S&P 500was up by 11.24 points or 0.60% to 1872.01 on Thursday. U.S. stocks rose for the third time this week as better-than-forecast data on leading indicators and regional manufacturing fueled optimism in the economy, overshadowing concern interest rates may rise in the middle of next year.

Quarterly Fed forecasts also showed more officials predicting that the benchmark rate, now close to zero will rise to at least 1 percent at the end of 2015 and 2.25 percent a year later. The central bank said it would trim its monthly bond purchases by $10 billion to $55 billion. Another report indicated the number of Americans filing applications for unemployment benefits held last week near the lowest level in almost four months, a sign the labor market continues to strengthen.


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

 
S&P ASX 200was down 61.6 points or 1.15 % and closed at 5294.00 points on Thursday. Spanish infrastructure developer ­Abertis has held discussions with the NSW government to express its interest in running toll roads as it tries to ­challenge incumbent ­Transurban’s grip on the $23 billion Sydney toll road market. Grocery wholesaler Metcash has reduced its profit guidance ahead of a strategy update on Friday, warning that earnings per share for the full year are now expected to fall per cent 13 per cent to 15 per cent. McAleese’s Cootes tankers will be allowed to continue operating on NSW roads after agreeing to upgrade its fleet and have an external operator review in-house maintenance.

Supply-chain logistics giant ­Brambles has been in discussions with Singapore-listed Goodpack about a potential ­takeover. Brambles said that the talks did not progress and it broke off from active discussions.


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

The top gainers on ASX 200 were:-
 
 

Code	Name	Price	Change	%Change
ALL	ARISTOCRAT LEISURE	$5.40	$0.21	4.05%
TME	TRADE ME GROUP	$3.72	$0.11	3.05%
CAB	CABCHARGE AUSTRALIA	$4.31	$0.11	2.62%
CDD	CARDNO LIMITED	$6.82	$0.16	2.40%
LYC	LYNAS CORPORATION	$0.23	$0.01	2.27%

Stock of the Day – Atlas Iron (AGO)

Atlas Iron is an Iron Ore Producer with four mine in the Pilbara region of western Australia. It is the fourth largest iron ore miner listed on the ASX behind giants BHP Billiton, Rio Tinto and Fortescue Metals. Atlas sells hematite fines direct shipping ore grading about 58% iron to Asian customers. Production started in 2009 and reached nearly 8 Million tones in fiscal 2013. We expect annual production to reach 12 million tones by fiscal 2015. Unit production costs (cash costs) were just AUD 49 per tonne in fiscal 2013.

Atlas Iron’s AUD 61 million underlying net profit gave the appearance of progress but our concerns about earnings sustainability remain. Iron Ore shipments continue to grow with 5.1 million tones of ore shipped during the period, 25% above the prior half. However earnings were supported by particularly strong iron ore prices, which averaged AUD 147 per tonne. 

 


Source - Atlas Iron
 
Put into Historical context the price of this abundant mineral spent more than 90% of the past decade below this level. Major global producers BHP Billiton, Rio Tinto and Vale among others are expanding production and we expect increasing supply to push long-term prices lower. Yet even at historically strong prices Atlas’s net profit margin was just 11% in the first half meaning earnings are very susceptible to weaker prices.


Atlas Daily Chart  (Source - Thomson Reuters)
Atlas disappointed the market by increasing fiscal 2014 capital expenditure from AUD 326 million to AUD 360 million. This isn’t the first time Atlas has disappointed in this way  with production targets slipping on a number of occasions in recent year. We believe the stock is expensive at its current price and would review the stock again at a later date.

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