The market is up 15. The SFE Futures were up 8.
Dow Jones up 58 although the Nasdaq and the S&P 500 were down. Early drivers were the fall in Apple (down 4.32%) after late results the night before, an unexpected 8.4% drop in US new home sales and a UK 2Q GDP number — the UK economy contracted by 0.7% in the second quarter. The Ifo institute’s German business climate index retreated to 103.3 in July, from 105.2 in June, taking it back to lows last seen in March 2010. The Bloomberg consensus forecast was for a more modest decline to around 104.5.
One of the main positive influences was a comment from ECB council member Ewald Nowotny in which he suggested the European rescue fund (ESM) should receive a banking license which would enable it to access ECB lending boosting the fund. The Euro had an up day — first in six days. Spanish bond yields backed off to 7.376% and Italian bonds down 15bp to 6.445%. European markets flat but mostly up with the UK down 0.02% on a weak GDP number but France up 0.23%, Germany up 0.25%, Spain up 0.82%, Greece up 0.25% and Italy up 1.17%. Egan Jones issued a downgrade of Italy’s sovereign rating to CCC+ from B+. Metals mixed with Copper and Nickel up and Zinc and Aluminium down. Gold up $26 and above $1600 at $1603. Iron ore giant Vale SA’s second quarter profit crashed by 59% to US$2.66B, under market expectations, after prices for iron ore, nickel and copper declined.
- Wesfarmers (WES) — 4Q sales numbers a bit soft although pretty much in line with expectations at Coles with Target and Kmart ahead of expectations and Bunnings below. There has been a 4th lift in discretionary spending businesses after the carbon tax cash giveaways but it is unlikely to persist creating a comparison problem for the 1st Q. Coles sales +4.6% to $8.35bn but better than Woolworths. Full year sales up 6.1% to $33.7bn (that’s $1.531 per man woman and child in Australia). No specific guidance given. WES is down 0.3% to 3190c.
- Newcrest (NCM) announced quarterly production numbers. Gold production down 15% after heavy rains with Cadia production down 22% but gold price achieved up 12% to A$1574/oz in the 4th Q against production costs at A$603/oz. NCM is up 3.6% to 2294c.
- Oil Search (OSH) report an incident at the Kumul oil terminal in PNG — “Minimal” impact so far — only about a barrel of oil split but enough to start an investigation which, if protracted, can cause more onerous issues. OSH is up 0.2% to 671c.
- Perpetual Limited (PPT) — Announces funds under management to end June down 4.6% in three months against the ASX 300 down 0.6%. JB Were has a SELL on the stock this morning based on price (expensive versus peers) on 14.3x versus the sector on 12x. PPT is down 0.8% to 2247c.
- Australand (ALZ) Interims in line with expectations at the EBIT level but with a lower interest expense. Guidance in line with consensus. ALZ is up 4.7% to 267c.
- ERA (ERA) announced an interim loss of $59.9m saying the uranium market remains challenging in the short term and encouraging in the long term. ERA unchanged at 147.5c.
- Nufarm (NUF) — upgrade Profit guidance to EBIT $200-205m and NAPT of $110-116m. NUF down 2c to 529c.
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