Austal awarded US$16.3M contract: market 0.15% higher over week

Market Reports

by Katrina Bullock

The ASX200 opened in the black and gained momentum throughout the day to close 0.7 per cent higher. The Real Estate and Utilities sectors were out in front today but every sector saw positive movement except Healthcare which is still struggling with the impact of the ongoing Royal Commission into aged care. The worst performing stocks were healthcare major, Resmed (ASX:RMD) and AMP (ASX:AMP) - both of whom released financial results to the market today – more on those to come.

At the closing bell the S&P/ASX 200 index closed 40 points higher to finish at 5,906.

Over the week, the market has gained 26 points or 0.4 per cent.

Broker moves

Bell Porter has revised its 12 month price target for Coles Group (ASX:COL) from $14.50 to $14.40. They have retained their recommendation to buy and reiterated their preference for Coles over the Woolworths Group (ASX:WOW), noting that the two new distribution centers that Coles proposes to build are estimated to be approximately 35 per cent more expensive than Woolworths’ recently constructed distribution centre in Dandenong. Shares in Coles Group (ASX:COL) closed 2.4 per cent higher at $12.75.

Bell Porter has maintained its recommendation to buy OZ Minerals (ASX:OZL) and has downgraded its 12 month price target from $12.30 to $11.85. This follows its analysis that the major risks to OZ Minerals' bottom line will be movements in the copper price and the Australian dollar. Shares in Oz Minerals (ASX:OZL) closed 0.1 per cent higher at $9.48.

Futures market

Dow futures are suggesting a rise of 123 points.
S&P 500 futures are eyeing a rise of 16 points.
The Nasdaq futures are eyeing a lift of 55 points.
And the ASX200 futures are eyeing a 39 point rise on Monday morning.

Company news

Shipbuilder and global defence contractor, Austal (ASX:ASB) has been awarded a contract worth US$16.3 million, by the U.S Navy. Under the contract Austal will perform extended industrial post-delivery availability on the Littoral Combat Ship 20. The program will include dry docking services in addition to other post-delivery activities such as engineering prefabrication and material procurement. This follows the US$21.1 million contract it was awarded last month for support and sustainment of Littoral Combat Ship 14. Shares in Austal (ASX:ASB) closed 1.4 per cent higher at $2.13.

AMP's (ASX:AMP) shares have taken a dive after the company provided an update ahead of its 2018 financial year results. AMP downgraded their estimated underlying profit to around $680 million, which is down on the previous financial year. These results follow the brand damage that came out of the Royal Commission into the banking sector, and have caused AMP to slash their dividend from 14.5 cents in 2017 to 4 cents this year.

Despite the release of some positive quarterly results this morning, shares in ResMed (ASX:RMD) also took a hit. For the three months ending 31 December, ResMed delivered revenue of US$651.1 million, which was an increase of 8 per cent on the prior corresponding period.

Medical cannabis company AusCann Group Holdings (ASX:AC8) has purchased a research and development facility in Perth in WA. The new facility will develop AusCann’s cannabinoid pharmaceutical product pipeline, facilitating the innovative formulations and dose forms.

ESR Real Estate has signalled its intent to extend the offer period regarding the takeover bid for fund manager Propertylink Group (ASX:PLG) so that offers made will remain open for acceptance until 28 February 2019. The bid has also been adjusted to approximately $1.16 per share, taking into account a 3.6 cent dividend to be paid on January 31.

Best and worst performers of the day

The best performing sector was Real Estate adding around 2 per cent while the worst performing sector was Healthcare shedding 0.5 per cent.

The best performing stock in the S&P/ASX 200 was Iluka Resources (ASX:ILU), rising around 9 per cent to close at $8.19. Shares in Sims Metal Management (ASX:SGM) and Reliance Worldwide Corporation (ASX:RWC) followed higher.

The worst performing stock in the S&P/ASX 200 was ResMed Inc (ASX:RMD), dropping around 12 per cent to close at $14.47. Shares in AMP (ASX:AMP) and Australian Pharmaceutical Industries (ASX:NST) followed lower.

Asian markets 

Higher. Japan’s Nikkei has added 1.1 per cent, Hong Kong’s Hang Seng has added 1.3 per cent and the Shanghai Composite has gained 0.6 per cent.

Wall Street

Wrapped up our four trading days this week higher: The Dow Jones added 2.9 per cent, The S&P 500 added 2.8 per cent and the tech heavy Nasdaq gained 2.6 per cent.

Commodities and the dollar

Gold is trading at US$1,282 an ounce.
Iron ore price rose 0.3 per cent to US$74.71. Its futures are pointing to a rise of 0.5 per cent.
Light crude is US 56 cents up at US$53.18 barrel.
One Australian dollar is buying 70.97 US cents.