Reports » Australia

Australian stock market and companies daily report (January 30, 2012)

Contributed by Intersuisse

By Intersuisse Research

Market Overview

- US stock indexes ended mixed after a reading on domestic economic growth fell short of expectations, with the Dow recording its first losing week of 2012.

- The Dow Jones Industrial Average closed down 74.17 points, or 0.6%, to 12,660.46. The Standard & Poor's 500 fell 2.1 points, or 0.2%, to 1,316.33, while the Nasdaq Composite Index rose 11.27 points, or 0.4%, to 2,816.55.

- The Dow and the S&P, which spent nearly all day in the red, mounted late-day rallies that pared losses for blue chips and turned the broader index positive briefly, though both finished down. On the week, the S&P and the Nasdaq ended in positive territory for the fourth week in a row.

- The nation's gross domestic product expanded at an annual rate of 2.8% from October to December. Though the data showed the US economy expanded at the fastest pace since the second quarter of 2010, the reading fell short of the expected 3% rate.

- Jittery European stock markets edged lower, ending the week on a down note, after US growth data fell short of expectations.

- In corporate news, Facebook could file as early as the coming week for an initial public offering that would raise $10 billion and value the company at $75 billion to $100 billion, with Morgan Stanley as the lead manager of the deal.

- Base metals closed mostly lower on the London Metal Exchange as investors took profits after weaker-than-expected US growth figures.

- The local market is set for a soft start to the week following weakness on European markets and a mixed performance on Wall Street. Ahead of the local open, SPI futures were trading 5 points higher at 4,255.

INTERNATIONAL OVERNIGHT NEWS

US stock indexes ended mixed after a reading on domestic economic growth fell short of expectations, with the Dow recording its first losing week of 2012.

The Dow Jones Industrial Average closed down 74.17 points, or 0.6%, to 12,660.46. The Standard & Poor's 500 fell 2.1 points, or 0.2%, to 1,316.33, while the Nasdaq Composite Index rose 11.27 points, or 0.4%, to 2,816.55.

The Dow and the S&P, which spent nearly all day in the red, mounted late-day rallies that pared losses for blue chips and turned the broader index positive briefly, though both finished down. On the week, the S&P and the Nasdaq ended in positive territory for the fourth week in a row.

US stocks seemingly shrugged off developments in Europe, both positive and negative, including reports that Greece was close to a debt restructuring deal with private creditors, and that Fitch downgraded the sovereign credit of Spain, Belgium and Italy.

The materials and health care sectors led the S&P while utilities and consumer staples lagged. Chevron fell the most among blue chips, down $2.63, or 2.5%, to $103.96 after the company announced refining profits fell in the fourth quarter. Alcoa was the biggest gainer on the Dow, up 0.7%.

In corporate news, Facebook could file as early as the coming week for an initial public offering that would raise $10 billion and value the company at $75 billion to $100 billion, with Morgan Stanley as the lead manager of the deal. Thenews boosted shares of Morgan and Goldman Sachs late in the session; Goldman rose 3% and led all financial stocks on the S&P 500, while Morgan Stanley gained 2.3%.

For Australian ADRs listed on the NYSE, BHP Billiton fell by $0.27 (-0.34%) to $80.15, ResMed rose by $2.85 (10.47%) to $30.06, Telstra Corporation fell by $0.05 (-0.28%) to $17.69, Telecom Corporation of NZ fell by $0.01 (-0.12%) to $8.63, Westpac rose by $0.16 (0.14%) to $113.62.

Just when many Treasury bond bears thought the wheel of fortune was turning in their favor, the Federal Reserve gave the safe-harbor market a new lease on life. At 7:45AM (AEST) the 10 year Treasury note was 1.89% and the five year note was 0.75%.

US Economic News

The nation's gross domestic product expanded at an annual rate of 2.8% from October to December. Though the data showed the US economy expanded at the fastest pace since the second quarter of 2010, the reading fell short of the expected 3% rate.

European and Asian Markets

Jittery European stock markets edged lower, ending the week on a down note, after US growth data fell short of expectations.

The Stoxx 600 index fell 1% to 255.40 in a choppy market. Stocks headed firmly south after see-sawing between small gains and losses in midday trade, when numbers showed that the US economy grew 2.8% in the final three months of 2011, missing analysts' expectations.

Expectations were on the rise for Greece and private creditors to soon wrap up talks on voluntary write-downs on Greek government debt.

The Athens General Index fell 2.7% to 745.67, with National Bank of Greece SA down 3.2% and Coca-Cola Hellenic Bottling Co. SA off more than 6%.

Italian debt markets also gave some short-term support to the markets in early trade, with the Italian government selling its full target of EUR11 billion of short-term debt at lower borrowing costs.

In London, shares of heavyweight BP PLC, down 2.6%, weighed on the market after a ruling by a US federal judge on Thursday said oil-service firm Transocean's contract with BP won't require it to pay compensatory damages linked to the 2010 Gulf of Mexico oil spill.

Royal Dutch Shell PLC fell 1.6% and BG Group PLC was down 2.7%.

