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Date Posted: 13:18:14 04/07/13 Sun
Author: The Japanese central bankaggressive new easing plan.
Subject: Friday 05 April 2013

MORNINGSTAR MORNING NOTES
Friday 05 April 2013
Overseas Market Report
Australian Market Report
Company Updates


Overseas Market Report - Stocks End Higher After Bank of Japan Moves
Stocks were higher after new moves by the Bank of Japan. The Japanese central bank announced an aggressive new easing plan. The bank expects to double the size of the monetary base by 2015 through massive purchases of Japanese Government Bonds. The larger-than-expected action is designed to increase inflation to 2% a year after decades of deflation.

Initial unemployment claims rose 28,000 to 385,000 last week, above the 356,000 claims expected by economists. The less volatile four-week moving average rose 11,250 to 354,250. The data comes ahead of tomorrow's closely watched payroll report for March.

At market close the Dow and S&P 500 were 0.4% higher while the Nasdaq was up 0.2%.

Shares of Facebook (FB) were up over 3% after the firm unveiled a new app that will run on certain Android-powered smart phones. The new Facebook Home will serve as a springboard for messaging, phone calls and other applications.

International Speedway (ISCA) experienced a disappointing decline in earnings year over year, as expenses grew faster than revenues during the company's first quarter. Motorsports-related revenues rose 4.8% to $84.6 million, thanks to contracted increases in TV broadcast revenues, while motorsports-related expenses rose only 1.5%, to $22.3 million. Prize and point money expenses also rose 4.3% to $26.3 million thanks to higher broadcast fees. General and administrative costs were higher than we had anticipated, at $26.0 million, as the incident at Daytona elevated these costs in the quarter and incentive spend resumed this year. Management maintained its full-year outlook. Shares were up less than 1% on the report.

For Australian ADRs listed on the NYSE, BHP Billiton rose 47 cents (0.71%) to $67.04, ResMed surged 46 cents (1.00%) to $46.49, Telstra Corporation gained 7 cents (0.29%) to $23.70, Telecom Corporation of NZ rose 11 cents (1.08%) to $10.26 and Westpac remained unchanged at $161.60.

Talk of a BoJ bond purchase and a poorer showing from US unemployment figures pushed bond yields lower. At 7:45 AM (AEST), the 10-year Treasury note yield was 1.76% and the 5-year yield was 0.70%.

European shares were sold off heavily due to the lack of ECB stimulus, which sparked many traders to take profits. The ECB kept interest rates on hold and failed to announce any new stimulus initiatives, which the market wasn't expecting, especially in the light of disappointing economic data.

Asian markets ended lower tracking losses on Wall Street overnight but a number of new monetary easing measures announced by the Bank of Japan helped the Nikkei retrace heavy losses and surge over 2% at market close. The Nikkei closed up 2.2%. The Shanghai Composite and the Hang Seng were shut for holidays. The Sensex fell 1.6% while the S&P/ASX All Ordinaries fell 0.9%.

The yen fell sharply and traded at 95.49 to the US dollar in after-hours trading in Asia, as it fell from 92.90 yen just ahead of the BoJ announcements. The new leadership at Japan's apex bank said the BoJ would introduce "quantitative and qualitative" monetary easing and terminate its previous asset-purchase programme. The BoJ's new Governor is committed to achieving a 2% inflation rate.

Many exporters reversed losses. Auto majors Toyota and Nissan advanced 2.8% and 2.6% each respectively while Honda and Mazda Motor gained 3.4% and 3.6% each, respectively. Mitsubishi Heavy Industries lifted 4.6% on a news report it has sealed a joint contract with France's Areva SA to construct a nuclear power plant in Turkey. Sony also retraced losses and swung into positive territory as it ended 0.2% higher. Canon also pared heavy losses but ended down 0.9%. However, Panasonic was up 2.3% a per cent while Pioneer and Sharp Corp. both gained 2.9% each.

In Mumbai, Jindal Steel led losses for Indian stocks as it fell 4.3%, followed by Tata Steel, down 4%, and Sterlite Industries, down 3.1%. Infosys, Hero MotoCorp, ITC, Bharti Airtel, Hindalco, TCS, BHEL, HDFC, ICICI Bank, and SBI all fell in a range between 2% and 2.7%. A host of stocks also fell more than a per cent each. Dr. Reddy's Labs was among the few gainers as the stock gained 3% after the company announced it has launched Zoledronic acid injection in the US market following approval by the USFDA.

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Australian Market Report - Local Markets Looking for a Mixed Start
Australian equities are looking for a mixed start as the US and Asian markets were buoyed by the actions of central governments to keep economic activity afloat. Conversely, the EU extended losses because of the ECB's inaction regarding economic stimulus. It'll be a quiet day on the domestic front, with no major economic announcements.

Ahead of the local open SPI futures were 16 points higher at 4,928.

Thursday 4 April - close

Fairfax Media (FXJ)

Fairfax Media (FXJ) announced changes to the organisational and reporting structure of its operations, and changes to its executive leadership team. Following the reorganisation, the group will have five business divisions: Australian Publishing Media, incorporating The Sydney Morning Herald, The Age and other businesses previously contained within Metro Media, the Financial Review Group, Fairfax Regional Media, Agricultural Media, and FCN NSW; Domain, which includes the print and digital elements of the Domain business together with the Metro Media Publishing JV; Digital Ventures, which includes Stayz, RSVP, TenderLink, and other digital businesses. The existing Marketplaces division will not continue under the new structure; and Fairfax Radio and Fairfax New Zealand, both of which remain unchanged from the previous structure. FXJ lost 1 cent (1.61%) to $0.61.

Silver Lake Resources (SLR)

Silver Lake Resources (SLR) provided an update on operational activities at the Murchison gold project located 600km north of Perth, reporting that commissioning has been completed on the following major mill components: 10.2 megawatt diesel fired power plant; crushing circuit; process water and reagent areas; grinding circuit; CIL circuit; and tailings storage facility. The crushing circuit is capable of producing 250t/hour and has been running at this rate consistently and the ball mill has been operating at name plate capacity of 135t/hour since mid-March 2013. Mill availability has been 93% and the plant was commissioned on low grade ore of ~1.0g/t Au and is currently being fed a blended grade of ~2.0g/t Au from open pit ore sources. Now that commissioning of the major mill components is complete the plant is now being operated and maintained by company personnel. SLR dropped 33 cents (16.84%) to $1.63.

Companies commencing Ex-Dividend Trading Today (ASX 300):

David Jones Limited

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