US Markets

US stock markets rose overnight, as investors remain relatively unconcerned over the lack of a conclusion over the Greek debt-refinancing negotiations.

The Dow Jones closed at fresh multi-year highs, its highest since May 2008.  In the broader markets the indexes held on to recent gains, again seven of the S&P 500′s 10 sectors were higher, led by again by energy and utilities.  

Talks between Greece and its creditors on a loan deal continue as a new fiscal pact is necessary for Greece to receive the next round of bailout funds.  The Federal Reserve Chairman Ben Bernanke address the US Senate budget committee and there has been a modest increase in the long-term normal rate of US unemployment, but did not say anything new.  

In corporate news, Coca-Cola rose, after reporting 4Q earnings and revenue that exceeded estimates, and  MasterCard said it will double its quarterly dividend as the credit-card processor on the back of a strong profits and revenue, while Coinstar (the provider of Redbox DVDs) climbed 14% after the company reported fourth-quarter results that were well above expectations and provided a first-quarter revenue outlook that exceeded forecasts.  

Commodity prices rose on the back of a weaker US dollar.

All ten company groups that make up the S&P index traded mixed, with the Materials down -0.1% , Energy sector was up 0.5%, Financials sector down -0.1%,  Industrials sector was down -0.1%, Technology was up 0.3%,  while Consumer Staples were up 0.5%.

The Dow Jones closed up 0.3% (or 33 points) at 12,878, the S&P 500 index up 0.2%  (or 3 points) at 1,347, the Nasdaq ended up 0.1% (or  4 points) at 2,532 and the smaller cap Russell 2000 was up 0.1%.

European Markets

European stock markets closed lower overnight, but pared losses in late trade on reports that Greece was close to reaching an agreement needed to qualify for a second bailout. The Stoxx Europe 600 index closed 0.3% lower.  

European markets recovered from early losses, after news that Greek government officials were drafting a final agreement on budget cuts to be presented to political leaders.  The Greek political parties have been struggling to finalize details of another round of austerity measures, intended to pave the way for their second bailout package for Greece.  

In economic news German industrial output data unexpectedly fell a seasonally adjusted 2.9% on the month in December, the biggest drop since the days of the GFC.  This weighed on German stocks particularly autos and miners.  In corporate news, Glencore International PLC and Xstrata PLC said they agreed to an all-share merger of equals that would create a $90 billion natural resources company, however some institutions are saying that the deal undervalues Xstrata.

In London the FTSE 100 index closed down -0.1% (or -2 points) at 5,890, the German DAX was down -0.2% (or -10 points) at 6,754 while in France the CAC was  up 0.2% (or 6 points)  at 3,411, Spain was up 0.1% and Italy ended up 0.6%.

Asian Markets

Asian stock markets eased yesterday, as markets reacted to key levels. Across the region stocks in the property, coal mining and banking sectors lost ground, because of disappointment over the Chinese government’s lack of monetary policy easing measures.  The spectre of lack of clear progress in ongoing Greek debt restructuring negotiations also weighed on sentiment.

In China the market fell as tight liquidity conditions and the absence of an easing in the reserve ratio requirements for banks weighed on stocks.  Hong Kong and Japanese markets ended flat.

In China the SSE Composite was closed up 0.1% at 2,331 while in Hong Kong the Hang Seng Index was down -0.2% (or  -47 points)  at 20,709 and in Japan the Nikkei 225 Index closed up 1.1% (or  97 points) at 8,929, South Korean KOSPI was up 0.1% for the session, while the Indian market up 0.6%.
Commodities

For the session the Benchmark crude NYMEX for March delivery was down -0.9% (or -$US0.95) settle at $US97.19.  Copper prices are seeking a support level as Copper for February delivery was down -1.0% (or -3.8 cents) at $US3.8580.  February gold was down -0.9% (or -$US15.10) at $US1,720. 

