The Dow broke through support at both 9500 and 9400, warning of a secondary correction. The signal will be confirmed if support at 9100 is penetrated. Recovery above 9600 is unlikely, but would signal a further advance with a target of 10000*.
I first learned about writing covered calls in the early 80s from the husband of a very wealthy heiress. You would recognize the family name. If you watch any PBS TV station, you’ll see it listed among those who endowed trusts to underwrite various educational programs.
This strategy has been the secret of the super rich for a long time, but the public hardly ever hears about it. The rich use it to steadily grow their money 15% to 20% per year at very low risk to their considerable fortunes. At 15% per year it only takes 5 years to double your money. At 20%, it takes only 4 years.
There are a lot of gamblers in the stock market. The rich are not among them.
They want to keep their money safe while they grow it. How do they do that? By feeding the bad habits of the gamblers in the market. In effect, writing covered calls is like being the “House” at Las Vegas. You let others take the chances, and you take a piece of every transaction.
When you write calls, you are selling a speculator an option to buy stock. Call BUYERS are hoping to make a killing on large stock advances. But this is a very high risk strategy. Statistics show that, typically, 90% of option contracts written on stocks expire worthless. But while the option buyers are losing their money, those who wrote (sold) the calls on those contracts are almost always making money.
Jack Adamo
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Shares to Rise in Early Trade Local stocks are picked to rise slightly this morning after a positive lead from Wall Street, where the Dow rallied late to finish 0.4% higher. Ahead of the local open the September SPI futures were 4 points (0.10%) higher at 4,453. Companies trading ex-dividend today (ASX 300): Hastie Group, Suncorp-Metway, Spark Infrastructure Group, WorleyParsons, Amalgamated Holdings, Probiotec and Cochlear. Market and Company News | Thursday 27 August 2009 - close Woolworths (WOW) Woolworths said that full-year net profit rose 12.8% from a year ago but it flagged slightly slower growth in the coming 12 months as the effect of government stimulus fades. The company reported net profit rose to $1.84bn for the year to June 30, from $1.63bn a year earlier and slightly above analysts' expectations, which had centred on $1.80bn. The prior year included 53 weeks in Woolworths' accounting. With the extra week stripped out, the company's net profit rose 15%, marking the 11th straight year of double-digit earnings growth. The retailer forecast between 8% and 11% net profit growth for fiscal 2010 and indicated margins should strengthen. That guidance excludes its hardware joint venture with US-based Lowe's unveiled earlier this week. Thus far in fiscal 2010, Woolworths said food and liquor, the group's core business, are performing well, indicating that it so far hasn't been hurt by increased competition from supermarket rival Coles, which is in the process of a turnaround. Woolworths' Australian food and liquor sales were $32.81bn last fiscal year while Coles food and liquor sales were $22.5bn. But Woolworths' discount retailer Big W, consumer electronics chain Dick Smith and the company's hotels division aren't doing as well as in the prior year. Management said consumer confidence is difficult to predict this fiscal year, given there is no more government stimulus money for consumers. The company's total revenue rose 5.4% to $49.85bn from $47.29bn. Management said overall group sales will grow in the upper single digits in fiscal 2010. Woolworths declared a final dividend of 56 cents a share, up from 48 cents a share last year. Last year, on reporting a 26% rise in full year net profit, the company flagged intentions to expand either globally or domestically. Woolworths made good on that promise earlier this week, unveiling the joint venture with Lowe's to break into Australia's hardware market. Chief Executive Michael Luscombe said there are no "imminent" plans to announce an international acquisition or growth project. Management said its performance in New Zealand continues to improve. WOW firmed 8 cents (0.28%) to $28.78. Crown (CWN) Crown has booked deep write downs on its US operations, resulting in a headline net loss of $1.2bn for the year ended June 30. The loss is down from a profit of $3.55bn a year earlier, when the bottom line included sizable gains on disposals and demergers. Despite the large loss and heavy write downs, underlying profit was stronger than expected with Crown's Australian casinos posting earnings growth. The company also said that gaming revenue growth in Australia is continuing in the new financial year. Chief Executive Rowen Craigie said the global financial crisis is having a major impact on the North American casino industry and conceded Crown's investments in the market had been "ill-timed". "Despite the write-downs Crown has one of the strongest balance sheets of any gaming company in the world," he said. "Crown's capability and financial strength places it in a strong position for the future." The headline loss included non-recurring items of $1.44bn, which the company said mostly related to write downs of the carrying value of its US investments due to the global financial crisis. Excluding these items, normalised net profit was $280.7m, compared with $370.2m a year earlier and higher than analyst expectations of $246.9m. Craigie said Crown's wholly owned Australian casinos continued to perform well in a challenging environment and both the Crown casino in Melbourne and Burswood in Perth had made solid starts to the new financial year. Earnings before interest, tax, depreciation and amortisation was up 7.5% on year for Crown Melbourne and 10.2% at Burswood. The two casinos were continuing to see solid growth in the new financial year, Crown said, with main floor gaming revenue across both properties growing about 5% on year in the seven weeks since July 1. Crown's 35% stake in Melco Crown in Macau posted a normalised loss of $34.3m for the year as the Macau gaming market was hit by the