The S&P 500 was down by3.97points or 0.20%on Friday and closed at 1988.40.  Stocks ended mostly lower on Friday as Ukraine-Russia tensions reignited.Federal Reserve Chair Janet Yellen said labour markets still have further to heal before their economies can weather higher interest rates. Gap Inc. gained 5.2 percent to $45.43. Net income rose 9.6 percent to $332 million, or 75 cents a share.
 
U.S. stocks had their best week in four months, with the Standard & Poor’s 500 Index reaching an all-time high. Data during last week showed fewer Americans than forecast applied for unemployment benefits, while purchases of previously owned U.S. homes unexpectedly rose in July to a 10-month high. Hewlett-Packard Co. jumped 5.1 percent after the technology provider reported its first revenue growth in 12 quarters amid a surge in personal-computer sales.


SPX Daily Chart (Source – Thomson Reuters)

S&P ASX 200was up by6.7points or 0.12 %on Friday and closed at 5645.6 points.  IRESS was the best-performing stock in the ASX?200 over the week, climbing 13.6 per cent to $9.97. Transpacific Industries had the biggest fall of the week with the shares falling 14.4% to 93.5 cents. Today earnings from BlueScope, Caltex Australia, McMillan Shakespeare, M2, NIB Holdings, Orora, PFL, Recall Holdings would be released.

 Iron ore was down 1.96 per cent on Friday, to trade at $US90.10 a tonne. Chorus (CNU) released its result today with revenue slightly up (0.1%) to NZ$1,058m but net profit down by 13.5% to NZ$148m. Tower Limited (TWR) has sold its residual life business to Foundation Life (NZ) for $36m. The best performing stock on ASX 200 on Friday was Mermaid Marine (MRM). To read our latest report on MRM – Click Here


MRM Daily Chart (Source – Thomson Reuters)

The top gainers on ASX 200 were:- 



Stock of the Day – Boral (BLD)

BLD’s 50% gypsum joint venture partner USG Corp, reported its 2Q2014 result in July.  Operationally the business is off to a good start post deal completion. Integration has been smooth synergies are on track and the technology roll out is progressing better than expected. Financially earnings are on track to hit the top end   of the pre deal guidance and BLD’s expectation for US$35m - $45m profit contribution in the first full year of operation is likely to be affirmed at the upcoming result.


Strong economic growth across Asia (Source – Company Reports)
 
For the June half the JV reported revenue of US$369m operating profit of US$26m and net income of US$7m. The technology roll out to be complete in 18 months as opposed to original guidance of 24 months. The JV is on track to deliver synergies of US$50m over three years. Despite the generally positive gypsum read through, the persistently weak US housing market is likely to dictate near term share price performance for BLD. Underwhelming US new home sales in conjunction with a number of US homebuilders reporting weak end market activity points to an uninspiring outlook.


Product penetration opportunities (Source – Company Reports)

Despite high levels of turnover throughout much of 2012-13, home sales have declined throughout 2014. As the US housing market fumbles along it appears there are fewer homeowners that are willing or able to sell. While new home supply has been slow to respond this dynamic has the potential to persuade buyers into new home construction although we are yet to see any evidence of this.


BLD Daily Chart (Source – Thomson Reuters)

We do not expect BLD’s US business to break even until 2H FY15 as the US housing starts run rate is below the guidance for breakeven at 1.1m. US brick pricing has been positive with price increases of 3.4% YOY. Offsetting weaker US EBIT we believe will be stronger Australian Construction materials EBIT due to successful NSW concrete price increases and 5% growth in Australian concrete demand year on year. We believe the stock is expensive at the current price and would review the stock at later date.

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