By Anchor Capital
Click here to view this Anchor Capital review as a PDF
South African Market Review
South African markets closed in the red yesterday. Coronation Fund Managers dropped 8.8%, after the company projected that its diluted EPS to drop between 5.0% to 15.0% in half year ended 31 March 2015. British American Tobacco declined 3.7%. Breweries company, SABMiller sank 1.9%. Retailers, Massmart Holdings, Woolworths Holdings and Clicks Group slipped 1.9%, 1.3% and 1.2%, respectively. On the flip side, mining sector stocks, Assore, Kumba Iron Ore and African Rainbow Minerals climbed 9.6%, 8.4% and 8.1%, respectively. Aquarius Platinum gained 3.7%, after it announced that its total attributable production in 3Q15 increased 5.8% to 84,792.00 PGM oz from the same period a year ago. The JSE All Share Index fell 0.3% to close at 55,039.29.
UK Market Review
UK markets finished lower yesterday, after the preliminary reading of the UK’s GDP showed that the nation’s economy grew at a slower-than-expected pace in 1Q15. Standard Chartered dropped 3.2%, after the lender reported 1Q15 profits below market anticipations. Whitbread declined 2.6%, after announcing that its CEO, Andy Harrison, would retire by February 2016. Separately, the firm announced upbeat FY15 results. BP ended 0.2% lower, after posting a fall in its 1Q15 profit. On the upside, Centrica climbed 2.3%, after its Chairman stated that the firm had made preparations in the event of a takeover offer. The FTSE 100 Index declined 1.0% to close at 7,030.53.
US Market Review
US markets ended mostly higher yesterday. Merck & Co. climbed 5.0%, after the company reported better-than-expected 1Q15 results and raised its FY15 net income guidance. United Parcel Service advanced 3.4%, as its 1Q15 earnings topped market estimates. Ford Motor rose 1.0%, despite reporting weaker-than-expected 1Q15 results. However, Whirlpool declined 7.1%, after the firm cut its FY15 revenue and earnings forecast. Apple retreated 1.6%, amid concerns that rapid iPhone growth might not continue. Pfizer fell 0.3%, after the company cut its FY15 revenue and earnings outlook. The S&P 500 Index rose 0.3% to settle at 2,114.76, while the DJIA Index advanced 0.4% to close at 18,110.14. However. the NASDAQ Index fell 0.1% to finish at 5,055.42.
Asia Market Review
Markets in Asia are trading lower this morning, as investors await the US Federal Reserve’s interest rate decision due later in the day. In Japan, markets are closed on account of a holiday. In Hong Kong, China Construction Bank, Industrial & Commercial Bank of China and Bank of China dropped 1.3%, 0.7% and 0.4%, respectively, ahead of the release of their quarterly results scheduled later today. In South Korea, automobile makers extended their previous session losses, with Hyundai Motor and Kia Motors losing 1.7% and 1.6%, respectively. However, Samsung Electronics advanced 0.2%, after the company reported 1Q15 earnings in line with market forecasts. Yesterday, the Nikkei 225 Index climbed 0.4% to settle at 20,058.95. Today, the Kospi Index is trading 0.7% lower at 2,133.14. The Hang Seng Index is trading 0.4% in the red at 28,327.90.
Commodities
At 06:00 SAST today, Brent crude oil fell 0.1% to trade at $62.58/bl. Meanwhile, the American Petroleum Institute (API), in its weekly report, indicated that crude oil inventories rose 4.20mn bls in the last week. Yesterday, Brent crude oil rose 0.1% to settle at $62.67/bl, after reports emerged that Iranian forces had seized a cargo ship in the Gulf, described initially as a US ship, fuelled concerns about the security of Middle East crude shipments.Yesterday, the Illinois North Central No.2 Yellow corn spot prices remained unchanged at$3.43/bushel.
06:00 SAST today, gold prices declined 0.1% to trade at $1,211.08/oz. Yesterday, gold gained 0.8% to close at $1,212.17/oz, on a weaker US dollar. Later today, traders will keep a tab on the outcome of the US Federal Open Market Committee’s (FOMC) two-day meeting.
Yesterday, copper rose 1.0% to close at $6,132.00/mt. Aluminium closed 1.7% higher at $1,878.75/mt.