ASX News Today

AKI – Suitor Exxaro Resources the South African miner has all but 27 percent for minimum acceptance level in its $338 million take-over bid for African Iron the Perth-based iron ore explorer.

BKN- Brdken the mining and rail equipment manufacturer says first-half profit is up 65 percent and its full-year expectations remain unchanged.

CLO – Clough the engineering and construction firm, has won a $140 million contract for work on Inpex’s $US34 billion Ichthys liquefied natural gas (LNG) project.

COH – Cochlear has suffered a $20 million dollar loss in the first half of its financial year after a mass recall of one its most popular bionic ear devices.

LEI – Leighton Holdings subsidiary Thiess has won a $1 billion mining contract to extend the life of OZ Minerals’ Prominent Hill copper and gold mine.

MQG – Macquarie Group says full-year net profit is expected to fall by as much as 25 per cent amid difficult trading conditions.

NAB – National Australia Bank lifted cash earnings in the first quarter to $1.4 billion but the bank says higher funding costs are impacting its business.

TCL – Toll road operator Transurban expects a strong performance in the second half of the financial year as it continues major construction projects in Australia and the US and finalises contracts on other developments.
Corporate News

Commodities Stock Index  up 0.1%
Gold Stocks Index down -0.1%
Oil Stocks Index up 0.6% 

US ADRs – Broadly Higher!!…

BHP down -0.5%,  RIO down – 0.5%; AWC up 1.4%
ANZ down – 0.7% & NAB up 0.3%

NEM   down -0.2%, JHX up 0.9%, NWS  up 1.2%

By Michael Hevern
Head of Research

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Clough’s Chief Executive Officer Kevin Gallagher said “This award represents further growth in our near shore marine construction business, delivered through our long- term joint venture BAM Clough. We are delighted to further strengthen our relationship with valued partner BAM, and are excited at the prospect of delivering excellent project outcomes for the JKC JV and ultimate client INPEX.”

Established in 1919, Clough delivers an integrated Engineering, Procurement and Construction service to oil and gas and mineral resources projects primarily in Australia and South East Asia. The Group’s services range from concept development through design, construction, installation, commissioning, operations and maintenance. BAM International brings the construction and construction-related services of the Dutch based Royal BAM Group to Africa, Australia, the Middle East and Gulf States, Asia Pacific and the Americas. These services include general building, marine works, infrastructural and industrial projects.

www.clough.com.au

http://www.traderdealer.com.au/fundamentals/clo

The $1 million consideration for the acquisition will be paid on the following basis – non refundable deposit of $20,000 paid on execution of the HoA; $80,000 to be paid on completion of the acquisition of Delcarmen; 12,500,000 performance shares will be issued on completion of the acquisition of Delcarmen, each of the performance shares will convert to an ordinary fully paid share, at 2 cents per share, in the Company upon the later of completion of the acquisition of Delcarmen or the grant of EPCA 2527; $200,000 to be paid on the later of completion of the acquisition of Delcarmen or the grant of EPCA 2527; 12,500,000 performance shares will be issued on completion of the acquisition of Delcarmen, each of the performance shares will convert to an ordinary fully paid share, at 2 cents per share, in the Company upon the later of completion of the acquisition of Delcarmen or the grant of EPCA 2528; $200,000 to be paid on the later of completion of the acquisition of Delcarmen or the grant of EPCA 2528; milestone payment of $250,000.

www.miningprojectsgroup.com.au

http://www.traderdealer.com.au/fundamentals/mpj

Thiess’ Managing Director Bruce Munro is very pleased with the outcome for both OZ Minerals and Thiess. “This contract is recognition of Thiess’ strong partnership with OZ Minerals, a relationship built since 2006 when Thiess undertook the construction of infrastructure and then the mining for the greenfield operation at Prominent Hill,” Mr Munro said. Executive General Manager of Thiess’ Australian Mining Michael Wright says the expansion requires Thiess to employ an additional 170 people over coming months with the total open pit mining workforce expected to peak at 550 people. “We have been very successful with our operations at Prominent Hill, with a strong focus placed on employing and training local people, and on ensuring we have a diverse workforce with a strong culture,” Mr Wright said.