global financial crisis, visa restrictions and economic conditions in China and Hong Kong. However, the group said recent trends in Macau were encouraging with signs of resumption of growth in the market. In the US, Crown has written down the carrying value of its interests in the Fontainebleau, Stations and Harrah's assets to nil, and its Cannery assets to $49.6m. Cannery's Las Vegas casinos will be affected by the US recession for some time and the projections for the permanent Meadows Casino in Pittsburgh have also been adversely impacted, Crown said. Crown also wrote down the carrying values of both its stake in Gateway in Canada and Aspinalls in the UK to nil. The group's net debt as at June 30 was $542m, with total debt $1.1bn. The group declared a final dividend of 19 cents a share, down from 29 cents last year. Crown said the full year dividend of 37 cents a share represents 100% of normalised net profit for the year. In the future, the company said it plans to pay a full year dividend of either 37 cents per share or 65% of normalised net profit, which ever is higher. It said the dividend is expected to trend towards 65% of normalised net profit over time. Operating revenue for the year rose 2% to $2.26bn from $2.22bn in the previous year. CWN rose 16 cents (2%) to $8.15. GPT Group (GPT) GPT Group booked a $1.2bn first half net loss after property valuations fell off a cliff and it was hurt by its involvement in a troubled global property vehicle with failed investment house Babcock & Brown. The company, which has had to launch two large dilutionary equity raisings worth a combined $3.3bn to reduce its crippling debt burden, said it expects further downward pressure on Australian property valuations to occur in the second half. The pace of the devaluation cycle, however, is slowing and values will stabilise "in the near term", Chief Executive Michael Cameron said in a statement. GPT's steep loss for the six months to June 30 compared with a smaller, $67.7m net loss a year ago. First half operating income, excluding asset write-downs, was $183.0m, compared with $234m a year ago. The fall was primarily the result of GPT not recognising any income from the joint venture with Babcock & Brown, GPT said. GPT stuck to its guidance of achieving full year net operating income of $365m and said it will pay an interim distribution of 2.5 cents, compared with 4.2 cents a year ago, putting it on track to meets its 2009 full year distribution forecast of 4.5 cents. The reported loss included a $1.01bn write-off of the value of its holding in the Babcock & Brown joint venture and a $567.2m impairment on the value of its Australian property portfolio. The losses were offset by a $606.6m gain on financial instruments, GPT said. By quarantining the troublesome assets, GPT is hoping the cleaner part of the company - its Australian office and retail property assets - will attract more investment because its risk profile will be substantially improved. Largely thanks to this year's $1.7bn share issue, last October's $1.6bn share issue, and asset divestments, GPT has cut its "look-through" leverage ratio to 30.5%, against a 55% covenant. GPT said it is still pursuing another $1bn in asset sales, and Cameron said it will consider pursuing "compelling investment opportunities". First half revenue slid to $400.0m, down 21% from $628.7m. GPT rose 2 cents (3.48%) to $0.595. Toll Holdings (TOL) Toll Holdings posted a 14% improvement in full-year underlying earnings from a year earlier and said it had a $1.6bn war chest to pursue further acquisitions, particularly in Asia. However the group was cautious on the outlook for trading conditions this year. "Trading conditions in the short term are expected to remain generally flat with some improvement evident across Australia and Asia," said Toll's Managing Director Paul Little in a statement. However, Little told a media briefing that while preparing budgets and forecasts for fiscal 2010 had been a "tough task," he had been "very pleased" with July trading that was above forecasts and pointed to a better year ahead. "There's no doubt in my mind there is no downside left in this tough economic situation we've been through," Little said. "There are some encouraging signs but it's probably too early to call it a strong recovery. We're cautiously optimistic about what we've seen in July, and we believe if there's a continuation of that particularly out of Asia,...India, China and Indonesia for example, then I think we will have a good first six months." Net profit for the year to June 30 was $270.3m, up from a loss of $694.7m a year ago, when a $952m loss from the distribution of Toll's majority stake in airline Virgin Blue Holdings to its shareholders was incurred. Full-year revenue for the company rose 16% to $6.49bn from $5.60bn a year ago, and Toll said it was well positioned to make further acquisitions. "We are continuing to see real opportunities for acquisitions which match our long-term strategic vision," said Little. "We see some very interesting future growth options both here in the region and around the world." Little said the group's global forwarding operations, or TGF, was a key growth focus, with Toll aiming to triple its revenue from this division to $3bn by 2012. With TGF formed from the merger of Hong Kong based freight forwarder Baltrans and the similar Australian Gluck business, both acquired in 2008, the company said it has since recruited experienced management across Europe, Asia, North America and South Africa to run this business. Chief Financial Officer Brian Kruger said with the firm's gearing levels falling to 12.2% from 37.6% during the year, the group's headroom across its existing facilities and $886m in cash, this gave it nearly $1.6bn with which to pursue acquisitions. "We're currently chasing prospects in three or four outsourcing areas that are very good," Little told an analysts briefing. Little also said the sale last year of the group's stake in global pallet provider Brambles "sends a clearer message to our investors about our strategic intentions." Net profit from its continuing operations rose 15% to $303m, but fell short of the $316.3m forecast by analysts. The group said net profit before non-recurring