Kalkine has a fully transformed New Avatar.

KALIN®

Kalkine Daily - 06/03/2014

Mar 09, 2014

S&P 500 was down by 0.10 points or 0.01% to 1873.81 on Wednesday. U.S. stocks fluctuated after the Standard & Poor’s 500 index rallied the most this year to a record as investors assessed the Ukraine situation and weaker than estimated data on payrolls and services. U.S. private employers added fewer workers than expected in February and services sector growth hit a four-year low, the latest signs of the economic toll severe weather is taking.

We think Ukraine is certainly on the market’s radar screens and certainly still in the headlines. Markets are continuing to give a free pass to any weak economic data because of the weather. That could be the case for much of the data coming through in the recent weeks. Stocks will ignore the data if it’s bad and rally if the number is good. The Federal Reserve said the economy in most regions grew last month even as harsh winter weather impeded hiring, disrupted supply chains and kept customers away from stores and auto dealerships.


S&P 500 Daily Chart   (Source – Thomson Reuters)

 


S&P ASX 200 was up 46 points or 0.85% and closed at 5446.20 points on Wednesday.Westpac Banking Corp’s new venture capital fund has taken an equity stake in Sydney-based peer-to-peer lender ­SocietyOne, in a deal that reflects the coming of age of online lending in Australia and the desire of the major banks to get closer to disruptive start-ups. Supermarket chain Coles is stepping up capital investment to drive a new phase of growth, unveiling plans to invest $1.1 billion over the next three years building 70 new supermarkets and ­creating more than 16,000 jobs. David Jones is expected to postpone merger talks with Myer Holdings for another two weeks until both ­department stores have released interim profit results.

Rex Minerals has raised $12.6 million in a two-tranche placement at 40¢ per share to institutional investors for working capital, ahead of a major financing and debt package later this year for its $850 million Hillside copper project in South Australia.


S&P ASX 200 Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:-

 
Code Name Price Change %Change
PDN PALADIN ENERGY LTD $0.57 $0.06 11.88%
PNA PANAUST LIMITED $1.84 $0.10 5.76%
SRX SIRTEX MEDICAL LIMITED $15.68 $0.84 5.66%
SIR SIRIUS RESOURCES NL $2.51 $0.13 5.46%
CSR CSR LIMITED $3.25 $0.14 4.50%




 
Stock of the Day – Macquarie Group (MQG)

Macquarie group began trading in 1969 as Hill Samuel Australia, obtained its bank license in 1985 and listed in 1996. It is now internationally diversified and operating in corporate finance, treasury and commodities, equity markets and funds management. MQG pioneered the process of buying assets and rolling them into finds providing a captive client for the banking group. Most of these funds were dissolved demurring GFC with MQG yet to replace the lucrative income source.

MQG is more leveraged to equity markets activity than any of its global peers with over 35% of revenues directly linked to equity markets. Despite management’s cautiousness we see Macquarie benefitting from improving capital market conditions and a weaker Australian Dollar. As Macquarie derives two thirds of its earnings from off shore this should provide a boost to earnings.


Source - Macquarie Group
 
We view Macquarie as a market confidence stock with earnings outperformance leveraged to the global market conditions. A key risk to the stock is reversal in the US economic recovery and an disorderly unwind of quantitative easing by the US federal reserve potentially derailing investor and capital market confidence. We argue all of Macquarie’s divisions including the annuity style business would suffer as a result. 


MQG Daily Chart  (Source - Thomson Reuters)

 

The three capital markets businesses are still struggling with mixed trading conditions and subdued market activity. Capital and balance sheet funding remain strong and confirms the group’s longstanding financial conservatism. The earnings outlook guidance for Macquarie securities group and Macquarie capital is unchanged with both expected to be up on FY13. Both divisions are benefitting from the heightened activity in investment markets with key drivers being increased initial public offerings and transaction activity. We find the stock too expensive at current price and would review this again at a later date.
 



Disclaimer
The advice given by Kalkine Pty Ltd and provided on this website is general information only and it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether the advice is appropriate to your investment objectives, financial situation and needs before acting upon it. You should seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice) as necessary before acting on any advice. Not all investments are appropriate for all people.
Kalkine.com.au and associated pages are published by Kalkine Pty Ltd ABN 34 154 808 312 (Australian Financial Services License Number 425376).
The information on this website has been prepared from a wide variety of sources, which Kalkine Pty Ltd, to the best of its knowledge and belief, considers accurate. You should make your own enquiries about any investments and we strongly suggest you seek advice before acting upon any recommendation.
Kalkine Pty Ltd has made every effort to ensure the reliability of information contained in its newsletters and websites. All information represents our views at the date of publication and may change without notice. To the extent permitted by law, Kalkine Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss or data corruption). If the law prohibits this exclusion, Kalkine Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services. There may be a product disclosure statement or other offer document for the securities and financial products we write about in Kalkine Reports. You should obtain a copy of the product disclosure statement or offer document before making any decision about whether to acquire the security or product.
The link to our Terms & Conditions has been provided please go through them and also have a read of the Financial Services Guide.