S&P 500was down by 3.52 points or 0.19% to 1849.04 on Thursday. U.S. stocks fell for the fourth time in five days, led by banks and technology companies, as investors resumed a rotation out of the bull market’s biggest winners.

Citigroup Inc. dropped the most since 2012 after its capital plan failed Federal Reserve stress tests. Applications for unemployment benefits unexpectedly declined last week to an almost four-month low, a sign companies are confident in the outlook for demand, data today showed. Housing, however, will probably take a while to escape from its recent slump as contracts to buy previously owned homes fell to their lowest level in almost 2-1/2 years in February.


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

S&P ASX 200was down 26.7 points or 0.5% and closed at 5350.10 points on Thursday. Woodside Petroleum has boosted its offshore expansion plans as it prepares to finalise the purchase of a 25 per cent stake in Israel’s giant Leviathan project for an estimated $2.71 billion while also winning additional exploration acreage in Myanmar.
LendLease has drafted in investment bank Morgan Stanley to sell its British shopping centre, Bluewater, in a transaction that could hit close to $1 billion (£600 to 700 million) and is likely to draw the interest of the world’s largest retail landlords.


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


The top gainers on ASX 200 were:-
 

Code	Name	Price	Change	%Change
LYC	Lynas	$0.225	$0.045	25%
KAR	Karoon	$2.57	$0.14	5.76%
TPM	TPG Telecom	$6.32	$0.16	2.60%
MGX	Mt. Gibson	$0.845	$0.02	2.42%
NUF	Nufarm	$4.00	$0.09	2.30%

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Stock of the Day – GPT Group (GPT)

GPT group was listed in 1971 and is Australia’s oldest listed property trust. The business strategy is not particularly differentiated from peers, other than through its particularly conservative gearing and relatively low emphasis on development activity. It is in the process of gradually changing its portfolio mix towards what it considers an optimal an optimal asset allocation of retail (50%), office (35%) and logistics (15%).

There were no surprises in GPT group’s full year result with operating income of AUD 25.7 cents per security, consistent with guidance. In recent years GPT had been able to generate good earnings growth from lowering borrowing costs. Some was due to the downwards trend in interest rates but a large portion arose from breaking interest rate hedges which pushed up debt. We don’t see average borrowing costs declining in the near term.


Source - GPT
 
Consequently we expect operating income and distributions to more closely track the growth rate in rents across the portfolio. GPT has guided for growth in underlying income of 3% which while well down on recent growth is consistent with the market expectation given the soft markets for Australian retail and office sectors.


GPT Daily Chart  (Source - Thomson Reuters)

GPT management expects the current weak conditions for office to recover during the next 12 months. We are less upbeat as we believe a slowing Australian economy and rising unemployment will result in only muted demand for office space. Further the trend for business to reduce workspace requirements is expected to also weigh on demand. We believe the stock is overvalued at its current price and would review it again at a later date.
 

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