(WEDNESDAY 24TH AUGUST- 08.30 - JAMES GERRISH)...The roller coaster ride continued overnight with the US MKT up strongly. The DOW JONES added +322pts while the S&P 500 was up +3.4% - the Smaller Caps in the US were all bid up strongly with the Russell 2000 up nearly 5% - this is a positive sign as smaller caps are a good indication of investors view on growth/risk and it was clearly in favour last night. SPI FUTURES are matching up +60pts this morning and this comes on the back of a great day yesterday which saw our index up +91pts.
The MKT really could have gone either way last night with traders looking at the positive data without giving much thought to the negative numbers we saw.
The data that was ignored included the Richmond Fed Factory Index which slipped a lot more than forecast (remember last week we saw the market tank on the Pilly Fed numbers), US new home sales continued to be abysmal printing +298k v 310k expectations, not surprisingly Eurozone consumer confidence was weak (-16.6 v -12.4 expectations) and to top things off we had German ZEW surveys (investor confidence) that missed the mark. With this flow you'd think we might have seen some RED but thankfully, it wasn't the case.
Instead the MKT focussed on better than expected manufacturing data from China yesterday which confirmed China had slowed but was still on track to grow at phenomenal rates (8% plus). We also had some preliminary manufacturing numbers from Europe and of course there is speculation that the FED will make some call on further stimulus this Friday from Jackson Hole. (we discussed this yesterday in the Morning Note).
REPORTING TODAY
A big day on the local reporting front today with the BHP headlining the card. Some expectations below. (provided by Goldman Sachs)
BHP - Expected profit of $US22.46 Billion and Dividend Per Share (DPS) of 52c
APA - Expected profit of $115m and DPS 17.9c
AIO - Expected profit of $201.9m and DPS 1c
DOW - Expected loss of -$13.9m and DPS 12c
MCC - Expected profit of $148.2m and DPS 16c
QAN - Expected profit of $507m and DPS 2c
SVW - Expected profit of $118.4m and DPS 26c
SUN - Expected profit of $536.2m and DPS 15c (just came out with lower profit but higher dividend)
WOR - Expected profit of $307.5m and DPS 44c
WTF - Expected profit of $53.7m and DPS 13c
MODEL PORTFOLIO STOCKS
(Provided by Morningstar)
QBE Insurance Group (QBE)
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Looking through the catastrophes 23-Aug-11 14:16
1H11 NPAT of US$673m was slightly below our US$680m estimate and at the lower end of the indicated mid-June guidance range of US$660m to US$704m. But the market slammed the result seeing negatives in the composition and punishing the downgrade in FY11 insurance margin range to 11% - 14%. And on the surface the reaction was understandable. The NPAT was a 53% increase over 1H10 of US$440m. As previously indicated dividend was held at 62¢ per share 10% franked.
ANZ Bank (ANZ)
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ANZ Banking Group Launches $750m Convertible Preference Share (CPS3) Offer 23-Aug-11 10:48
ANZ Banking Group announced that it has lodged a prospectus with the Australian Securities and Investments Commission for an offer of 7.5m convertible preference shares (CPS3) to raise $750m with the ability to increase or reduce the size of the offer. The offer is expected to open on 31 August 2011 and is open to Australian resident holders of ANZ ordinary shares or convertible preference shares issued by ANZ in September 2008 (CPS1) and in December 2009 (CPS2), on the Register at 7:00pm (Melbourne time) on 3 August 2011. The closing date for the security-holder offer is currently scheduled to be at 5:00pm (Melbourne time) on 21 September 2011. The offer forms part of the group's ongoing capital management strategy.
*** We'll be looking at the term of this Hybrid and may look to ad it to the Pension Performers Portfolio.
AUSTRALIAN STOCK PRICES OVERNIGHT
In New York, News Corp rose by US$0.84 to US$16.52, equivalent to A$15.71, A$0.29 above its last close on the ASX.
ResMed rose by US$1.08 to US$29.29, equivalent to A$2.78, A$0.03 above its last close on the ASX.
In London, Rio Tinto rose 5.0 pence to £34.26, A$0.08 higher in Australian currency terms.
BHP-Billiton rose 11.5 pence to £18.90, A$0.18 higher in Australian currency terms.
Henderson Group Plc rose 1.0 pence to £1.26, A$0.02 higher in Australian currency terms.
Enjoy the Green today - I still expect things to remain choppy and retain the premise (for shorter term trades) of Buy to doom.... Sell into the short term gloom....