Thiess’ $2.8 billion mining business in Australia and overseas provides turnkey services for mine owners, including mine development and approvals, mine planning, infrastructure design and construction, technical services, plant procurement and maintenance, and all facets of mining operations. The Prominent Hill operations are a crucial part of Thiess’ business. Thiess has an annual turnover of $7 billion and $22 billion work in hand. With over 19,000 employees, it has become Australia’s leading and most trusted construction, mining and services contractor. Thiess is a wholly owned subsidiary of Leighton Holdings Limited.

www.thiess.com.au

http://www.traderdealer.com.au/fundamentals/lei

The SPI Futures is trading above the key pivot level of 4230, ending up 0.4% (or 15 points) at 4,271. The key levels for our index today are 4230 to 4300. 

Yesterday Aussie shares played catchup with their overseas counterparts, but today traders should be looking to protect recent profits, as investors wait for some conclusive news on the Greek debt talks and today’s RBA decision.  Markets eased in the US and European markets overnight.  

The RBA is expected to cut interest rates to 4% today, but investors and borrowers will be watching to see how much of the cut is passed on.

See below for ASX listed companies in the news today.

Economics News Today

* RBA Interest Rate Decision. 

US Markets

US stock markets eased overnight, as the 5-week rally paused, as markets trade at key levels. Trader focus turned to debate in Greece over fiscal austerity, and the pending bailout.  

The three major indexes took a breather, finishing flat for the session.  To put this in perspective, the recent rally has seen the Dow and the S&P 500 each rise nearly 20% since early October. Overnight seven of the S&P 500′s 10 sectors finished in the red, led lower by materials and financials, but energy stocks provided some support.  

Sixty percent of the S&P 500 companies have reported so far and to date earnings have surprised to the upside for stocks which are considered leaders in their sector, e.g. Apple and Caterpillar, but consumer retail margins are shrinking as shown by Amazon’s huge profit fall.

All ten company groups that make up the S&P index traded lower, except for Energy which was up 0.9%. Materials were down -0.2%, Financials were down -0.1%, Industrials were down -0.1%, Technology was flat,  while Consumer Staples were down -0.1%.

The Dow Jones closed down – 0.1% (or -17 points) at 12,845, the S&P 500 index was down -0.1% (or 1 point) at 1,344, the Nasdaq ended down -0.1% (or -1 points) at 2,528 and the smaller cap Russell 2000 was down -0.3%.

European Markets

European stock markets generally ended in the red overnight, as debt concerns resurfaced.  The Stoxx Europe 600 index closed down 0.1%, breaking a 4-day winning streak.  

Across the region banking shares led decliners, however Greek banks bounced around 20% from recent lows as the fears of nationalisation subsided.  

Trader focus turned to debate in Greece over fiscal austerity, and the pending bailout.  Greek leaders are yet to conclude debt talks with private debt holders to write down the country’s debt by EUR100 billion. A resolution is crucial as Greece must repay EUR14.5 billion of maturing debt in March to avoid a default. The political leaders tried to agree on fiscal austerity measures needed to keep Greece from defaulting on its debts next month. Greece has agreed to cut 15,000 public-sector workers by the end of this year.  

Investors are also concerned about Portugal, which could be the next in line for a bailout after their borrowing costs recently surged with the 10-year government bond yield reaching euro-era highs. The 10-year Portuguese government bond yield is at 17.39%.  

In London, miners were again in focus with Randgold Resources up 2.2% after posting a fourfold rise in 4Q net profit, which led to a doubling of its dividend payment. Glencore International PLC fell -4.5% and Xstrata shares were down -1.7%, as traders heard that the proposed merger with Xstrata PLC might be investigated by the European Union competition commissioner.  

