The market is up 9 points. The Dow Jones was up 74 at 16,273 — After some early weakness, the market continued to strengthen during the day, trading in a 120-point range. Janet Yellen gave testimony at a Senate committee hearing and said that harsh winter weather might have had an impact on recent economic data and reiterated her stance that accommodative monetary policy should remain appropriate for some time. She said the Fed would probably continue tapering while tracking data to see if recent soft data was weather related.
Economic data was mixed. Durable goods orders were better than expected but the weekly jobs numbers showed employment conditions remained challenging. The struggling retail sector was stronger, despite reporting lacklustre earnings — but obviously not as bad as expected. JC Penney rose over 25% after projected revenue margins increases and Sears Holdings rose 6.46% (even though it reported a loss), but Best Buy was down 0.97% after being up over 4% earlier in the day.
The S&P rose 9 to a record closing high of 1854. Oil fell 0.34% to US$102.25. Gold rose US$3.20 to US$1,331.20 per ounce. The US$ was weaker against most major currencies and the Australian dollar was weaker, currently trading at US89.65c. VIX Index fell 2.23% to 14.03. US treasury markets were stronger — The yield on the 10-year bond fell 2 basis points to 2.6473% following a strong result in the auction of US$29 billion in seven-year notes.
European shares were weaker — The UK FTSE rose 0.16% but the German DAX fell 0.76% and the French CAC fell 0.01% following increased tension in Ukraine. European bonds were stronger — The yield on the euro 10-year bond yield fell 5 basis points to 1.563% and the UK 10-year bond yield was also 5 basis points lower at 2.674%. The Italian bond yield fell below 3.55 for the first time since 2006.
Base metal prices were mixed — Nickel rose 1.64%, zinc rose 0.34% and lead was 0.14% higher but aluminium and copper were 0.27% and 0.26% weaker respectively. Iron ore rose US$0.20 to US$118.00 a tonne.
- Woolworths (WOW) — Down slightly on their results. Net profit up 14.5% to $1.3217 billion, which was slightly below a broker consensus forecast of $1.323 billion. Revenue was up 6% to $32 billion. Interim dividend of 65c. WOW increases fiscal 2014 profit guidance to 5%-7% from 4%-7%. Some business are still experiencing challenging trading.
- Virgin Australia (VAH) — Underlying Loss of $49.7 million which was as expected. Statutory loss of $83.7 million. Total cash position of $896.4 million. Velocity Frequent Flyer passed the 4 million membership milestone and achieved increased member engagement levels. The fall in profit was due to a challenging trading and competitive environment, ongoing subdued consumer sentiment and economic uncertainty. But the airline performed better than Qantas on key measures of growth in total group revenue, domestic yield, international Yield and group revenue load factor. VAH was unable to give FY14 guidance amid economic uncertainty.
- Select Harvests (SHV) — Underlying NPAT up 118% to $18.4 million up from $8.4 million in the pcp. Operating cashflow of $23.5 million up from $11.6 million. Interim dividend of 11c.
- James Hardie (JHX) — 3Q Net operating profit of $43.7 million up 64%. A special dividend of US28c together with a 1H ordinary dividend of US8c. The 125 year anniversary special dividend, FY2014 first half dividend and future dividends will be unfranked for Australian taxation purposes. Management expects FY earnings excluding asbestos, asset impairments, ASIC expenses, New Zealand product liability and tax adjustments to be between US$190m-US$200m.
- Aurora Oil and Gas (AUT) — Net profit of $116.43m up 98%. Revenue up 91% to $562.76m. No dividends.
ANNOUNCEMENTS
- Woodside (WPL) — Have signed an agreement with Korea Gas Corp for a max supply of 2.2m tonnes of LNG over a 3 year period. LNG for Kogas to come from Pluto LNG Plant.
- Oil Search (OSH) and PNG have reached an agreement under which PNG will subscribe for 149.39m shares in OSH at 820c per share. OSH have announced the acquisition of a 22.835% interest in PRL-15 from InterOil for $900m.
- Boral (BLD) and USG Corp have announced the completion of their 50/50 JV – USG Building Products. The venture creates a world leading building products business with sales and operations across Asia, Australasia and the Middle East. USG have funded their cash payment to Boral with the net proceeds of a recently completed $US350m senior note offering and cash on hand. Additional cash payments are expected upon completion of the accounts.
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