27 Feb 2015
Markets
- US and European stocks hit highs as the Eurozone approved a four month extension on Greece’s bail-out. Asian stocks also finished higher, and local stocks finished higher buoyed by positive results out of company reporting season.
- In local stock news, Telstra has announced that CEO David Thodey will retire from the role after almost six years. He will be replaced by Telstra CFO Andrew Penn, a former CEO of AXA Asia Pacific, who has more than 30 years’ experience in a variety of roles across Australia, NZ, Europe and the Asia Pacific region.
- Woolies was down more than 10% today after revealing pressure on margins and earnings. The group has reduced its guidance for a profit rise of between 4% and 7% to between 2% and 6%.
- Medibank has released net profit after tax of $151.2m for the half year. The result was in line with guidance, and the company remains on track to deliver its full year forecast. The level of product downgrading and churn across the industry remains a problem.
- Santos has reported an underlying profit of $533m for their full year result. The headline result was a loss of $935m due to non-cash impairments (write-downs). The full year dividend came in at 5c higher than last year. Even with the falling oil price, the company delivered its highest production in five years, and record sales and revenue.
- QBE announced a net profit after tax of $742m, below market expectations. However, the miss was driven by a one-off item. Positively, claims provisions weren’t raised, their problematic Argentinian business was sold, and the balance sheet improved with gearing down considerably.
- APA Group (Australia’s largest natural gas pipeline business) announced strong earnings increase of 9% to $401m for the half year to end of December. The stock rose strongly as a result.
- Caltex has beaten its guidance with a 48% rise in annual profit and tripled its final dividend, buoyed by wider refiner margins and stronger sales of premium fuels.
- BHP Billiton’s interim net profit has almost halved as falling commodity prices weighed on the resources sector, but BHP says they remain well placed to weather a low price environment. On an underlying basis, net profit was well ahead of expectations.
Economics
- Confidence levels among the biggest companies in Australia have hit their lowest point since the end of 2012, harming plans for investment and medium term growth. According to a key survey, big businesses’ overall confidence is now below its long run average and weaker than confidence levels for smaller companies and in the broader economy.
- US existing home sales were down 4.9% in January from the previous month; a more modest decline was expected. The median price of an existing home was up 6.2% on the same time last year, to $199,600. New home sales also fell.
- US central bank chair Janet Yellen addressed Congress (the US senate) saying the economy is improving as she laid the groundwork for a potential rate increase this year. The first US rate rise is getting nearer, but will still be data dependent.
- China’s manufacturing sector moved back into expansionary territory. The key reading was the highest in four months.
- Chinese consumer sentiment remained close to record lows in February with confidence around personal finances dropping to the lowest level since December 2011.
Politics
- The European Commission, the European Central Bank and the IMF approved Greece’s four month bail-out extension after the country submitted a list of reforms that were in line with expectations.
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