items and discontinued operations, a key underlying measure, was up 14% to $298m. The company declared a final dividend of 13.5 cents, up from 11.5 cents a year ago. TOL added 41 cents (5.7%) to $7.60. OZ Minerals (OZL) OZ Minerals Chief Executive Terry Burgess said the miner is in no hurry to spend its $1bn cash pile and has vowed to take time to set a new strategic direction for the company. OZ posted a loss of $580.7m for the half ended June 30, compared with a restated profit of $10.9m a year earlier, after booking a one off loss of $553.9m on its company-saving asset sales deal with China Minmetals Non-Ferrous Metals. Burgess took up the job at OZ at the beginning of August and has given himself 100 days to carry out a strategic review of the company. He said the miner has had a turbulent six months and he is now determined to take his time to get its strategy right before deciding how it will deploy its cash. "We need to identify which commodities we are going to be active in and which regional areas of the world we are going to be active in," he told reporters. "There are some opportunities available from time to time and we are happy to assess those, but we want to make sure that whatever we do fits into the overall strategy process." The focus for the company for now is to deliver production from Prominent Hill and to work on developing growth options at the copper gold mine. OZ plans to spend about $25m on exploration work in the second half of 2009, with most of that to be spent around Prominent Hill. Burgess said the mine is performing well, delivering $19.4m in profit before tax in the two months it has been in operation, and that this was likely to improve as it continued to ramp up. Cash costs are forecast to be at 65-75 US cents per pound for the year and the mine is on track to meet guidance for full year output of between 85,000 and 100,000 metric tonnes of copper and 60,000 to 70,000 ounces of gold. The one off charge on the asset sales to Minmetals reflects the fact that the proceeds of the sale came in $617.9m below the book value of the assets. At the time of the sale, independent expert Grant Samuel found the assets were worth more than Minmetals was offering but that the deal was in the best interests of shareholders, given the company's debt woes. OZ is now back on track, albeit as a much smaller company, and Burgess said it is benefiting from the resurgent copper price and experiencing strong demand. "There is good demand for concentrates at the moment, we certainly have no problem in selling our concentrates, and we are getting interest from certain smelters," he said. "We do sense that there may be a deficit in copper during the second half of 2009." Consolidated revenue for the half climbed to $854.5m from $529.3m in the prior year and the miner said it won't pay an interim dividend where last year it paid 5 cents a share. OZL fell 7 cents (6.09%) to $1.08. Tatts Group (TTS) Tatts Group posted a 7.7% rise in its full-year net profit but flagged doubts about the sustainability of the strength of its results in the face of fading government stimulus. The group said full-year net profit rose to $277.4m from a net profit of $257.6m a year earlier. Revenue from ordinary activities rose 5.1% to $3.25bn from $3.09bn. "There is little doubt that the neighbourhood gambling model offered by Tatts is more resilient than many other businesses during a period of falling consumer confidence and rising unemployment," Tatts said in a statement. "The main question is whether the strong performance over the past few years can be maintained." Of particular concern is the sustainability of recent consumer spending patterns, which have over the past 12 months been supported by lower interest rates, lower fuel prices, customer decisions to defer major purchases and government stimulus payments. "As these benefits wash out of the broader economy and unemployment rises, growth rates can be expected to slow," Tatts said. Tatts' lotteries sales were helped by a large jackpot in its Oz Lotto brand at the end of the financial year, which Tatts said produced the equivalent of three weeks' sales. Tatts Lotteries' earnings before interest, tax, depreciation and amortisation for the year rose 12.7% to $118.8m from a year earlier. However, the company said it is unlikely Tatts Lotteries will be able to reproduce the 2008-09 results in 2009-10. Tatts said the New South Wales government's proposed sale of its NSW Lotteries business presents an opportunity to acquire an operation that "suits the Tatts business model". "The potential acquisition of NSW Lotteries, should it become available, would be the natural extension of this business," it said. The company declared a final dividend of 11 cents. TTS fell 10 cents (3.83%) to $2.51. Ramsay Health Care (RHC) Ramsay Health Care said full-year net profit rose 16%, boosted by the first full-year contribution from its UK hospitals. The company's profit in the year ended June 30 rose to $106.5m, from $92.2m a year earlier, while revenue from continuing operations grew 21% to $3.23bn from $2.68bn. The company also announced an institutional share placement to raise about $220m and a share purchase plan to raise an additional $40m to cut debt and increase its flexibility to pursue growth initiatives. "Ramsay is extremely well placed to capitalise upon growth opportunities available in Australia, the UK and Europe," Chief Executive Chris Rex told a briefing on the company's results. "Factors such as population growth, an ageing population and the 'Baby Boomer' effect will drive demand for hospital care over the long term and we believe we are well positioned to capture that projected increase," he said. The company is seeking acquisitions, particularly in one European nation, Rex said, though he wouldn't say which country as this would be "like an open invitation to anybody who wants to sell something to put their prices up." Still, "it is one where we are confident that the market characteristics are such that we could thrive and prosper," he said, adding an acquisition is possible within the next year. He said Ramsay's portfolio of hospitals will continue to generate strong organic earnings growth from its $580m program to