The S&P 500 was down by 13.10points or 0.65%on Tuesday to 1988.44. U.S. stocks fell on Tuesday as bond yields hit their highest in a month on expectations interest rates could rise sooner than some investors expect and as Apple shares declined. Apple wiped out a rally of as much as 4.8 percent after unveiling new products including larger-screen iPhones. McDonald’s Corp. retreated 1.5 percent as its monthly sales missed estimates. Home Depot Inc. lost 2.1 percent after confirming that hackers attacked its computer systems.

Anxiety over Fed rate prospects trumped any excitement in US equity markets over Apple news. The S&P 500 closed 0.65% lower to 1988.44 points late in the US session. In contrast to the US Federal reserve, the Bank of Japan continues to battle deflationary pressures and the European Central Bank has embarked on another round of easing to boost meek growth. The YEN was under pressure and fell by 0.2% to Y106.26 per US dollar, its weakest in six years. A soft yen tends to help exporter sensitive Japanese stock market.


APPLE Daily Chart (Source – Thomson Reuters)

S&P ASX 200was up by 31 points or 0.60%on Tuesday and closed at 5607.9 points. WorleyParsons also announced an acquisition, picking up US gas and oil consultancy MTG. Its shares lifted 0.8 per cent to $15.91. Brambles shares fell 0.4 per cent to $9.48 after the logistics business announced the purchase of UK-based Ferguson Group for £320 million ($555 million). Telstra shares gained 0.5 per cent to $5.68.

The Australian dollar has hit a five month low as the US dollar continues its surge against most of the major currencies. Iron ore was down 0.4 per cent at $US83.20 a tonne. Decmil Group has been awarded a $19.88 million bridge contract at Elizabeth Quay, Perth (WA). Western Areas was among the top performers. To read our latest report on Western Areas Click Here. The following stocks will trade ex-dividend today:

Air New Zealand, Arrium, Atlas Iron, Automotive Holdings, Bentley Capital, Blackmores, DWS Ltd, Century Australia, Cardno, Brambles, Calibre, Hill Ltd, Invocare, Kingsgate Consolidated, Monadelphous, NIB Holdings, Sandfire Resources, Specialty Fashion Group, Tandou, Tassal, Trade Me, Woolworths.


Western Areas Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 




How to choose dividend stocks?


Stock of the Day – Tatts Group  (TTS)

Tatts delivered FY14 earnings in which lotteries EBITDA came in at $296.6m for FY14, representing a 0.7% rise relative tor FY13, albeit on a negative 4.3% year on year fall in revenue. The result was somewhat boosted by a full year’s contribution from SA Lotteries however the segment was unable to match the exceptional FY13 jackpot sequence. TattsBet disappointed posting a decline in EBITDA of -7.5% on -2.0% revenue growth ass the firm boosts its investment in marketing and digital capabilities.


Tatts Lotteries EBITDA + Revenue (Source – Company Reports)

With lotteries remaining a relatively stable business the focus going forward will be on whether or not Tatts can turn around the soft trends in its wagering business. Turnover growth has been an issue for Tatts in the past 18 months which we believe reflects their limited retail investment. Various initiatives are now underway including a new website, new brand, increased marketing investment, refreshed retail network and product offering expansion. 


Tatts Wagering EBITDA + Revenue (Source – Company Reports)
 
Operating cash flow of $278.4m represented a cash conversion ratio of 90% with timing difference s at year end related to jackpots causing somewhat of a drag. We viewTatts cash conversion outlook as favorable. Tatts NPAT result came in 4.2% below our expectations. Revenue and EBITDA both posted 1.1% and 3.6% below our expectations respectively.


TATTS Daily Chart (Source – Thomson Reuters)

Wagering EBITDA margins declines by 150 basis points compared against the previous corresponding period and were 60 basis points below our expectations. Wagering revenue declined 2.0% versus the previous corresponding period as the competitive landscape intensifies. Management sees margins declining further in FY15 as the business reinvests to respond to market competition. We believe the stock is expensive at the current price and would review the stock at a later date.

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