ST: Australian stock market and companies daily repot
- US stocks rallied broadly on Thursday, with Caterpillar, American Express and Chevron among the gainers, as economic data from the US and China and comments from European officials reassured investors about the global economy.
- The rally followed a mix of economic data and commentary that encouraged investors about the global economy. In the US, the Labor Department's weekly report showed the number of US workers filing new claims for unemployment benefits decreased slightly in the first week of June while continuing claims fell to the lowest level in 18 months, indicating the job market continues to slowly improve.
- Asian markets ended mostly higher as upbeat economic data from China, Japan and Australia as well as commodity price gains helped investors overlook losses on Wall Street and the euro zone's fiscal troubles.
- Base metals on the London Metal Exchange ended mixed as an early afternoon rally faded when the euro eased from its highs against the US dollar.
- Australian Labour Market Strengthens - The labour market remained a story of strength in May, with a further 26,900 jobs created over the month, enough to push the unemployment rate to its lowest since January. The increase in employment takes total job creation since August 2009 to 283,600
1. Unemployment fell to a seasonally adjusted 5.2% in May from 5.4% in April. The number of people in full-time work rose 36,400, while the number in parttime work fell 9,400.
- Australian Crude Oil and Condensates Exports Fall - Exports of crude oil and condensates fell by 18% to 3,788m litres in the first quarter of this year,
INTERNATIONAL OVERNIGHT NEWS
US stocks rallied broadly on Thursday, with Caterpillar, American Express and Chevron among the gainers, as economic data from the US and China and comments from European officials reassured investors about the global economy.
All three major large-cap measures experienced their thirdlargest one-day gains of the year.
The Dow Jones Industrial Average rose 273.28 points (2.76%) to 10,172.53. Caterpillar led the measure's gains with a jump of $3.14 (5.5%) to $59.95. The industrial giant generates a chunk of its revenue overseas and its shares tend to rise and fall with investors' expectations for global growth.
American Express was also strong, with a climb of $1.92 (5%) to $40.03. In addition, Chevron leapt $3.38 (4.8%) to $74.17, lifted by an increase in crude-oil futures to above $75 a barrel.
The Nasdaq Composite added 59.86 (2.77%) to 2,218.71. The Standard & Poor's 500 index rose 31.15 (2.95%) to 1,086.84. All of the S&P 500's sectors rose, with the energy, industrial and materials sectors experiencing the largest percentage gains.
Goldman Sachs fell $3.03 (2.2%) to $133.77, with the pullback attributed in part to another volley of negative headlines. The investment bank was sued by an Australian hedge fund for $1bn, and there are reports it might be the target of a second probe by the Securities and Exchange Commission into another now-toxic CDO product.
Del Monte Foods jumped 98 cents (6.7%) to $15.65. The fruit-and-vegetable company's fiscal fourth-quarter profit fell 11%, still beating analysts' estimates, as the year-earlier quarter was a week longer and the company boosted marketing spending by 64%. The company also forecast earnings for the new year above Wall Street's average estimate, boosted its quarterly dividend and said it will launch a three-year $350m stock-buyback effort.
American Eagle Outfitters rose 47 cents (3.9%) to $12.68, after the teen retailer raised its quarterly dividend 10% to 11 cents a share, saying the increase reflects its strong cash generation and commitment to enhancing shareholder value. The company also said it has repurchased 5.9m shares for about $96m this year, leaving 24.1m shares remaining under its current authorisation.
US Economic News
Economic data from the US and China and comments from European officials reassured investors about the global economy.
The rally followed a mix of economic data and commentary that encouraged investors about the global economy. In the US, the Labour Department's weekly report showed the number of US workers filing new claims for unemployment benefits decreased slightly in the first week of June while continuing claims fell to the lowest level in 18 months, indicating the job market continues to slowly improve.
European and Asian Markets
European stocks ended higher on Thursday as the region's top two central banks stood pat on interest rates and investors focused on prospects for global economic growth.
The Stoxx Europe 600 index rose 1.6% to close at 248.46.