expand its hospitals. About $300m has been spent on 20 facilities in the past three years, with about half invested in projects that now are completed, he said. Ramsay also is looking at opportunities to expand the operating capacity of its UK facilities in high-demand areas, Rex said. Operating revenue in the UK rose 79% to $689.9m last fiscal year from $384.5m a year earlier, reflecting 12 months' ownership of Ramsay UK, the fourth-largest UK private hospitals company, compared with 7.5 months in fiscal 2008. Work for the state-run National Health Service comprised 44% of Ramsay's British admissions, up from 25% in fiscal 2008, Rex said. Revenue from its Australian and Indonesian hospitals rose 10.7% to $2.54bn, from $2.29bn a year earlier, as admissions gained 6% in Australia and 14% in Indonesia. About 40% of Australian patients are treated in private hospitals each year, with admissions growing at 6.3% annually in the past 10 years, compared with 2.3% for public hospitals, Rex said. If similar growth continues, by 2021 private hospitals will be treating more than 50% of all Australian patients, he said. "Barring unforeseen circumstances, Ramsay is targeting core net profit growth of 12%-14%" this fiscal year on last year's $146.4m, Rex said. Core net profit - which excludes one-off items, amortisation of intangibles and divested operations - rose 19% from $123.1m in fiscal year 2008. In fiscal 2009, Ramsay posted specific items and amortisation of intangibles of $39.9m, mostly related to deferred non-cash rent expense from its UK hospitals and some restructuring and integration costs. Ramsay posted full-year core earnings per share of 74.1 cents, 22% up on 60.7 cents a year earlier, and ahead of its May forecast of 20% growth, and 72.8 cents, the analyst consensus estimate. Goldman Sachs JBWere is the sole manager for its share placement, which will be underwritten at a minimum price of $10.00 a share - a 7.3% discount to Ramsay's last traded price Wednesday of $10.79 - with the final price to be determined by a bookbuild, it said. Paul Ramsay Holdings, a company associated with Chairman Paul Ramsay and its largest investor with a 42% stake, won't participate in the placement, the company said. After the raising, Ramsay's net debt will be about $1.12bn, compared with $1.27bn at June 30, 2008, and its headroom within its senior debt facilities will be about $650m to $750m after allowing for current development commitments in the next three years. A senior debt facility of $1.9bn isn't scheduled to be refinanced until November 2012, Rex said. Ramsay will pay a final dividend of 21.5 cents, up from 17.5 cents a year earlier, bringing the full-year dividend to 38 cents, up from 32.5 cents in fiscal 2008. RHC was halted from trade with a last price of $10.79. Sino Gold Mining (SGX) Sino Gold Mining's friendly takeover by largest shareholder Eldorado Gold will help Sino achieve its target of becoming a top-quartile, mid-sized producer, Sino Gold Chief Executive Jake Klein said. Eldorado is offering 0.55 of its shares for each Sino Gold share, valuing Sino at $2.2bn. Given that the Canada-based miner already owns a 19.83% stake in Sino Gold, the Eldorado offer is equivalent to $1.76bn in shares. "Our long-term vision is to become a geographically diversified, intermediate producer. The new Eldorado will have a market capitalisation of about $6bn, similar to (Australia's second largest gold producer) Lihir Gold," Klein said during a conference call. Moving up the ranking to become a mid-size producer would have been difficult to achieve for Sino on its own, and the combination of the two companies represents a merger of two higher-ranked, premium stocks, Klein said. The offer values Sino Gold shares at $7.24 cents each based on the closing price of Eldorado on the Toronto Stock Exchange on Aug. 25, a 21% premium to Sino Gold's closing share price on the same day of $5.97. Analysts, however, said the premium appeared low, with many having expected a bid premium of 30% and above. Queried on the timing of the proposed deal before Sino Gold could deliver on gold production growth plans over the next one or two years that would have allowed a higher bid premium, Klein said the implied share price was at the higher end of analysts' share price targets. Eldorado operates the Tanjishan mine in China, as well as other mines and projects in Brazil, Turkey and the US, while all of Sino's assets are located in China. The offer turns the tables on recent deal activity involving Chinese entities investing in offshore resources, and shows that China's vast mineral reserves can also be sought by Western investors. A meeting of Sino Gold shareholders to approve the deal is scheduled for late November, with the transaction expected to be completed in early to mid-December, the companies said. Eldorado shareholders will end up with 75% of the combined group, which will apply to be listed on the Australian Securities Exchange. However, Sino plans to delist from the Hong Kong Stock Exchange. The deal, which will also need approval from Australia's Foreign Investment Review Board, includes mutual break fees of $21m. Klein said he doesn't expect FIRB approval to become an issue as all of Sino's assets are located in China. Klein will step down as CEO if the transaction is successful but will stay on as a consultant. The combined group will produce about 540,000 to 560,000 troy ounces of gold, at an average cash cost of US$340/oz. SGX firmed 73 cents (12.23%) to $6.70. Minara Resources (MRE) Minara Resources returned a net loss of $3.1m in the six months to June 30, compared with a profit of $50.9m for the same period a year earlier, but said it is hopeful a slow recovery in nickel prices will boost the group's outlook. "The nickel market is slowly recovering, which is reflected in the current nickel price, which has improved in July and August," Managing Director and Chief Executive Peter Johnston said in a statement. "Having achieved a stable production profile with good cash reserves and a strong balance sheet, Minara is well positioned to capitalise on the nickel market recovery," the CEO said, adding the outlook for cobalt remains uncertain. Although the company has implemented cost cutting