Overseas Market Report – U.S. Stocks Move Higher on Oil Price Rally
U.S. stocks finished modestly higher on Tuesday following a rally in oil prices.
U.S. factory orders were down 1% in September, a larger-than-expected decline. August's data was also revised lower to a 2.1% fall. Durable goods orders were down 1.2% in the month. Commercial aircraft orders, which can be very volatile, saw a 36% fall.At the close, the Dow was up 0.5%, the NASDAQ was up 0.4% while the S&P 500 gained 0.3%.
For Australian ADRs listed on the NYSE, BHP Billiton added 88 cents (2.69%) to $33.63, ResMed gained 34 cents (0.58%) to $58.56, Telstra Corporation lifted 45 cents (2.37%) to $19.41, Spark New Zealand rose 4 cents (0.35%) to $11.47 and Westpac increased 44 cents (1.98%) to $22.61.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.22% and the 5-year yield was 1.59%.
American International Group's (AIG) third-quarter results were not impressive and show the company trending in the wrong direction, Morningstar said. The biggest negative factor was poor results in alternative investments related to energy and emerging-market investments. The company posted a 6% annualized return on equity for the quarter, normalized for unusual items, with AIG headed in the wrong direction when it comes to management's goal to move toward a 10% target.
Shares of Kellogg (K) fell after the firm reported disappointing results. The company's earnings were off 8.5% year over year due to restructuring charges and other charges. Excluding currency impacts, net revenues were up 1% as the U.S. breakfast foods segment saw sales slump 2.6%.
Sprint (S) reported worse-than-excepted results. The firm improved its customer churn rate in the quarter, but it still lost $585 million in the quarter. This was an improvement from the $765 million lost in the year-ago quarter but below analyst expectations. The firm said it plans to cut $2 billion in costs over the next year.
Discovery Communications' (DISCA) third-quarter profit of 47 cents per share (excluding one-time items) was well above analyst expectations of earnings of 38 cents per share. Revenue was off slightly, partially due to the strength of the U.S. dollar on the firm's overseas operations.
European markets rallied to end mostly higher.
The FTSE 100 and French CAC 40 were up 0.3% and 0.4% respectively, while Germany's DAX remained flat.
Asian shares were mixed.
The Nikkei 225 fell 2.1%, while the Shanghai Composite was down 0.2% and the Hang Seng gained 0.9%. India's Sensex was up 0.1%.
Australian Market Report – Local Market Expected To Open Higher
Ahead of the local open, SPI futures were 17 points higher at 5,246.
Tuesday 3 November – close. The Australian market had a strong rally this morning on the back of positive leads from global equity markets overnight. Local stocks hovered at their day's highs, with local investors unimpressed with the RBA's decision to keep the interest rate unchanged. The big banks recouped some of their recent losses, whilst mining giants Rio and Fortescue closed lower due to weakness in iron ore prices. All sectors performed positively. The Australian dollar appreciated against most major currencies.
The All Ordinaries rose 69.90 points (1.34%) to 5,291.20 while the S&P/ASX 200 added 73.40 points (1.42%) to 5,239.20.
Alumina (AWC)
Alumina announced that Alcoa is taking decisive action to curtail uncompetitive smelting and refining capacity to ensure continued competitiveness amid prevailing market conditions. It will reduce aluminium smelting capacity by 503,000 metric tons and alumina refining capacity by 1.2m metric tons. Alcoa will begin the curtailments in the fourth quarter of 2015 and will complete them by the end of the first quarter of 2016. Alcoa will partially curtail refining capacity at its Pt. Comfort, Texas facility by about 1.2m metric tons. The partial curtailment of the Point Comfort refinery is expected to result in a post-tax charge of US$4m for AWAC. AWAC is a JV between the Company and Alcoa Inc. AWC gained 2 cents to $1.13.
Graincorp (GNC)
Graincorp announced that it expects to report FY15 underlying NPAT of $45m and statutory NPAT of $32m. It also expects to report FY15 underlying EBITDA of $235m. The expected FY15 results remain subject to audit completion. The Company expects to report sales volumes for Marketing of 6.0mmt, full year EBITDA loss of $2m and full year PBTDA loss of $16m. It also expects to report Significant Items totalling $12m. The Significant Items total is slightly higher than previously indicated, due to additional restructuring costs in Storage & Logistics and Oils and an impairment of a Malt elevator in Canada. The average of the forecasters' most recent updates is 16.1mmt of winter crop for eastern Australia. GNC fell 41 cents to $8.48.
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