Overseas Market Report – U.S. Stocks Close Higher; Energy Prices Eyed
U.S. stocks closed higher on Wednesday as commodity prices were in focus.
Oil prices rose on Wednesday morning but then pared those gains after the release of a handful of reports on U.S. supply and global demand.At the close the Dow, S&P 500 and NASDAQ were up 0.7%, 0.8% and 0.9%, respectively.
For Australian ADRs listed on the NYSE, BHP Billiton added $1.42 (4.15%) to $35.67, ResMed gained $1.15 (2.17%) to $54.07, Telstra Corporation lost 6 cents (0.29%) to $20.35, Spark New Zealand lifted 7 cents (0.66%) to $9.94 and Westpac increased 29 cents (1.32%) to $22.19.
At 7:45 AM (AEST), the 10-year Treasury note yield was 2.07% and the 5-year yield was 1.37%.
SABMiller (SBMRY) has rejected a bid from Anheuser-Busch Inbev (BUD) for £42.15 per share with a partial stock option. AB InBev had earlier, for the first time, gone public with this bid. Analysts regard this as posturing for a higher price by the SABMiller board, and AB InBev is expected to make a higher bid.
Shares of Yum Brands (YUM) plummeted after the firm reported disappointing quarterly results. Yum's third-quarter results are the clearest sign to date that the Chinese consumer is exercising more caution. Although Yum's updated guidance calls for mid-single-digit fourth-quarter growth, including positive comps at KFC and negative comps at Pizza Hut Casual Dining, management comments regarding "unexpected headwinds" in China cast a shadow on near-term expectations. China comps overshadowed several positives from the quarter (including a 470-basis-point increase in China restaurant margins to 19.6%, positive comps across most markets for KFC, and another stand-out quarter from Taco Bell).
European shares pared gains in late trading but still ended higher.
The FTSE 100, French CAC 40 and Germany's DAX were up 0.2%, 0.1% and 0.7%, respectively.
Asian markets were also higher.
The Nikkei 225 was 0.8% higher, while the Hang Seng soared over 3.1%. India's Sensex was up 0.4%. The Shanghai Stock Exchange remained closed for public holidays.
Australian Market Report – Local Markets Expected To Open Higher
Ahead of the local open, SPI futures were 32 points higher at 5,222.
Wednesday 7 October – close. The Australian market started the day on a high point, as energy stocks rallied after strong gains in crude oil prices overnight. However, the positivity was short-lived as the big banks succumbed to selling pressures in early morning trade. Volatile trading continued throughout the day with a late rally pushing the benchmark higher for the third-straight session. There were mixed results from the sectors; energy and materials gained most significantly while industrials lagged behind the rest. The Australian dollar appreciated against most major currencies.
The All Ordinaries rose 29.40 points to 5,228.40 while the S&P/ASX 200 added 30.50 points to 5,197.90.
Beach Energy Limited (BPT)
Beach Energy provided monthly drilling report for September 2015. A six-well development campaign is underway in the Tirrawarra and Gooranie fields, targeting gas and gas liquids in the Patchawarra Formation and oil in the Tirrawarra Sandstone. Tirrawarra-86, the fourth well of the campaign, was cased and suspended following intersection of gas and oil pay in target zones in-line with pre-drill estimates. A five-well campaign was completed in the greater Limestone Creek area. Jena-23, the last development well of the campaign was drilled to develop booked reserves in the McKinlay Member and Mid-Namur Sandstone. Spitfire-7 was cased and suspended as a future oil producer following intersection of 6.6m of net oil pay within the target Birkhead Formation. BPT gained 4 cents to $0.525.
In This Issue
Saracen (SAR) | BUY
Saracen (SAR) announced September Q production of 38.1koz, in-line with Argonaut’s estimate. Cash and bullion was unchanged at A$44.9m, after spending $10.2m at Thunderbox, A$9.2m at Karari and A$3.2m on exploration. These parameters suggest the September Q AISC is likely in-line with the FY guidance of A$1025-A$1075/oz. Going forward, growth capex associated with Karari is expected to rapidly subside with commercial production expected in the coming months. Full production report, including cost parameters are expected in the September Q report later this month.
Western Areas (WSA) | BUY
Western Areas (WSA) has deferred $32.6m of FY16 capital expenditure in light of prevailing low nickel prices. Spending on sustaining capex, exploration, the mill enhancement project and Cosmos development have been rationalised. Production and cash cost guidance remains unchanged. Consolidated cash at 30 September was estimated at $60m.
Recent Contacts & Presentations
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