S&P 500was down by 5.49 points or 0.29% to 1866.52 on Friday. U.S. stocks rose for the week, sending benchmark indexes to their biggest gains in a month, as data from jobless claims to manufacturing showed the economy is strengthening. Economic reports over the week showed U.S. factory production rose in February by the most in six months and an index of leading indicators increased more than forecast. The number of Americans filing applications for unemployment benefits held near the lowest level in almost four months, a sign the labor market continues to strengthen.

The bull market in U.S. equities this month entered its sixth year, with the S&P 500 surging as much as 178 percent from its 2009 low, as three rounds of bond purchases from the Fed helped fuel economic growth in the past 11 quarters.



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

 
S&P ASX 200was up 44.1 points or 0.83% and closed at 5338.10 points on Friday. Australand Property Group announced that Citigroup Global Markets Australia and each of related bodies corporate Holds 14.99 pct of interest in share capital of company. Invocare Ltd announced Commonwealth Bank of Australia and its related bodies corporate holds 5.03 pct of interest in share capital of company.
Metcash shareholders have given the thumbs down to a risky turnaround plan that involves cutting dividends to fund almost $700 million of capital investment aimed at securing the ­long-term future of independent ­grocery retailers. Metcash shares fell as much as 12 per cent on Friday to their lowest level in nine years after the wholesaler said it would reduce its dividend payout ratio from around 92 per cent in 2013 to 60 per cent.


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

The top gainers on ASX 200 were:-
 

Code	Name	Price	Change	%Change
IGO	INDEPENDENCE GROUP NL	$4.04	$0.23	6.04%
ALQ	ALS LIMITED	$7.54	$0.36	5.01%
GEM	G8 EDUCATION LIMITED	$4.76	$0.22	4.85%
DLS	DRILLSEARCH ENERGY	$1.59	$0.07	4.61%
COH	COCHLEAR LIMITED	$58.96	$2.38	4.21%
ABP	ABACUS PROPERTY GROUP	$2.37	$0.09	3.95%

 
Stock of the Day – Monadelphous (MND)

Monadelphous is major engineering company providing construction, maintenance and industrial services to the mining, energy and infrastructure sectors. The engineering construction division provides project management and construction services to the mining and energy sector. The maintenance and industrial services division specializes in the planning and management of mechanical and electrical maintenance services.

Monadelphous announced a sound first half fiscal 2014 result despite tough conditions, with operating revenue down just 1% to AUD 1.3 billion, underlying earnings before interest, tax, depreciation and amortization or EBITDA down 3% to AUD 121 million and underlying net profit after tax  or NPAT steady at AUD 79 million. Operating cash flow remained strong at AUD 78 million. The interim dividend was AUD 0.60 (fully franked) down 3%. Despite the turmoil engulfing many of Monadelphous’s peers, the company has proved to be highly resilient.



Source - Monadelphous
 
Monadelphous face strongly building headwinds as the massive wave of mining and LNG projects nears completion. Chief Executive Robert Velletri is forecasting a 10% decline in full year revenue and noted the company’s focus has shifted to managing execution risks, improving productivity and reducing costs to protect margins that remain under pressure in an increasing competitive environment.



Monadelphous Daily Chart  (Source - Thomson Reuters)

Monadelphous’s shares are overvalued with the market anticipating an early improvement in domestic engineering construction demand which we view as improbable. Monadelphous retains a solid position in the provision of structural, mechanical, piping, electrical and instrumentation work to the domestic iron ore and LNG sectors. Recurring engineering, maintenance and industrial services contract work for energy companies has established a barrier to entry, through switching costs. But deteriorating conditions have caused a significant slowdown in the pipeline for new contract work. Engineering construction revenue increased by just 1% to AUD 960 million as market conditions in the mining and energy sectors continued to tighten with limited new tenders, customers restricting capital expenditure, increased competition and numerous project deferments. We like the Monadelphous story but find the stock expensive at its current price. We will review the stock again at a later date.
 

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