across the board, it is aiming to maintain its production profile with the full year forecast for Murrin Murrin unchanged at 30,000 to 40,000 tonnes. Crimping its half year revenues has been a strengthening Australian dollar, as Minara's nickel and cobalt revenue is priced in US dollars, while its input costs are priced in the local currency. Revenue for the half year fell to $190.1m from $289.4m. The group skipped paying a dividend and said June cash at hand is $127.2m. MRE remained unchanged at $1.00. Virgin Blue Holdings (VBA) Virgin Blue posted a loss of $160.0m for the year to June 30, compared with a net profit of $97.7m a year earlier after facing the toughest operating conditions in its nine year history. The group said based on current market conditions, it expects to break-even this year, with a positive cash-flow even after excluding a $231.4m capital raising launched last month. Despite intense competition continuing on domestic routes, Virgin Blue said yields on its short-haul business had improved from May to July. "Whilst it cannot be considered a recovery at this stage, it does indicate some stabilisation at least in the domestic market," the airline said in a statement. Founding Chief Executive Brett Godfrey, who has said he will leave the airline during 2010, said that cost saving and productivity initiatives, redeployment of excess domestic capacity onto short-haul international routes, and the removal of up to 400 positions, had helped cut the group's variable cost base by 4.5% during the year. "While airlines have been variously impacted by the global economic crisis, our approach was to respond swiftly and definitively to softening domestic demand," said Godfrey in a statement. Virgin Blue's revenue rose 13% to $2.64bn from $2.33bn, and the group said its underlying loss excluding one off costs and after tax was $13m. It won't pay a final dividend, consistent with a year ago. At the time of the raising to improve its liquidity and financial flexibility, the carrier said it expected a net loss of between $160m and $165m due to losses on its new long-haul airline V Australia and expenses related to its fuel and currency hedges. The group said a loss of $124m for start-up costs and the first four months of V Australia's operations on the transpacific route reflected "the difficult long haul environment compounded by the US-centric focus of the launch routes." V Australia filled just 62.3% of its seats since its launch in late February, with revenue of $69m. However, the company expressed hope that further route expansion, starting with Phuket in November and Johannesburg in March, and its planned alliance with Delta Airlines - which commenced flights between the US and Australia in July - will help the profitability of its long-haul carrier. VBA remained unchanged at $0.35. FKP Property Group (FKP) FKP Property Group reported a net loss of $319.4m for the year ended 30 June 2009. Second half impairments of $269.4m (pre-tax) resulted in a full year statutory loss. Revenues from ordinary activities were $384.2m, up 15.2% from last year. Diluted EPS was (70.3) cents compared to 38.7 cents last year. Net operating cash flow was $114.6m compared to $6.2m last year. The final dividend declared was 1.45 cents, taking the full year dividend to 3.45 cents compared with 31.70 cents last year. Looking ahead, the Company expects higher operating profits and operating cash flow in 2009/2010 with the completion of the Energex transaction and the expected settlement of the first lots at Saltwater Coast, Point Cook. FKP firmed 6.5 cents (11.02%) to $0.66. Cabcharge Australia (CAB) Cabcharge Australia said net profit for the 12 months to June 30 was $61.4m, up 4% from a year earlier's $59.0m, as it reiterated its intention to challenge in court charges levelled at the company by the competition watchdog. Cabcharge said that revenue from ordinary activities for the full year was $174.4m, up 1% from fiscal 2008. Flagging a positive outlook for the current fiscal year, which will likely include acquisitions in both taxis and bus operations, Cabcharge said it is awaiting the judicial hearing of its case against the Australian Competition and Consumer Commission. "We trust the ACCC matter will be dealt with expeditiously in the Federal Court. We look forward to presenting our side of the story and being able to challenge some of the assertions made by complainants under cross examination," Cabcharge said in a statement. Earnings per share rose 1.3% to 51.0 cents, with a final dividend of 17 cents taking the full year dividend to 34 cents. CAB strengthened 59 cents (11.03%) to $5.94. Kingsgate Consolidated (KCN) Kingsgate Consolidated reported a fall in full year net profit to $32.5m from $36.2m a year earlier but forecast higher gold output. The miner will pay a final 15 cent dividend a share. Revenue for the 12 months ended June 30 was $114.1m, up from $76.5m. It forecast gold output of 120,000 to 140,000 troy ounces for the year ended June 30, 2010. That's up from output of 93,002 ounces for the 2009 financial year, with output set to grow further after Kingsgate was granted mining leases for its Chatree North mine in Thailand. Kingsgate also said it will continue its investigation of a possible float of local subsidiary Akara Mining on the Thai Stock Exchange. KCN added 25 cents (3.78%) to $6.87. Abacus Property Group (ABP) Abacus Property Group reported a net loss of $102.41m for the year ended 30 June 2009. The result was principally caused by the property and investment devaluations of $113m and the derivative (interest rate swaps) devaluations of $48m. Revenue from ordinary activities were $138.44m, down 14% from last year. Diluted EPS was (11.81) cents compared to 10.80 cents last year. Net operating cash flow was $65.59m compared to $76.71m last year. The final dividend declared was 0.75 cents, taking the full year dividend to 7.75 cents compared with 13.50 cents last year. ABP added 1 cent (2.9%) to $0.36. Roc Oil (ROC) ROC Oil reported a US$14.2m first half net loss on lower oil prices and a fall in the value of derivative investments. Still, the figure was an improvement on last year's first half net loss of US$120.72m. Normalised net profit rose to US$19.6m