Daily Market Reports | Mar 01 2017
This story features WORLEY LIMITED.
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The company is included in ASX100, ASX200, ASX300 and ALL-ORDS
By Greg Peel
The Dow closed down -25 points or -0.1% while the S&P lost -0.3% to 2362 and the Nasdaq fell -0.6%.
Surplus in Sight
Yesterday’s data revealed Australia’s current account deficit dropped by -62% in the December quarter from the September quarter, to $3.85bn from $10.2bn. At 0.9% of GDP, the CAD has not been this low since 1980.
It all came down to the terms of trade of course. The trade balance moved to a surplus of $4.67bn from a -$3.54bn deficit in September, simply because export growth of 3% outstripped import growth of 1%. The difference, of course, was commodity prices. Coal prices have since come off a bit since but iron ore is holding at recent highs and oil prices are also steady. Economists are therefore predicting a current account surplus in the March quarter.
The last time that happened, Whitlam was in power.
Forecasts for today’s GDP result are for 0.7% growth to an annual rate of 1.9%, up from 1.8% in September in real terms. Nominal GDP is forecast to have risen 3.0% annual.
A strong CAD result for December has long been predicted, so the numbers had little impact on the local stock market yesterday. Or maybe it did, on a “sell the fact” basis, given nine of the top ten losers in the ASX200 yesterday were miners, despite commodity prices doing nothing untoward overnight. Most of those were gold miners, with the gold price dipping only slightly.
The odd man out amongst the losers was Spotless Group ((SPO)), wrapping up result season as one of the last companies to disappoint.
On the other side of the ledger, the big winner on the day was WorleyParsons ((WOR)), up 32% following a takeover bid (or the foundations of one). Given this stock has long been over 10% shorted by the market, and given a major share price tumble earlier in result season on a weak report, the revelation that a full takeover bid was originally flagged late last year and not disclosed is going to make for some interesting legal action, one would assume.
No earnings reporters on the day made into the top ten gainers yesterday. The closest we got to that was Gateway Lifestyle Group ((GTY)), which kicked on another 4.4% after posting a solid result on Monday.
The selling in the market yesterday came in the afternoon. The index had managed to rise 30 points up to lunchtime but ultimately closed down -12. If we take out the impact of WorleyParsons on the energy sector, all sectors finished in the red yesterday bar utilities, with materials (-0.8%) the biggest loser. Again this smacked of profit-taking in the sector given (a) share prices have run very hard, (b) earnings results and surprises are now known, (c) it was the last day of the month, and (d) it seemed a good idea to square up ahead of Trump’s address today (our time).
Utilities (+0.6%) appeared to be the recipient of the funds.
Let’s Get This Over With
Yesterday I noted that the last time the Dow posted 12 consecutive up-days to new highs was in January 1987, and wondered to when in history 13 might take us. Well the answer is the dawn of time. It has never happened before.
And still hasn’t. The streak was broken last night as Wall Street, too, squared up ahead of the address.
There were some positive US data releases last night. The Conference Board’s monthly measure of consumer confidence rose to 15-year high. Seems consumers are just as excited about a Trump administration as investors appear to be.
The December quarter also saw a strong rebound in consumer spending, but US GDP result was dragged down by a widening trade deficit – something that would have steam coming out of Trump’s ears. The first revision of the original estimate came in at an unchanged 1.9% growth.
Not much more to say. Grab your sandwiches early.
Commodities
Aluminium rose over 1% last night in London in a session that saw no other moves of that magnitude. All were up bar nickel, which fell -0.9%.
Iron ore fell -US$1.10 to US$91.50/t.
West Texas crude is down a tad at US$53.96/bbl.
The current account deficit number did nothing for the Aussie yesterday, which is currently a rabbit in the headlights at US$0.7671. Similarly, the US dollar index is little changed at 101.11.
Gold is roughly steady at US$1251.30/oz.
Today
The SPI Overnight closed down -6 points.
The local GDP result is out later this morning.
Donald Trump’s address begins at 1pm Sydney time.
It’s the first of the month, thus manufacturing PMIs are due across the globe today, and both the manufacturing and service PMIs out of China.
The result season is now formally over. But don’t forget to prepare for the barrage of ex-dividends now upon us.
Tonight Rudi will host Your Money, Your Call Equities on Sky Business, 8-9pm.
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