Heavyweight oil group Total SA fell 1.2% in Paris, helping drag the French CAC 40 index 1.3% lower at 3,318.76. French banks also contributed to a gloomy mood.

In Germany, the DAX 30 index edged 0.4% lower to 6,511.98.

On the FTSE 100, Rio Tinto fell by 54.4 pence (-1.40%) to 3,838.62 pence and BHP-Billiton fell by 24.5 pence (-1.11%) to 2,175.00 pence.

Most Asian markets climbed, adding to weekly gains.

Much of the buying in the region was tempered by caution over Greece's debt restructuring talks and mixed earnings reports, however, with Japanese equities hurt by grim earnings reports from Nintendo and NEC Corporation.

The Nikkei Stock Average slipped 0.1% to 8,841.22 in Tokyo, while Hong Kong's Hang Seng Index added 0.3% to 20,501.67, its sixth straight day of gains led by banking and telecommunication shares, and South Korea's Kospi climbed 0.4% to 1,964.83.

The day's performance allowed the stock benchmarks in Tokyo, Seoul, and Hong Kong to end the week with a net gain of 0.9%, 0.8%, and 2%, respectively.

Mainland Chinese and Taiwanese markets remained shut for a holiday.

Several resource-sector shares advanced in the region after the Fed's signals on interest rates midweek weakened the US dollar and spurred commodity prices.

Inpex Corporation added 2.9% and Sumitomo Metal Mining advanced 2.5% in Tokyo, Korea Zinc Co. rose 0.7%, and in Hong Kong, Zhaojin Mining Industry climbed 1.2%.

In Tokyo, NEC tumbled 7.1% after issuing a poor fiscal-year earnings outlook and Nintendo sank 4.9% after weak results.

Memory chip maker Elpida Memory also skidded 7.1% after the Nikkei reported that the firm is expected to post a Y90 billion ($1.17 billion) operating loss in the nine months to the end of December.

In Hong Kong, property developers declined after recent gains, with China Overseas Land & Investment dropping 3.4% and Cheung Kong Holdings declining 2.1%.

Samsung Electronics rose 1.1% in Seoul after its fourthquarter net profit rose 17% to KRW4 trillion ($3.57 billion), although the result fell short of analyst expectations. Shares of Hyundai Motor fell 3.5%, however, after its fourthquarter results missed some analyst estimates. The NZX-50 closed up 0.4% at 3,294.64.

Commodities

Base metals closed mostly lower on the London Metal Exchange as investors took profits after weaker-thanexpected US growth figures.

Crude-oil were little changed, but Gold ended the week at a fresh seven-week high as a weaker dollar and weaker-thanexpected US economic data offset sales from investors looking to lock in recent gains.

The euro is expected to move in a sideways range against the US dollar until a Greek debt deal is announced.

AUSTRALIAN OVERNIGHT NEWS

Australian Markets

The local market is set for a soft start to the week following weakness on European markets and a mixed performance on Wall Street.

Ahead of the local open, SPI futures were trading 5 points higher at 4,255.

Companies in the News

Rio Tinto (RIO)

Rio Tinto expects to replace some directors and management at Ivanhoe Mines (IVN) after grabbing majority control of the Canadian mining company, and may seek direct ownership in the massive Oyu Tolgoi copper and gold project in Mongolia. The Anglo-Australian mining company doesn't currently have any plans to shake up Ivanhoe, but is reviewing its investment in the company and anticipates replacing some of the management and at least a majority of the non-Rio appointed directors, according to a filing from Ivanhoe to the US Securities and Exchange Commission. The change will give Rio more than a majority on the Ivanhoe board, it said. Rio reserved the right to increase its holding in Ivanhoe as well as the right to make proposals "alone or with a third-party" regarding Ivanhoe's existing investment, ownership in Oyu Tolgoi or other changes, the filing added. Rio earlier this week said it has bought an additional 15.1m shares of Ivanhoe, increasing its interest to 51% from 49% at a cost of C$302m (US$301m). It said it has no current plans to buy more shares. RIO strengthened $1.43 (2.09%) to $69.78.

Woodside Petroleum (WPL)

Woodside Petroleum has stopped production at more of its oil fields off the coast of Western Australia due to the threat posed by tropical cyclone Iggy. Woodside has shut-in production at the Cossack, Wanaea, Lambert and Hermes oil fields on the North West Shelf. This follows the shut-in of the Vincent oil field off the North West Cape. Woodside is operator of the North West Shelf, which includes several offshore oil projects and a major liquefied-natural-gas processing operation at Karratha. The company operates and owns 60% of Vincent, with Japan's Mitsui & Co. holding the remainder. Iggy over the next three days will steadily intensify while moving southeast toward the western Pilbara coast, the Australian Bureau of Meteorology said on its website. Gales may develop on the coast between the communities of Whim Creek and Coral Bay on Saturday afternoon or overnight into Sunday, the bureau said. WPL rose 51 cents (1.5%) to $34.48.

Australian Economic News

No news today.