from last year's US$13.3m loss, excluding unrealised derivative losses of US$34.4m. Revenue fell 43% to $102.1m from US$178.8m. ROC declined 1.5 cents (2.11%) to $0.70. AJ Lucas Group (AJL) AJ Lucas Group reported NPAT of $165.15m for the year ended 30 June 2009. Revenue from ordinary activities were $499.18m, up 17.6% from last year. Diluted EPS was 239.7 cents compared to 24.9 cents last year. The net operating cash outflow was $11.9m compared to an inflow of $50.07m in the previous corresponding period. The final dividend declared was 5.5 cents fully franked, taking the full year dividend to 10.5 cents compared with 8 cents last year. AJL weakened 15 cents (3.9%) to $3.70. Economic News Business Investment Private new capital spending on buildings and equipment in Australia rose 3.3% to $24.07bn in the second quarter of 2009 from $23.31bn in the first quarter, the Australian Bureau of Statistics said. Spending rose 4.4% from the second quarter of 2008. Economists on average had expected that spending in the second quarter fell 5.0% on a quarterly basis. A seventh estimate of expenditure shows companies expected to invest $101.13bn in the fiscal year ended June 30, 2009, a rise of 16.9% from the seventh estimate for 2007-08. The seventh estimate for 2008-09 was also 1.4% higher than the sixth estimate for 2008-09. The third estimate for 2009-10 was $90.56bn, down 10.4% from the corresponding estimate for 2008-09. The bureau surveys companies each quarter on their actual business investment and investment plans. It makes seven estimates of spending plans for each fiscal year, beginning six months before the year begins. The bureau also said that the trend estimate of capital expenditure fell 0.6% to $23.93bn in the second quarter from the first. | |||||||||||||||||||||||||||||||||||||||||||||||||
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US Stocks Close Higher as Banks Pace Gains | Thursday 27 August 2009 - close | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Repeating a process that has been at the crux of stocks' gains in the past week, a series of financial firms - including Citigroup and Bank of America - paced the market higher and dominated the volume again on Thursday, while a rosy update on the much-delayed Dreamliner airplane helped Boeing lead industrials into the green. Closing higher for the eighth straight session, the Dow Jones Industrial Average tacked on 37.11 points (0.39%) to 9,580.63. The eight-day winning streak was its longest advancing move since the eight days ended April 10, 2007. Within the index, gains were paced by Boeing, up $4 (8.4%) to $51.82. The airplane maker's gains came as the firm said its 787 Dreamliner airplane is now expected to make its first flight by the end of the year and booked a $2.5bn charge for a program it said would still be profitable. The Standard & Poor's 500 closed up 2.86 (0.28%) to 1,030.98, including a gain of 0.8% for industrials and 1% for financials. The Nasdaq Composite rose 3.3 (0.16%) to 2,027.73. For financials, part of the gains in the past week stemmed from a rush of short covering. As the broad market has continued to gain in the past week, short interest in the financial sector has also risen. Pockets of investors are seemingly betting a pullback has to be coming, with financials likely to lead any downtrend. Moreover, many of these financials dominate the trading desks of several types of high-frequency trading firms. Given the higher volumes being created by speculative traders and others looking to short sell the companies, an opportunity has been provided for high-frequency firms looking to buy and sell quickly. Among the most traded companies are Citigroup, up 42 cents (9.1%) to $5.05; Fannie Mae, up 7 cents (3.8%) at $1.92; Freddie Mac, up 21 cents (10%) to $2.24; and Bank of America, up 13 cents (0.7%) to $17.92. Combined, all four made up nearly 38% of NYSE Composite volume in Thursday's session. The companies have regularly been above 30% of volume in the past week. American International Group, another high-volume stock, closed up $10.15 (27%) to $47.84. The insurer's stock was helped by a report that Chief Executive Robert Benmosche has been talking with former CEO Maurice "Hank" Greenberg for months. Guess rose $3.47 (11%) to $35.62 as its fiscal second-quarter profit climbed 11% on higher sales in Europe. The clothing maker raised its quarterly dividend 25% to 12.5 cents. Oshkosh increased $6.65 (24%) to $34.20 after a unit of the company was awarded a contract by the US Army to produce 2,568 trucks and trailers. Navistar International led a decline in truck maker stocks on gloomy numbers on truck deliveries from Swedish giant Volvo AB as well as the loss of a military contract to rival Oshkosh. Navistar closed down $2.47 (5.2%) to $44.80. Precision Castparts, up $8.20 (9.5%) to $94.97, said it was buying Carlton Forge Works, a fellow maker of parts for the aerospace industry including for Boeing's 787 Dreamliner. The deal should immediately add to Precision's earnings. For Australian ADRs listed on the NYSE, BHP Billiton firmed $1.01 (1.61%) to US$63.66, Rio Tinto Plc added 32 cents (0.2%) to US$157.36, ResMed dropped 14 cents (0.31%) to US$45.54, Telstra Corporation increased 25 cents (1.79%) to US$14.25, Telecom Corporation of NZ improved 5 cents (0.53%) to US$9.44 and Westpac climbed $3.99 (4.08%) to US$101.80. In economic news, the US Government untouched its estimate that US 2Q GDP fell 1.0%, saying inventory liquidation was deeper than first thought and consumer spending not as weak. Economists expected a big revision, to a drop of 1.5%. Meanwhile, initial claims for jobless benefits dropped by 10,000 to 570,000 latest week. Prices of most Treasuries remained lower during Thursday afternoon following decent demand for a $28bn seven-year note auction. At 7:45 AM (AEST), the 10-year Treasury note yield was 3.45% and the five year yield was 2.47%. European shares lost ground on Thursday, as losses for drinks maker Diageo and weakness for automakers offset gains from Credit Agricole and utilities. The pan-European Dow Jones Stoxx 600 index fell 0.5% to 235.24, extending Wednesday's decline, which snapped a four-session winning run. Overall, the French CAC-40 index