In London the FTSE 100 index closed down -0.1% (or -9 points) at 5,892, the German DAX was down -0.1% (or -2 points) at 6,765 while in France the CAC was down -0.7% (or -22 points) at 3,405. Spain was down -0.3% and Italy ended down -0.3%.

Asian Markets

Asian stock markets played catchup yesterday, following the US investors on better-than-expected US employment figures.

In Japan the market reached its highest level in three months, led by exporters on the prospect of better global demand into 2012.  In China the Shanghai Composite Index rose to close at 2-month highs, as the gains were led by growth-sensitive stocks.

In China the SSE Composite closed up 0.1% at 2,331 while in Hong Kong the Hang Seng Index was down -0.2% (or -47 points) at 20,709 and in Japan the Nikkei 225 Index closed up 1.1% (or 97 points) at 8,929. The South Korean KOSPI was up 0.1% for the session, while the Indian market was up 0.6%.

Commodities

The Dollar Index was higher at 79.09 on a higher Euro, while the Australian Dollar last traded higher at 1.0762. Commodities prices traded lower.

For the session the benchmark crude NYMEX for March delivery was down -0.9% (or -$US0.95) to settle at $US97.19.  Copper prices are seeking a support level as Copper for February delivery was down -1.0% (or -3.8 cents) at $US3.8580.  February gold was down -0.9% (or -$US15.10) at $US1,720. 

ASX News Today

AUN – Austar, the regional pay TV provider, is seeking court approval to postpone a shareholder vote on Foxtel’s proposed take-over because the competition watchdog is yet to approve the deal.

DOW – Downer, the engineering firm and major private partner in the troubled Reliance Rail project, has welcomed a restructure of the group’s financing.  Elsewhere Downer said it has won a $570 million contract to provide services at the Karara iron ore project in WA.

EXT – Extract Resources says the proposed $2.1 billion takeover bid for the Perth-based uranium explorer and developer of one of the world’s biggest uranium assets by a Chinese state-owned entity has taken a step closer, but a direct offer has not been made.

NAB – National Australia Bank’s cash earnings in the first quarter of its fiscal year are up 8 percent but the bank says higher funding costs are impacting its business.

PAN  - Panoramic Resources has delived an “opportunistic” takeover bid for the base metals explorer Magma Metals.

PPT – Investment firm Perpetual said that it stood Chris Ryan down over the weekend because of differences with the board over strategy.

QAN – Qantas boss Alan Joyce has warned a parliamentary hearing that proposed legislative changes are a major threat to the airline’s future.

TLS – Telstra is expected to report a double-digit increase in first half profit later this week, as the telco grows market share, particularly in mobile, as it keeps costs in check.

WBC – Westpac boss Gail Kelly says the bank may not pass on the central bank’s expected interest rate cuts this week.

WHC – Whitehaven Coal has closed four mines in NSW as a result of recent heavy rainfall and says it has lost about one week’s worth of production.

Corporate News

Reporting today: Bradken (BKN), Challenger (CDI), Cochlear (COH), Reckon (RKN) and Transurban (TCL)

Market Summary 

ASX – to open lower

US & UK/Europe – lower

Commodities Stock Index  up 0.1%
Gold Stocks Index down -0.1%
Oil Stocks Index up 0.6% 

US ADRs – Lower

BHP down -0.5%,  RIO down – 0.5%; AWC up 1.4%
ANZ down – 0.7% & NAB up 0.3%
NEM   down -0.2%, JHX up 0.9%, NWS  up 1.2%

By Michael Hevern
Head of Research

For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

DLA Consulting was ranked as a Top 10 place for executive search by Business Bulletin Magazine and has received ‘Highly Commended’ status from the Australian Achievers Award for over 10 years. Ms Denise Lock, Managing Director of DLA Consulting, received the Inaugural Service Award from the Australian & New Zealand Institute of Insurance & Finance for her significant contribution to the industry. “DLA Consulting is a strategic addition to the Humanis brand portfolio and will enable Humanis to grow its insurance and financial services portfolio. There are significant synergies between DLA Consulting and the Humanis Group and we will work together to provide DLA Consulting greater leverage nationally and internationally,” said Mr Rabieh Krayem, Humanis Group Managing Director.