Currencies
Yesterday, the South African rand strengthened against the US dollar, after data showed that US consumer confidence weakened unexpectedly in April. Meanwhile, the S&P/Case-Shiller home price indices in the US gained higher than market expectations annually in February. Traders now look forward to the conclusion of the US FOMC meeting, due later today.The yield on benchmark government bonds fell yesterday. The yield on 2015 bond declined to 6.02% while that for the longer-dated 2026 issue fell to 7.91%.
At 06:00 SAST, the US dollar is trading 0.1% lower against the South African rand at R11.8521, while the euro is trading 0.3% lower at R12.9918. At 06:00 SAST, the British pound has declined 0.2% against the South African rand to trade at R18.1718.
Yesterday, the euro advanced against most of the major currencies, but declined against the South African rand. Economic data indicated that consumer confidence in France rose in line with market estimates in April. Later today, traders will eye reports of eurozone consumer confidence and economic sentiment data for further direction.
At 06:00 SAST, the euro slipped 0.2% against the US dollar to trade at $1.09629, while it has weakened 0.1% against the British pound to trade at GBP0.7151.
Economic Updates
On a quarterly basis, in the UK, the preliminary gross domestic product (GDP) recorded a rise of 0.3% in 1Q15, compared with an advance of 0.6% in the prior quarter. Markets were expecting GDP to advance 0.5%.The BBA mortgage approvals in the UK rose to a level of 38.75k in March, compared with a revised level of 37.45k in the previous month. Markets were expecting BBA mortgage approvals to climb to 37.80k.
The consumer confidence rose to a level of 94.00 in April, in France, in line with market expectations. Consumer confidence had registered a reading of 93.00 in the prior month.
On an annual basis, in February, the S&P/Case-Shiller composite home price index (HPI) of 20 metropolitan areas advanced 5.0% in the US, compared with a revised rise of 4.5% in the previous month. Market expectation was for the S&P/Case-Shiller composite HPI of 20 metropolitan areas to rise 4.7%.
The Richmond Fed manufacturing index advanced to -3.00 in the US, in April, higher than market expectations of a rise to a level of -2.00. The Richmond Fed manufacturing index had registered a level of -8.00 in the prior month.
The CB consumer confidence index fell unexpectedly to 95.20 in the US, in April. In the previous month, the CB consumer confidence index had recorded a revised level of 101.40.
In April, the small business confidence index recorded a drop to 47.40 in Japan, compared with market expectations of a fall to a level of 49.00. The small business confidence index had registered a reading of 49.80 in the prior month.
The ANZ Bank, in its business outlook survey, has reported that business confidence improved with a net 41.3% of respondents expecting business activity to improve over the coming year, compared with 42.2% in the prior month.
New Zealand has posted trade surplus of NZD0.63bn in March, following a revised trade surplus of NZD0.08bn in the previous month. Market anticipation was for the nation to post a trade surplus of NZD0.30bn.
Corporate Updates
South AfricaCoronation Fund Managers Limited
: The fund management company, in its trading update for the half year ended 31 March 2015, indicated that it expects its diluted headline EPS to drop between 5.0% and 15.0% from the same period previous year to the range of R2.62 to R2.34. It further stated that its total assets under management for quarter ended at 31 March 2015 stood at R636.00bn.Aquarius Platinum Limited: The platinum mining company, in its 3Q15 results, stated that its total attributable production increased 5.8% to 84,792.00 PGM oz from the corresponding period of previous year. It stated that it revenue fell 2.0% to $50.24mn from the previous quarter due to lower production and $2.00mn negative sales adjustments. The company incurred a net loss of $8.10mn.
Anglo American ramps up output at SA coal mine after wildcat strike: Anglo American said on Tuesday it was ramping up output at its South African coal mine to meet its production targets after a 13-day wildcat strike by workers halted operations.
Matrix launches online store: The vehicle-tracking-device provider has increased its technology innovation for customers over the last few months. The launch of the e-commerce site follows the recent announcement of the availability of its mobile app.
UK and US
Pfizer Inc.: The pharmaceutical company, in its 1Q15 results, indicated that its reported revenue dropped 4.3% to $10.86bn from the same period a year ago. However, its reported diluted EPS increased to $0.38 from $0.36 recorded in the corresponding period of previous year. The company stated that it has updated its FY15 reported revenue guidance and now expects it to be in the range of $44.00bn to $46.00bn.