The advance was helped by gains for companies geared to economic growth, with carmaker Daimler rising 3.1% and miner Xstrata gaining 4.3%.
The European Central Bank has been buying European government bonds lately as part an effort to stabilise financial markets and President Jean-Claude Trichet said that the bank will continue with its liquidity measures.
The ECB and the Bank of England both left key interest rates at record lows on Thursday, as was widely expected.
Of the regional benchmarks, the UK FTSE 100 index rose 0.9% to close at 5,132.50, the German DAX index climbed 1.2% to finish at 6,056.59 and the French CAC-40 index rose 2% to settle at 3,516.64.
The oil and gas sector was unable to join in Thursday's advance, however, hit by a 6.7% drop in BP shares to 365.5 pence. The oil giant, currently battling to contain the massive oil spill in the Gulf of Mexico, said that it wasn't aware of any reason that would justify the sharp slide in its US-listed shares on Wednesday. Significant additional cash flow, below-target gearing and a strong asset base gives it significant capacity and flexibility in dealing with the cost of responding to the incident, the environmental remediation and the payment of legitimate claims, it said. The cost of the response to date is approximately US$1.43bn.
Asian markets ended mostly higher as upbeat economic data from China, Japan and Australia as well as commodity price gains helped investors overlook losses on Wall Street and the euro zone's fiscal troubles.
Japan's Nikkei Stock Average gained 1.1%, while Hong Kong's Hang Seng Index inched up 0.1%. However, China's Shanghai Composite fell 0.8%.
New Zealand shares ended slightly higher on Thursday, overlooking a negative cue from Wall Street after the Reserve Bank of New Zealand raised its policy interest rate 25 basis points to 2.75%, its first move in more than a year. The benchmark NZX-50 ended up 0.1%, or 2.2 points, at 3,002.33. RBNZ Governor Alan Bollard said he has opted to begin removing monetary policy stimulus given New Zealand's economic recovery.
Commodities
Base metals on the London Metal Exchange ended mixed as an early afternoon rally faded when the euro eased from its highs against the US dollar.
Gold futures continued their slide as investors felt less of a need for the metal's safe-haven properties while optimism about global growth increased.
Crude-oil prices climbed to a four-week high above $75 a barrel, led by gains in equities prices.
AUSTRALIAN OVERNIGHT NEWS
Australian Markets
Local shares are set for a positive session after the Dow jumped 2.8% overnight.
Ahead of the local open the June SPI futures were 68 points (1.50%) higher at 4,509.
Companies in the News
Rio Tinto (RIO)
Chalco, the listed unit of Chinalco, is back in talks with Rio to jointly expand the Yarwun 2 refinery to process bauxite from Chalco's Aurukun project in Queensland, a newspaper has reported. The report said Chalco was set to put its $3bn bauxite project on hold as a result of the government's proposed resource super profits tax and as it struggles to make the Aurukun development viable. It said Chalco was expected to lobby Queensland Premier Anna Bligh to amend the project's lease terms, which require an alumina refinery to be built near the site, and that Chalco might look to mine the ore and send it to China for processing. RIO increased $1.49 (2.24%) to $67.87.
Woolworths (WOW) and Harvey Norman (HVN)
Woolworths Chief Executive Michael Luscombe said that he "absolutely" expects sales growth this holiday shopping season over last year, striking an optimistic tone despite two consecutive months of declines in consumer confidence. He wasn't alone. Harvey Norman Chairman Gerry Harvey said he thinks the holiday shopping season will be "quite good", barring any major global economic events. WOW rose 28 cents (1.03%) to $27.50. HVN rose 9 cents (2.7%) to $3.42.