Humanis Group Limited (HUM) is a specialist labour hire, professional placement and international recruitment firm with annual revenues expected to reach $450 million in FY12. The merged Group has an operational capacity spanning Australia, New Zealand and the Philippines, servicing a high-quality client base of principally ASX Top 200 companies. The Group has core capabilities encompassing temporary, permanent and international recruitment and significant exposure to key growth sectors in the market with a focus on the skills-and-labour constrained industries, including energy (coal and oil & gas), resources, transport, logistics and financial services.

Humanis Group is in a position to expand their existing offshore recruitment business and consolidate its presence in industry sectors with chronic skills shortages. Humanis Group will continue to develop its national footprint and broaden its geographical reach throughout Australia.

www.humanis.com.au

http://www.traderdealer.com.au/Fundamentals/hum

Cardno will pay US$106 million for the purchase of ATC which includes payment of US$101 million on settlement and a US$5 million holdback to be paid in 18 month’s. The transaction is expected to be effective 1 March 2012. The acquisition of ATC will be funded through a A$45 million Placement combined with a 1 for 9 Renounceable Rights Issue to existing shareholders which will raise an additional A$66 million approximately. The transaction is subject to customary closing conditions including approval of the Committee of Foreign Investment in the United States, due to a small amount of security level work for the U.S.A.

Cardno Managing Director, Andrew Buckley commented that in line with Cardno’s proven strategy, ATC’s key management will remain active in the company, which will be known as Cardno ATC. Mr Buckley said the addition of Cardno ATC will further strengthen Cardno’s exposure to the U.S.A. environmental and natural resources management market and is highly complementary to Cardno’s existing businesses in the U.S.A. He further noted that this cements Cardno’s position as one of the largest environmental consulting firms in the U.S.A. Mr Buckley added that ATC will provide Cardno with broader access to key U.S.A. clients such as oil, gas and energy companies and major U.S.A. contractors and retail groups. Integral to ATC’s core strength and reputation has been the company’s ability to successfully deliver a broad range of environmental services to major clients through multi-year master service agreements.

Cardno is an integrated professional services provider, delivering the specialist expertise necessary to create and improve the physical and social infrastructure that underpins communities around the world. Cardno’s team includes leading professionals who plan, design, manage and deliver sustainable projects or community programs.

www.cardno.com

http://www.traderdealer.com.au/Fundamentals/cdd

Commenting on the acquisition, Pro-Pac’s CEO, Brandon Penn, said “the purchase of Hills is a very exiting opportunity to take this successful NSW business model national through our existing national infrastructure. Hills have developed significant intellectual property and business methodologies that we will be able to leverage on and which will give us new sources of revenue streams. Hills will be run as a separate sales unit and brand but will utilise Pro-Pac’s existing back end and logistics infrastructure.”

Pro-Pac Packaging Limited is a diversified manufacturing and distribution company, providing innovative, flexible and rigid packaging solutions for a broad group of customers. PPG is headquartered in Sydney with operations in Adelaide, Brisbane, Melbourne and Perth.

www.ppgaust.com.au

http://www.traderdealer.com.au/Fundamentals/PPG

The SPI Futures is trading above the key pivot level of 4230, ended up 1.3% (or 56 points) at 4,278. The key levels for our index this week are 4180 to 4350. 

Aussie shares are seet to play catchup with their overseas counterparts, as investors wait for some conclusive news on the Greek debt talks and the US monthly employment figures were better-than-expected.  We had strongly positive leads from the US and European markets on Friday.   There is plenty of economic news out this week with seven central banks meeting, including the RBA which is expected to cut interest rates agains on Tuesday. 