Merck & Co.: The pharmaceutical company, in its 1Q15 results, stated that its sales decreased 8.2% to $9.43bn from the corresponding period of prior year. Its non-GAAP EPS stood at $0.85, compared with $0.88 reported in the same period of preceding year. The company indicated that it has narrowed and raised its FY15 non-GAAP EPS guidance to the range of $3.35 to $3.48, including a $0.27 negative impact from foreign exchange.
Bristol-Myers Squibb Co.: The pharmaceutical company, in its 1Q15 results, revealed that its total revenue advanced 6.0% to $4.04bn from the same period of last year. Its diluted EPS was $0.71, compared with $0.56 posted in the corresponding period of prior year. The company stated that it has adjusted its FY15 non-GAAP EPS guidance range to $1.60 to $1.70 from the previous range of $1.55 to $1.70. It also announced the commencement of a cash tender offer for up to $400.00mn aggregate principal amount of specified series of its outstanding debt.
United Parcel Service: The logistics company, in its 1Q15 results, indicated that its total revenue rose to $13.98bn from $13.78bn reported in the corresponding period of previous year. Its diluted EPS stood at $1.12, compared with $0.98 posted in the same period of prior year. The company stated that it is on track to meet its FY15 guidance for diluted EPS of $5.05 to $5.30, an increase of 6.0% to 12.0% from the previous year. It also announced the appointment of Richard Peretz as the Chief Financial Officer, replacing Kurt Kuehn.
Express Scripts Holding: The company, in its 1Q15 results, stated that its revenue was up 5.1% to $24.90bn, compared with the same period of preceding year. Its diluted EPS increased to $0.60 from $0.42 recorded in the corresponding period of prior year. For FY15, the company stated that it has narrowed its adjusted diluted EPS guidance from the previous range of $5.35 to $5.49 to the range of $5.37 to $5.47.
Ford Motor Co.: The automaker company, in its 1Q15 results, revealed that its revenue dropped to $31.80bn from $33.90bn recorded in the corresponding period of prior year. Its EPS stood at $0.23, $0.04 less than the market estimated EPS of $0.27.
Kraft Foods Group: The grocery manufacturing and processing company, in its 1Q15 results, indicated that its net revenue was down 0.2% to $4.35bn from the same period of previous year. Its diluted EPS decreased to $0.72 from $0.85 posted in the corresponding period of last year.
BP Plc: The petroleum industry company, in its 1Q15 results, indicated that its total revenue and other income dropped 40.9% to $54.92bn from the same period a year ago. Its diluted EPS stood at 14.21¢, compared with 18.97¢ posted in the corresponding period of previous year. For 2Q15, the company expects reported production to be lower than the previous quarter. Whitbread Plc: The coffee shop and restaurant company, in its FY15 results, stated that its revenue was up 13.7% to GBP2.61bn, compared with the corresponding period of previous year. Its diluted EPS stood at 202.79p, compared with 181.06p recorded in the same period of last year. The company also announced the decision of Andy Harrison to retire as Chief Executive by the end of this financial year ending February 2016.
St. James’s Place: The wealth management company, in its interim management statement for 1Q15, revealed that its funds under management climbed 21.8% to GBP55.80bn from the same period of prior year. Its total new single investments increased to GBP2.00bn from GBP1.80bn recorded in the corresponding period of previous year.
Rexam Plc: The consumer packaging company, in its trading update, stated that its overall global beverage can volumes were up 5.0% in 1Q15. It indicated that the group expects FY15 to present a tough trading environment and stated that it would focus on tightening cost management.
Dechra Pharmaceuticals: The veterinary pharmaceuticals company, in its interim management statement, indicated that the board is confident that trading continues to be in line with management expectations for FY15. It stated that revenue for 3Q15 increased by 14.3% at constant exchange rate and 6.0% at actual exchange rate.
WPP Plc: The advertising and public relations company revealed that it has made a strategic investment in Refinery29 Inc., where WPP Ventures and Scripps Networks would be the interactive partner in the investment.
Rolls-Royce Holdings: The company announced the sale of its Michell Bearings business to British Engines Limited for a cash consideration of GBP12.60mn. It stated that the sale would be completed in the autumn, subject to licence consents.
