Overseas Market Report – U.S. Stocks End Modestly Lower on Mixed Earnings
U.S. stocks finished modestly lower on Tuesday after investors grappled with mixed earnings reports, while a selloff in the health-care sector weighed on the NASDAQ.
U.S. housing starts rose 6.5% in September from August levels to a seasonally adjusted rate of 1.21 million, well above expectations. The increase was driven by an 18.3% rise in multifamily construction. Single-family home starts rose only 0.3%. Building permits were off by 5% in the month.
At the close, the Dow and S&P 500 were each down around 0.1%, while the NASDAQ was off 0.5%.
For Australian ADRs listed on the NYSE, BHP Billiton slipped 28 cents (0.79%) to $34.95, ResMed fell $1.43 (2.47%) to $56.46, Telstra Corporation added 54 cents (2.81%) to $19.73, Spark New Zealand lifted 18 cents (1.72%) to $10.91 and Westpac declined 44 cents (1.93%) to $22.34.
At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.07% and the 5-year yield was 1.39%.
Shares of IBM (IBM) were down after the firm reported disappointing results. The results were driven by the combination of persistent headwinds in its Global Business Services segment and higher investment in strategic imperatives. Management also lowered its full-year guidance by 10%.
Worse-than-expected quarterly results and guidance sent Harley-Davidson's (HOG) shares tumbling. The motorcycle maker said it earned 69 cents per share in the quarter, well below the 78 cents a share expected by analysts. Management lowered its guidance for 2015 shipments; they now expect shipments to be flat to down 2% year over year. The firm is planning job cuts that will result in a $30 to $35 million charge in the fourth quarter.
Yum Brands (YUM) announced it will spin off its China business into a separate publicly traded company. The new firm will pay Yum an unspecified percentage of sales for the exclusive rights to KFC, Pizza Hut and Taco Bell brands in China. The transaction is expected to be complete by the end of 2016.
Verizon's (VZ) third-quarter results showed its ability to weather the wireless competitive environment. The firm added 430,000 net new post-paid phone customers during the third quarter, similar to a year ago, with customer loyalty remaining exceptionally strong. On the flip side, Verizon's pricing power in this environment remains limited. Adjusting for the adoption of Edge phone instalment plans, Morningstar estimates average billings per post-paid account increased less than 1% year over year, continuing the sharp slowdown in growth seen over the past 18 months.
European shares were lower.
The FTSE 100 was down 0.1%, Germany's DAX lost 0.2%, while the French CAC 40 fell 0.6%.
Asian markets were mixed.
The Shanghai Composite was 1.1% higher, the Nikkei 225 rose 0.4%, while the Hang Seng was off 0.4%. India's Sensex fell 0.2%.
Australian Market Report – Local Market Expected To Open Lower
Ahead of the local open, SPI futures were 14 points lower at 5,199.
Tuesday 20 October – close. The Australian market opened lower this morning on the back of weakness in commodity prices overnight. After a slight recovery in early trade, local stocks continued to fall throughout the day, dragged down by heavy sell-offs amongst resource stocks and the big lenders. There were mixed results from the sectors; health care gained most significantly whilst energy and materials lagged behind the rest. The Australian dollar appreciated against most major currencies.
The All Ordinaries fell 33.00 points to 5,271.60 while the S&P/ASX 200 dropped 34.10 points to 5,235.60.
G8 Education (GEM)
G8 Education announced that on 5 October 2015, the Panel made a declaration of unacceptable circumstances in relation to an application dated 26 August 2015 by Affinity Education Group regarding its affairs. The Panel found that the Company has a relevant agreement or is acting in concert, with each of the JB Super Fund; Taxonomy; West Bridge Holdings parties in connection with the acquisition of Affinity shares and acceptance of those shares in to the off-market takeover bid for Affinity. The Panel based its findings on the following factors; there are structural links, common investments and common dealings between Ms Jennifer Hutson and each of JB Super Fund, Taxonomy and West Bridge Holdings; the acceptances of the scrip bid by JB Super Fund and Taxonomy occurred in uncommercial circumstances. GEM fell 3 cents to $2.96.
Nine Entertainment Co. Holdings (NEC)
Nine Entertainment Co. Holdings announced that it has been informed by Apollo, a substantial shareholder in the Company that it has entered into an agreement for the sale of part of its shareholding in the Company to interests associated with WIN Corporation. The agreement relates to 13% of the Company and the transaction is expected to complete on 9 November 2015. NEC lost 3 cents to $1.59.
In This Issue
Argonaut Oil & Gas: Upcoming Sector Catalysts
Whilst the Oil and Gas sector has seen significant losses there is still opportunities available. Some stocks with upcoming catalysts include, AWE with the Waitsia-1 program, FAR with its three well program in Senegal, CTP with the upcoming NEGI announcement, SEH finalising its gas sales funds transfer and CVN with its gross US$70m carried Roc-1 well.
Recent Contacts & Presentations
Tox Free Solutions (TOX), AWE Limited (AWE), Ausdrill (ASL), GR Engineering (GNG), Medusa (MML), Resolute (RSG), Kingsgate (KCN), Troy (TRY), Northern Star (NST), Sandfire (SFR), Regis (RRL), Saracen (SAR), Sino Gas & Energy (SEH), Dacian (DCN), Buru Energy (BRU), Carnarvon Petroleum (CVN), Otto Energy (OEL), Empire Oil & Gas (EGO), FAR Limited (FAR), Central Petroleum (CTP), Senex Energy (SXY)
Please read Argonaut's Important Disclaimers & disclosures
Log in to the client area below to download the full Morning Note PDF