Transurban (TCL)
Transurban said it completed its $542.3m equity raising, however retail investors largely shunned the offer to help fund its $630.5m acquisition of Sydney's Lane Cove Tunnel. The 27.8m new securities not taken up by retail investors in the 1-for-11 entitlement offer, failed to achieve the $4.60 clearance price under a bookbuild and will be taken up by underwriters UBS and sub-underwriters to the issue. The institutional component of the entitlement offer, supported by both new and existing investors in mid-May, raised around $410m from the issue of around 89m securities at $4.60 each. The retail offer raised just $6.4m from existing investors, when less than 5% of security holders elected to take up their entitlements. TCL improved 5 cents (1.12%) to $4.50.
Caltex Australia (CTX)
Caltex said that a major turnaround and inspection maintenance procedure at its Lytton refinery in Queensland is almost complete and that a full shutdown of the refinery has ended. The full shutdown lasted around 18 days and some of the refinery is still partially shut, Caltex said. Lytton is expected to be fully operational again by the end of next week. Caltex also said the Kurnell refinery is undergoing some planned maintenance but only on a couple of units, adding that the refinery is still producing fuel. CTX firmed 50 cents (4.87%) to $10.76.
AWE (AWE)
AWE said that it's found oil at an important exploration well offshore New Zealand, enhancing its chances of offsetting a natural resource decline at its existing producing assets. The Tui SW-2 well is part of a $175m multi-well exploration campaign being carried out by AWE in Australia, New Zealand, Indonesia and Yemen. So far, results have been mixed, with the high-risk Hoki-1 well, also offshore New Zealand, coming up dry and the Rockhopper-1 well offshore Victoria producing disappointing results. Another well offshore Victoria, Trefoil-2, was more successful. AWE said that the new well encountered oil shows over an interval larger than 10 metres near the bottom of the 3,749 metre drill hole in the same sand formation hit in the original Tui discovery. While the signs are promising, more testing needs to be done to determine the significance of the find. Wireline logging data will be collected over the next few days, AWE said. AWE firmed 10 cents (4.93%) to $2.13.
Iress Market Technology (IRE)
Iress said it has experienced growth across all divisions so far in the first half of 2010 and expects revenue growth toward the top end of its expectations. Activity during the half ending June 30 was being driven by improved confidence and mood in markets. While revenue growth for the half would be close to the top of expectations, it would still be below pre-crisis levels. Iress expects positive growth in earnings before interest, tax, depreciation and amortisation in the first half of the year. IRE climbed 20 cents (2.38%) to $8.61.
Kingsgate Consolidated (KCN)
Kingsgate’s Chatree North gold processing plant will pay reduced taxes under a Thai government scheme, the company said. Expansion of the plant, expected to cost around US$100m, will start immediately. The plant will be able to process 2.7m tonnes of ore per year, in addition to the 2.3m tonnes-capacity plant already in operation at the site. The government incentive plan, approved by the Thai Board of Investment for Kingsgate's local subsidiary Akara Mining, will give the plant an eight-year tax-free period followed by five years at half the 30% standard rate of corporate tax. The company has already spent US$25m on the plant expansion, with a further US$36m available in the company's cash accounts and US$30m in an undrawn working capital facility with Investec. KCN added 86 cents (9.9%) to $9.55.
Australian Economic News
Labour Market Strengthens
The labour market remained a story of strength in May, with a further 26,900 jobs created over the month, enough to push the unemployment rate to its lowest since January. The increase in employment takes total job creation since August 2009 to 283,600, the Australian Bureau of Statistics said. Unemployment fell to a seasonally adjusted 5.2% in May from 5.4% in April. The number of people in full-time work rose 36,400, while the number in part-time work fell 9,400. The seasonally adjusted workforce participation rate fell to 65.1% in May from 65.2% in April. Aggregate monthly hours worked rose 2.9% in May from April to 1.57bn hours.
Crude Oil and Condensates Exports Fall
Exports of crude oil and condensates fell by 18% to 3,788m litres in the first quarter of this year, the Australian Bureau of Agricultural and Resource Economics said. The decline in volume was moderated by higher prices, with value falling by 15% to $2bn. Thermal coal export volumes slipped 13% to 30.8m tonnes, with value falling 10% to $2.6bn, while the value of liquefied natural gas exports rose 21% to $2.2bn on steady production levels.