Kier Group: The construction company announced that it has entered into a conditional agreement to buy the entire issued share capital of MRBL Limited to accelerate its strategy for growth in the infrastructure sector.
Financial Times
Alliance Trust Chief gets a year to improve returns after hedge fund truce: Alliance Trust brokered a last-minute ceasefire with one of New York’s most aggressive hedge funds which has been strident in its criticism of the management and sought to place three new Directors on the investment trust’s board.
Inflows boost Henderson assets under management to GBP89.00bn: Henderson Global Investors increased its assets under management by 10.0% in the first quarter as it benefited from improving investment performance and the rally in European equities.
GSK reveals strong trial results for shingles drug: GlaxoSmithKline has revealed strong results from trials of a new shingles vaccine that some analysts believe could reach GBP1.00bn a year in sales, providing a fillip to the UK drugmaker as it tries to convince investors that it can deliver fresh growth.
Ulster Bank Chief to head Williams & Glyn: The Chief Executive of Ulster Bank is to be appointed head of Williams & Glyn as the challenger bank prepares to float on the stock market nearly three years after it was originally due to be sold.
StanChart to keep domicile issue under review as profits slump: Standard Chartered is keeping the option of moving its headquarters out of Britain under review after a “pretty significant” rise in the UK bank levy, its finance Director has said.
Mayfair landlord Grosvenor warns of property boom complacency: Grosvenor, the Mayfair landlord owned by the Duke of Westminster, has warned investors of the dangers of “complacency” about the global property investment boom, as it reported its strongest results since the financial crisis.
Countryside blames UK election doubts for planning delays: Falling planning consent approvals in the run-up to the general election are hampering efforts to ease Britain’s housing crisis, Countryside has warned.
Mercuria earnings rise after JPMorgan unit swallowed: Mercuria posted an increase in earnings last year as the fast-growing commodities trader digested the acquisition of JPMorgan’s physical oil and metals business.
Nigeria audit: state oil company siphoning oil revenues: Nigeria’s state oil company is assuming “carte blanche” and spending nearly half the proceeds from crude oil sales before they reach the treasury, according to a long awaited audit into billions of dollars of allegedly “missing” oil revenues.
Total’s refining and chemicals unit limits decline in earnings: A tripling of net income at Total’s refining and chemicals unit helped the oil and gas major beat analysts’ expectations and offset the crippling effect of the 50.0% fall in oil prices in its 1Q15 results.
Coinbase opens bitcoin exchange in UK: Coinbase, the world’s most well-funded bitcoin company, has opened its exchange and online wallet in the UK, targeting British enthusiasm for the digital currency as it eyes international expansion.
Citigroup challenged over ‘opaque’ lobbying at fiery meeting: Investors challenged Citigroup Executives at the bank’s annual shareholder meeting on Tuesday, expressing concerns over “opaque” lobbying efforts, which contributed last year to a watering down of post-crisis regulatory reforms.
Catastrophe deals threaten reinsurance sector ‘collapse’: The $575.00bn industry that protects insurers from earthquakes, hurricanes and other disasters risks a banking-style meltdown if it continues making “dangerous” changes to how it is structured, new research has found.
Goldman Sachs’ reported spending on EU lobbying rises 14-fold: Goldman Sachs has revealed a 14-fold increase in the amount it says it spends on lobbying in Brussels after the EU strengthened its disclosure rules.
Inflows boost Henderson assets under management to GBP89.00bn: Henderson Global Investors increased its assets under management by 10.0% in the 1Q15 as it benefited from improving investment performance and the rally in European equities.
BlackRock at odds with its investors over shareholder rights: BlackRock, the world’s largest asset manager, is pressing companies in its portfolio to give their shareholders a right to nominate Directors, putting it in the forefront of the latest US corporate governance campaign – yet it is not a right that the company is planning to grant to its own investors.
Santander profits lifted by Brazil and Spain: Banco Santander´s earnings jumped 32.0% in the 1Q15, after the Madrid-based lender recorded higher profits in nine out of the 10 markets in which it operates, including a marked improvement both in Brazil and Spain.
China rail group signs $5.50bn in Africa deals: A Chinese state-owned rail company has signed $5.50bn worth of contracts in Africa, in the latest sign that the country’s “New Silk Road” strategy to build infrastructure around the developing world is showing tangible results.
