Sunday, May 15, 2011

Australian Stock Market Report may 16 2011

Australian Stock Market Report may 16 2011 : US consumer prices rose by 0.4pct in April, above expectations centred on a rise of 0.3pct. Excluding food and energy (core measure) consumer prices rose by 0.2pct, in line with expectations. And the US consumer sentiment index rose from 69.8 to 72.4 in May, above forecasts centred on a result near 69.5.

European shares fell on Friday with investors focussing on hawkish comments by European Central Bank Governor Claude Trichet. Trichet urged Greece to stick to its reform plan and not restructure its debt. The FTSEurofirst index fell by 0.4pct with the German Dax lower by 0.6pct and the US FTSE eased by 0.3pct.

US sharemarkets fell on Friday as investors weighed higher domestic inflation, European debt jitters and slower global growth. The Dow Jones lost 100pts or 0.8pct with the S&P 500 also lower by 0.8pct and the Nasdaq lost 34pts or 1.2pct. Over the week the Dow Jones fell by 0.3pct with the S&P 500 down 0.2pct but the Nasdaq was flat.

US treasuries rose on Friday (yields lower) as a weaker sharemarket encouraged safe-haven flows. In addition the Federal Reserve bought US$6.94 billion in Treasury coupons on Friday as part of the second phase of quantitative easing. US 2yr yields fell by 3pts to 0.54pct and US 10yr yields fell by 6pts to 3.17pct. Over the week US 2yr yields fell by 0.5pts and US 10yr yields rose by 4pts.

The US dollar was stronger against major currencies in European and US trade on Friday. The Euro eased from highs near US$1.4340 to US$1.4070, before ending US trade near the session´s lows. The Aussie dollar fell from highs near US107.10c to US105.20c before ending US trade near US105.65c. And the Japanese yen eased from 80.35 yen per US dollar to JPY80.90, ending US trade near its weakest levels.

US crude oil prices rose on Friday as investors covered positions ahead of the weekend. Trading was volatile with investors focussing on European debt concerns, strong German and French GDP results and speculation that Libyan leader Muammar Gaddafi may have been wounded in a military attack. The Nymex crude oil contract rose by US68c or 0.7pct to US$99.65 a barrel and London Brent crude rose by US85c to US$113.83 a barrel. Over the week Nymex crude rose by US$2.47 a barrel or 2.5pct.

Base metal prices were mixed on the London Metal Exchange on Friday. Copper rose 0.7pct and zinc lifted 0.3pct but other metals fell 0.6-2.4pct. Over the week metal prices fell by just under 1pct except tin which fell 3.6pct. But gold fell on Friday as the US dollar rose with Comex gold futures down by US$13.20 an ounce to US$1,493.60. Gold rose by US$2 an ounce over the week.

Ahead: In Australia, housing finance and car sales data are released. Dulux releases first half results. In the US, the Empire State manufacturing index, capital flows and the housing market index are released. Eurogroup finance ministers meet.

AUSTRALIAN OVERNIGHT NEWS

Australian Markets
Local shares are likely to open lower following a poor performance in offshore markets.
Ahead of the local open the SPI futures were down 35 points at 4678.

Companies in the News
BHP Billiton (BHP)
BHP released a supplementary environmental impact statement on the proposed expansion of its Olympic Dam operation, a step toward gaining board and government approval for the long-awaited project to boost copper, gold and uranium output. The company said the revised statement addresses environmental, social and economic issues raised in more than 4,000 public submissions on the company's draft impact statement, which was released in May 2009. BHP gained 19 cents (0.43%) to $44.32.


Woodside Petroleum (WPL)

Woodside CEO-elect Peter Coleman said he won't be distracted by recent media speculation that the company may face a takeover from BHP. Woodside has said it is in talks with owners of "third-party gas" for potential processing through Pluto. Coleman said: "I really can't comment on where we are in discussions on Scarborough at all." But he said he is "quite familiar" with Scarborough, a remote gas field co-owned by ExxonMobil and BHP. WPL rose 4 cents (0.09%) to $45.07.


Paladin Energy (PDN)
Paladin reported a deeper third quarter loss than in the previous year after higher revenue was offset by rising costs. A net loss for the three months to March 31 of US$13.5m compared to a US$3.9m loss for the same period a year earlier. Revenue jumped 74% to US$92.9m from US$53m on higher production volumes and a stronger uranium price. But finance and corporate costs almost doubled to US$29.5m from US$14.6m as the company continued to expand a Namibian mine. Third quarter uranium oxide output rose 21% on year to 1.4m pounds but fell 4% on the second quarter. Paladin stuck to its recently downgraded annual production forecast of 6.0m pounds plus or minus 1%. PDN fell 5 cents (1.5%) to $3.29.

Boart Longyear (BLY)

Earnings at Boart are expected to rise 35% over the course of this year as small miners ramp up their exploration spending in an attempt to cash in on booming commodity prices. The company said its earnings before interest, tax, depreciation and amortisation is expected to climb to US$300m in the year to the end of December from US$222m in 2010 and US$111m in 2009. Revenues are expected to rise 19% to US$1.75bn, the company's secondhighest level since 2008 on the eve of the global financial crisis. BLY dropped 19 cents (4.26%) to $4.27..
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