lost 0.5% to 3,648.53, the German DAX 30 index fell 0.9% to 5,470.33 and the UK FTSE 100 slipped 0.4% to 4,869.35. Autos were paring gains made this quarter, with Daimler shares down 2.7% and BMW shares down 2.9%. Food and drink shares were also weak, with Diageo shares falling 4.1%. The firm reported a 7% rise in fiscal-year net profit to GBP1.6bn, but warned that 2010 would be challenging, with its operating profit growth expected to slow. Elsewhere in the sector, shares of Irish drinks firm C&C Group rose 18.2% in London. The firm said it is buying the Irish, Northern Irish and Scottish businesses of Anheuser-Busch InBev for EUR180m. It also affirmed fiscal-year financial guidance. AB-InBev shares declined 1.9% in Brussels. Credit Agricole rose 3.7% in Paris. The French bank's second-quarter net profit jumped to EUR201m from EUR76m, beating analyst forecasts as its net banking income rose 40.3% to EUR4.56bn. Other banks performing well included Natixis, which built on sharp gains made on Wednesday with a 6.9% rise after an upgrade to "buy" from "sell" at a brokerage. Shares of GDF Suez rose 2%, helping the utility sector put in a strong performance. The firm's first-half net profit fell 6.3% to EUR3.26bn, beating market expectations. Hotels group Accor jumped 5.7% after saying its board will review the benefits of separating its hotel business from the division that provides employee-benefits services to companies. Accor swung to a first-half net loss of EUR150m. Mobile phone maker Nokia saw its shares rise 2.3%. It will start a unit called solutions as of Oct. 1 that is designed to more tightly integrate its devices and customer services. Nokia also launched a new Linux-based phone. On the FTSE 100, Rio Tinto shed 9.50 pence (0.4%) to 2,359.83 pence and BHP Billiton lost 3.50 pence (0.22%) to 1,596.54 pence. Most Asian markets declined on Thursday with exporters leading Japanese shares lower as increased risk aversion helped the yen gain. China's plans to assess overcapacities in various industries, meanwhile, raised concerns about the country's economic recovery and hurt shares of metal producers across the region. Japan's Nikkei 225 Average dropped 1.6% to 10,473.97, with China's Shanghai Composite slipping 0.7% and Hong Kong's Hang Seng Index declining 1.0%. New Zealand shares ended slightly weaker on Thursday as investor sentiment was weighed down by offshore leads and some disappointing company results. The NZX-50 ended down 0.5%, or 14.5 points, at 3,076.42. Base metals on the LME finished mixed. Aluminium rose $35 (1.88%) to $1,895 while copper firmed $60 (0.95%) to $6,350 and nickel remained unchanged at $19,100. Zinc fell $5 (0.27%) to $1,835 and lead weakened $20 (0.97%) to $2,035. Comex copper was last quoted at 284.55 US cents per pound. Gold and silver futures finished slightly mixed but for the most part consolidated while setting up for a break in either direction whenever they get the necessary technical or fundamental catalyst. Spot gold was last quoted at $948.35. Comex gold futures strengthened $1.50 (0.16%) to $947.30. Spot silver was last quoted at $14.24. Crude oil prices ended higher on a late recovery led by a rebound in equities and weakness in the US dollar. West Texas Intermediate was last quoted at US$72.24 per barrel. The US dollar was sold off across the board in very thin late afternoon trade. At 08:05 a.m. (AET) the US dollar was quoted at 0.6971 euros, 93.48 yen, 1.193 AUD and 61.47 pence. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Overseas Market Report, Tuesday 25 August 2009 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US Stocks Mixed, With Boeing Helping DJIA's Fifth Gain | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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As the Dow Jones Industrial Average rose for its fifth consecutive session, member Boeing assisted after receiving a contract, Advanced Micro Devices was a chip outperformer and stunted HD-TV demand singed Best Buy. The Dow Jones Industrial Average rose 3.32 points (0.03%) to 9,509.28, its highest close in more than nine months. The Nasdaq Composite Index dropped 2.92 points (0.14%) to 2,017.98. The Standard & Poor's 500-stock index shed 0.57 (0.06%) to 1,025.56. Both the Nasdaq and the S&P 500 snapped four-session winning streaks. Boeing rose $1.26 (2.7%) to $47.13, the Dow industrial average's best percentage gainer. Canadian airline WestJet said it ordered 14 of the aircraft maker's next-generation 737-700s. Advanced Micro Devices rose 30 cents (8.1%) to $4, the S&P 500's best percentage gainer. The chip maker is trading at an unwarranted discount to its peers, given its prospects, including the likelihood of better gross margin, said analysts in raising shares to buy from hold and boosting their price target to $5.50 from $4.25. Best Buy lost $1.68 (4.5%) to $35.81. A twice-monthly consumer survey by Stifel Nicolaus found only 22% of respondents intend to buy a high-definition television set within the next year, down from 27% in early August and making it the worst performing category for the first time in the survey's five-year history. Warner Chilcott jumped $4.35 (27%) to $20.41. The specialty drug maker plans to acquire Procter & Gamble's prescription-drug business for $3.1bn, a sign that the market for loans on more highly levered deals may be loosening. Dow industrial member P&G shed 24 cents (0.4%) to $53.34. Toll Brothers lost 93 cents (4.1%) to $21.77. Ahead of the luxury home builder issuing results on Thursday, analysts downgraded shares to hold from buy, saying the stock is trading too high based on their outlook for the housing market. Dell advanced 29 cents (2%) to $14.78, its highest close in more than 10 months. Seeing an improved outlook for computer demand, one broker raised the personal-computer maker's stock rating to buy from neutral. Kansas City Southern lost 83 cents (3.5%) to $23.17. Analysts cut the rail carrier's shares to neutral from buy, saying the stock's price had gotten too high. Valeant Pharmaceuticals declined $2.32 (8.5%) to $24.85. The drug company said its retigabine treatment of painful complications of shingles didn't meet its end goal in a key study. For Australian ADRs listed on the NYSE, BHP