Shares steady despite positive lead
The Aussie market was flat Thursday morning despite a strong lead from global equity and commodity markets. Both of the major indices and the local currency remained at close to two-month highs.
In economic news, the Melbourne Institute Household Financial Conditions index decreased from 34.5 points in the December quarter to 28.8 points in the March quarter. The first fall in four quarters was largely attributed to the four interest rate rises in the past six months.
At noon, the All Ords had edged 0.5 lower to 4,866.4, while the ASX/200 shed 2.7 to 4,850.5. Over 1.3 billion shares worth around $3.7 billion had changed hands.
According to the World Bank’s prediction yesterday, China’s economy will grow 9.5% this year.
The upgrade from the bank’s November prediction of 8.7% GDP growth did little to boost mining stocks, with the Energy sector 0.2% lower by midday.
Woodside put on 29c, or 0.6% to $46.09, while Origin and Santos weakened 1.3% each to $16.43 and $14.15 respectively.
The price of crude rose 1.5% in New York overnight to a two-month high.
Coal stocks were the big improvers as prices for contract settlements continue to beat expectations.
Whitehaven climbed 2.9% to $5.03. Coal & Allied and New Hope rose 1.8% each.
Metals prices in London were all remarkably between 1.6% and 1.8% higher as the Materials and Resources sector retreated 0.3%.
BHP Billiton slid 35c to $42.95 and Rio Tinto added 6c to $76.76.
BHP said today it believes the iron ore production JV with Rio can be finalised this calendar year. Meanwhile, the company's financial arm won a $2.2 billion court battle with the Australian Taxation Office yesterday after the Federal Court dismissed the ATO’s appeal against a Federal Court decision.
Steelmakers Bluescope and Onesteel, and copper and gold producer OZ Minerals were between 1.3% and 1.7% in the red.
Chemicals and explosives company Orica rose 69c, or 2.7% to $26.50.
The big four banks moved either side of the gain, albeit slightly, as the Banks and Financials sector advanced 0.2%.
In the positive, ANZ and CBA both added 0.5%, while NAB was up 0.1% and Westpac down 0.8%.
QBE shed 38c, or 1.8% to $20.84 in a mixed morning for the insurers.
Westfield led Property Trusts 1.1% higher. The sector heavyweight added 19c, or 1.6% to $12.03 as most of its peers were either flat or within 1% above the gain line.
A 1.8% drop to $39.13 from Leighton saw that the Industrials sector was 0.2% in the red.
Brambles dipped 4c to $7.37, while Qantas and Transurban gained 0.7% and 0.8%.
ConnectEast fell 4.4%to 43c.
Corporate Express dropped 2.6% to $5.56 after receiving two broker downgrades in reports this morning. Yesterday, the company recommended shareholders accept US-based Staples offer to buy all the shares in Corporate Express for $5.60 each.
It was an unusually subdued morning for Consumer Discretionary stocks.
Crown, Billabong and Newscorp were between 1.2% and 1.7% lower.
Pacific Brands and Navitas put on 3.4% and 2.5% to $1.365 and $5.42.
Kathmandu shares rallied 5.2% to $1.83 after beating estimates with an $11.3 million loss for the six months to 31 December 2010.
Telstra gained 4c to $3.17 as the company’s potential split remains in question. The Telecommunications sector added 1.4%.
Around the region, the Nikkei 225 shed 26.5 to 10,820.5, while the NZSE50 put on 20.0 to 3,221.0. The Straits Times Index slid 1.1 to 2,918.2.
Spot gold was trading at US$1,122.00 per ounce, while the Aussie was buying US$0.922.
Sigma dividends unlikely
Sigma Pharmaceuticals said that reductions in carrying cost of goodwill and other write downs would affect the company's bottom line as it prepares to report half year results, expected to be reported on 23 March. The expected reduction in profit for the company meant that it wasn’t expecting to pay dividends in the second half of the year.
Sigma shares are suspended at 90c.
CBH directors recommend Toho proposal
A committee of directors of CBH Resources, independent of the company’s largest shareholder Toho Zinc Co., Ltd, said it considers the revised Nyrstar Proposal cannot be successful in its current form and instead endorsed the revised Toho Proposal and recommended it to CBH shareholders, subject to no superior proposal emerging. The committee said that given the voting thresholds that apply under a scheme of arrangement, Nyrstar’s recent revised proposal would clearly fail.
By noon, CBH shares were unchanged at 18.5c.
BHP confident of completing Rio deal in 2010
BHP Billiton believes it can finalise the Western Australia iron ore production joint venture with Rio Tinto Limited (RIO) this calendar year. As part of its commitment to increasing its capital expenditure to around $20 billion next year, BHP plans to spend $5.8 billion on the equalisation payment for the JV.
At midday, BHP shares were trading down 29c to $43.01.
Credit Suisse downgrades David Jones
Following yesterday’s first half result for David Jones, Credit Suisse (NEUTRAL, price target $5.50) downgraded the stock to neutral. The broker said the David Jones was trading at fair value with few near term catalysts to drive a re-rating.
IPO costs slash Kathmandu profits
Kathmandu, which first listed on 13 November 2009, has posted an $11.3 million loss for the six months to 31 December 2010. The major driver for the loss was the company’s costs associated with listing on the ASX, without which the clothing retailer would have posted a $3.6 million profit, from a loss last year of $2 million.
Half way through the day, Kathmandu shares were trading up 9.5c to $1.835 each.