subscription revenue surpassed the US$1 billion run rate, becoming just the second pure-play software-as-a-service company to achieve this milestone behind Salesforce.com (CRM). Non-GAAP operating margins continue to hover around break-even, though Morningstar expects to see more marked progress here in fiscal 2017.
For Australian ADRs listed on the NYSE, BHP Billiton rose 84 cents (3.71%) to $23.46, ResMed gained 42 cents (0.74%) to $57.33, Telstra Corporation fell 21 cents (-1.15%) to $18.04, Spark New Zealand gained 37 cents (3.27%) to $11.67 and Westpac jumped 108 cents (5.28%) to $21.54.
At 8:15 AM (AEDT), the 10-year Treasury note yield was 1.82% and the 5-year yield was 1.30%.
European markets rose on Tuesday.
The FTSE 100, French CAC 40 and Germany's DAX were up 0.9%, 1.2% and 2.3%, respectively.
Asian shares were also higher.
The Nikkei 225 rose 0.4%, while the Hang Seng gained 1.5% and the Shanghai Composite closed 1.7% higher. India's Sensex rose 3.4%.
Australian Market Report- Local Market Expected To Open Higher
Ahead of the local open, SPI futures were 92 points higher at 4,982.00.
Tuesday 1 March – close. The Australian market opened lower on the back of a negative lead from the US market. After a volatile morning of trade, the benchmark index rose steadily during afternoon trade, with resource stocks leading the charge along with solid gains in the big lenders. There were mixed results from the sectors; energy and materials were the biggest winners for this session while telecommunication services lagged behind the rest. The Australian dollar depreciated against the greenback but experienced mixed results against other major currencies.
The All Ordinaries rose 41.70 points to 4,989.60 while the S&P/ASX 200 gained 41.40 points to 4,922.30.
In This Issue
Argonaut Research | Orbital (OEC) | SPEC BUY
It was a very busy half for OEC. The sale of Synerject delivered a one-off profit, but more importantly the $24.2m cash proceeds boosted the closing cash balance to $28.6m and allowed OEC to encourage the early conversion of the Convertible Notes (thereby saving ~$0.8m in interest). A restructure has focussed the business and OEC is now strongly positioned to replace steady equity accounted earnings from Synerject with potential high growth in Aerospace and Mining & Industrial. In our view the current EV does not fully reflect the longer term earnings potential. Speculative buy.
Argonaut Research | Global Construction (GCS) | BUY
This was a decent result from GCS particularly at the top line, although tighter margins reflect a competitive environment and different business mix. The strong cash flow conversion and reduction in gearing to 8% were key positive takeaways. Reasonable pipeline visibility helps underpin revenue forecasts, although our earnings have been pared back on lower margin assumptions. We like the strong balance sheet, east coast expansion, diversification strategy and Brookfield relationship and maintain our buy call and $0.65 valuation.
Orora (ORA)
Orora announced that it has acquired IntegraColor for US$77m. The acquisition price represents a multiple of 6.9 times historic EBITDA. IntegraColor is a well-established US provider of point of purchase retail display solutions and other visual communications services for long-term corporate customers across the consumer (food and beverage), healthcare/education and horticulture industries. IntegraColor offers customers a broad set of value-added services from brand concepts through to design, production, data management, fulfilment and logistics, complementing the Company's total packaging solutions capability. ORA lifted 3 cents to $2.31.
News Corporation (NWS)
News Corporation announced the settlement of a class action lawsuit alleging various antitrust claims arising out of past operations at its News America Marketing division. Under the terms of the settlement with the plaintiffs, who consist of consumer packaged goods companies, the Company will pay $250m, and the pending litigation will be dismissed, subject to court approval. Additionally the Company will pay $30m to resolve related claims. The case was first brought in December 2012, prior to the separation of the Company from 21st Century Fox in 2013. The trial began in the U.S. District Court for the Southern District of NY. NWS lost 26 cents to $15.98.
Recent Contacts & Presentations
Troy Resources (TRY), Northern Star Resources (NST), Regis Resources (RRL), Medusa Mining (MML), Doray Minerals (DRM), Beadell Resources (BDR), Red 5 (RED), Kingsgate Consolidated (KCN), OBJ (OBJ), Sino Gas & Energy Holdings (SEH), TFS Corporation (TFC), Paragon Care (PGC), Austal (ASB), Orbital Corporation (OEC),Energia Minerals (EMX), Berkeley Energia (BKY) , Finders Resources (FND), 4DS Memory Ltd (4DS) , Bionomics Ltd (BNO)
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