Billiton advanced 85 cents (1.35%) to US$63.91, Rio Tinto Plc increased $3.26 (2.05%) to US$162.51, ResMed increased 33 cents (0.73%) to US$45.53, Telstra Corporation slipped 21 cents (1.43%) to US$14.50, Telecom Corporation of NZ firmed 36 cents (4%) to US$9.36 and Westpac added $2.54 (2.64%) to US$98.69. In economic news, the US Midwest posted its first monthly increase in manufacturing during July, rising 2.6% to a seasonally adjusted level of 79.7, because of a big jump in auto production, according to data by the Federal Reserve Bank of Chicago. The Chicago Federal Reserve said that improved production and income indicators helped lift the July National Activity Index to -0.74 from a revised -1.82 in June, providing another sign of stabilisation in the US economy. At 7:45 AM (AEST), the 10-year Treasury note yield was 3.48% and the five year yield was 2.48%. European shares hit a fresh 2009 high on Monday amid continued hopes for an improving economy, with gains from miners helping the advance. The pan-European Dow Jones Stoxx 600 index rose 0.8% to 236.66, a level not seen since early October, building on gains of nearly 3% made last week. At the regional level, the UK's FTSE 100 index rose 0.9% to 4,896.23, the French CAC-40 index advanced 1% to 3,652.17 and the German DAX index climbed 1% to 5,519.75. Miners were the best performers in percentage terms on Monday and particular standouts included Rio Tinto, shares of which rose 4.9%, and Xstrata, up 4.3%. BHP Billiton gained 57.50 pence (3.61%) to 1,637.00 pence. Also higher, shares of French mining firm Eramet jumped 10.8%. Analysts upped their rating on Eramet to buy from neutral, saying the market doesn't appear to widely know that manganese ore prices have increased sharply, citing data from Metal Bulletin and Vale management. In the oil and gas sector, shares of Repsol advanced 2.5% to EUR17.53. The Spanish oil giant was upped to buy from neutral with a 20 euro price target by one broker, who said production from new projects will add around 300,000 barrels a day, close to the current production level. BBVA shares climbed 3.1%. The US Federal Deposit Insurance Corp. is selling the banking operations of Guaranty Bank of Texas to the US division of the Spanish bank after assuming most of its losses. BBVA Compass will acquire $12bn in assets and $11.5bn in deposits and entered into a loss sharing agreement with the FDIC that covers all the acquired loans. In the construction sector, shares of Ireland's Kingspan Group shares advanced 13.8%. The building-materials supplier reported a 71% drop in first-half profit to EUR20.4m but said that demand has stabilised over recent months. Japanese stocks posted their biggest percentage gain in more than three months as strong economic data from the US and Europe on Friday reinforced investor confidence that an economic recovery is under way. Japan's Nikkei 225 Average climbed 3.4%, or 342.85 points, to end at 10,581.05, with automobile shares rebounding from Friday's weakness, while cyclical stocks such as commodity producers pacing the advance on economic recovery hopes. Shares of Sumitomo Metal Mining rose 4.4% and Inpex climbed 5.4%. Hong Kong's Hang Seng Index added 1.7% and China's Shanghai Composite rose 1.1%. New Zealand shares ended higher on Monday, tracking offshore markets but volume remained light as most investors stuck to the sidelines. The NZX-50 ended up 1.1% or 33 points at 3,067.67. Lead surged to an 11-month high on the London Metal Exchange on concerns lead poisoning cases may force smelter shutdowns in China. Base metals on the LME finished mixed. Aluminium fell $15 (0.77%) to $1,925 while copper rose $70 (1.11%) to $6,375 and nickel weakened $100 (0.51%) to $19,350. Zinc dropped $5 (0.27%) to $1,840 and lead firmed $125 (6.67%) to $2,000. Comex copper was last quoted at 291.40 US cents per pound. Gold futures declined sharply late in the session when chart-based selling accelerated as equities backed down from their earlier highs. Spot gold was last quoted at $940.40. Comex gold futures dipped $11.00 (1.15%) to $943.70. Spot silver was last quoted at $14.13. Crude oil futures danced up against $75 a barrel on Monday, but never crossed the line in a day of light trading and stability after a week of torrid gains. West Texas Intermediate was last quoted at US$73.82 per barrel. Major currencies seesawed on Monday, with the late afternoon decline in US equities causing the euro to retrench and the safe-haven yen and US dollar to advance. At 08:05 a.m. (AET) the US dollar was quoted at 0.6995 euros, 94.49 yen, 1.194 AUD and 60.92 pence. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
US stocks rise, data points to recovery
The Dow Jones Industrial Average climbed 70.89 points (0.76 per cent) to 9350.05 in closing trades. The tech-heavy Nasdaq composite increased 19.98 points (1.01 per cent) to 1989.22 and the Standard & Poor's 500 index, a broad measure of the market, gained 10.91 points (1.09 per cent) to 1007.37, crossing the psychological 1000 barrier.
Yesterday the major indices rebounded strongly on surging oil prices.
After a wobbly opening amid thin volume, the major indices settled into positive territory as investors focused on the latest positive data.
The Conference Board said its index of leading economic indicators, a measure of economic conditions in the coming months, climbed for the fourth month in a row in July, by 0.6 per cent.
"The indicators suggest that the recession is bottoming out, and that economic activity will likely begin recovering soon," said Ken Goldstein, economist at the private research firm.
A Federal Reserve index of the manufacturing sector in the Philadelphia, Pennsylvania region turned positive in August, rising to 4.2, its highest level since November 2007, the month prior to the economy's official entry into recession.
However the market had an unwelcome surprise on unemployment, which is expected to top 10 per cent as the economy struggles toward recovery.
The Labour Department reported new claims for unemployment benefits rose for the second consecutive week, to 576,000 in the week to August 15. Most analysts had expected claims to fall to 550,000.
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