US Markets

Traders pushed the markets higher after stronger-than-expected employment report from the U.S. Labor Department, which showed that in January Nonfarm payrolls rose 243,000 last month, marking the biggest gain since April, and the unemployment rate fell from 8.5% to 8.3%, its lowest since February 2009. 

All ten company groups that make up the S&P index traded higher with the Materials up 1.4% , Energy sector was up 1.7%, Financials sector up 0.4%,  Industrials sector was up 0.6%, Technology was up 1.3%,  while  Consumer Staples were up 2.1%.

The Dow Jones closed up 1.2% (or 157 points) at 12,862, the S&P 500 index up 1.5%  (or 19 points) at 1,344, the Nasdaq ended up 1.6% (or 46 points) at 2,905 and the smaller cap Russell 2000 was up 2.2%.

European Markets

European stock markets rallied, on the back of the US employment figures. The Stoxx Europe 600 index  rose 1.7% and was up 3.6% for the week.  

Investor sentiment was also boosted by data from the eurozone composite purchasing manager’s index (PMI) which  confirmed growth in the private-sector activity in January, as the index rose to 50.4 in January (up from 48.3 in December). Across the region financials and growth sensitive stocks led the gains, as commodites also gained.  

Markets across the region rose with the exception of Greece which fell -3.8%, after media reports said the Greek Prime Minister may resign if a new financing plan is not backed by the three parties that support his interim unity government. Eurozone finance ministers also cancelled a meeting due to discuss Greece’s second bailout, that had been set for Monday. 

In London the FTSE 100 index closed up 1.8% (or 105 points) at 5,901, the German DAX was up 1.7% (or 111 points) at 6,766 while in France the CAC was  up 1.5% (or 51 points)  at 3,427, Spain was up 1.0% and Italy ended up 1.0%.

Asian Markets

Asian stockmarkets ended in mixed on Friday, as traders were cautious ahead of Friday’s US employment report.  

Traders will be taking their lead form the US today and are set to play catchup today. The Japanese and South Korean markets lost ground.  Chinese stocks recovered from early weakness to finish at 2-month highs, as the property sector saw some bargain hunting.

In China the SSE Composite was closed up 0.8% at 2,330 while in Hong Kong the Hang Seng Index was up 0.1% at 20,757 and in Japan the Nikkei 225 Index closed down -0.5% (or  -44points) at 8,832, South Korean KOSPI  was up 1.3% for the session, while the Indian market up 1.0%.

Commodities

For the session the Benchmark crude NYMEX for February delivery was up 1.5% (or $US1.48) settle at $US97.77.  Copper prices are seeking a support level as Copper for February delivery was up 3.2% (or 12 cents) at $US3.8905.  Februarygold was down -1.1% (or -$US18.90) at $US1,725. 

ASX News Today

BLD – Boral the building materials maker has sold its Indonesian business for $US135 million ($A127.87 million) and confirmed its previous expectations for its half-year profit.

AUN – Austar the regional pay TV provider is seeking court approval to postpone a shareholder vote on Foxtel’s proposed take-over because  the competition watchdog is yet to approve the deal.

EXT – Extract Resources says the proposed $2.1 billion takeover bid for the Perth-based uranium explorer, by a Chinese state-owned entity has taken a step closer, but a direct offer has not been made.

PAN  - Panoramic Resources has delived an “opportunistic” takeover bid for the base metals explorer Magma Metals.

Commodities Stock Index  up 1.4%
Gold Stocks Index down -1.3%
Oil Stocks Index up 2.2% 

US ADRs – Broadly Higher!!…

BHP up 1.6%,  RIO up 0.1%; AWC up 2.2%
ANZ up 1.2% & NAB up 1.2%
NEM   down -2.1%, JHX up 2.0%, NWS  up 1.8%

By Michael Hevern
Head of Research