Takeda to pay $2.70bn to settle Actos cancer claims: In one of the largest product liability settlements to date, Takeda Pharmaceutical has agreed to pay $2.70bn over claims that its blockbuster diabetes drug Actos causes bladder cancer.
Ministers cite security in effort to block details of Saudi deal: The UK government is fighting to keep secret details of how it handled allegedly corrupt transactions related to a contract to equip Saudi Arabia’s national guard, saying that to disclose the information would jeopardise counter-terrorism co-operation.
Ford’s net income falls after truck switchover halts production: A product switchover that reduced supplies of key new vehicles cut first-quarter net income at Ford, despite decreased losses in its European and South American operations for the quarter.
Honda braces for lacklustre year: Honda is bracing for another lacklustre year ahead after an underwhelming fourth quarter that saw a rise in recall costs and slower sales in its main markets due to quality issues.
Libya Holdings bets on reconstruction: Libya Holdings Group is making a big bet on the country’s reconstruction – even as a civil war rages and jihadi militants advance on its cities – by finalising a deal to buy one of region’s largest cement firms and private-sector employers.
Daimler outperforms expectations with surge in profits: Daimler’s 1Q15 net profit almost doubled compared to a year ago helped by demand for the new Mercedes-Benz C-Class saloon and surging truck sales in North America.
Deutsche Bank Chief Fitschen goes on trial in Kirch case: Lawyers representing Jürgen Fitschen, Deutsche Bank’s co-Chief Executive, have dismissed the charges against him as, “without exception, unfounded” at the start of a fraud trial stemming from the collapse of the Kirch media empire in 2002.
Amazon to expand business-to-business marketplace: Amazon is embarking on a new push to disrupt the wholesale sector, trying to use its success in selling to consumers online to encourage businesses to buy everything from PCs to paper cups on the site.
Kimberly-Clark competition helps to boost online engagement: US-based consumer goods company Kimberly-Clark has invested in a number of start-ups in an effort to discover technology that would inspire customers to change their behaviour.
Samsung profit sinks on smartphone woes: Samsung Electronics said it was relying on buoyant sales of its new flagship Galaxy S6 phone to offset lower demand for cheaper handsets, as it revealed a sixth consecutive year-on-year quarterly profit slide.
GoPro upbeat on future as profits sparkle: GoPro’s profits leapt 52.0% in the 1Q15, beating Wall Street’s forecasts, the action-camera maker reported on Tuesday as it announced the acquisition a “spherical video” start-up aimed at virtual reality headsets.
Twitter plunges after results ‘leaked’: Twitter’s stock fell as much as 26.0% – wiping $6.10bn off its market capitalisation – after Nasdaq accidentally published the messaging platform’s financial results early, showing it missed revenue expectations and lowered its guidance.
Uber expands food delivery service: Uber is making a broader push into the on-demand food delivery market, taking on the likes of GrubHub, Seamless, Just Eat and Postmates, in its latest expansion beyond its original ride-hailing app.
Network spending weighs on Orange as sales and revenues dip: Orange saw a dip in sales and earnings during the first quarter while network spending by the French mobile operator outstripped cost-cutting measures.
China rail group signs $5.50bn in Africa deals: A Chinese state-owned rail company has signed $5.50bn worth of contracts in Africa, in the latest sign that the country’s “New Silk Road” strategy to build infrastructure around the developing world is showing tangible results.
St James’s Place: Lost 3.4% to 875.50p even after its first-quarter results matched expectations.
Allied Minds: Slipped 3.0% to 677.00p on worries that departing Chairman Mark Pritchard will sell some of his 9.5% stake.
Lex
Twitter: early bird: For companies wanting instant feedback to their earnings, reporting after the market close is not ideal since it will be nearly 18 hours until their shares officially begin trading (notwithstanding the erratic after-market). Twitter, at least accidentally, found a solution to the agony of waiting. Unfortunately, for the social network, the instant feedback it got on its first-quarter results was not pretty as its shares tumbled nearly a fifth, or $6.00bn in lost value, in the closing minutes of official trading. The culprit that Twitter cited for both its soft revenue results and projections was its limited success so far for “direct response” products which allow users to connect easily with advertisers (e.g. just click on an ad in a Twitter feed to reach a product being marketed). Twitter did manage to post an Ebitda margin of 24.0%, beating expectations (on its adjusted measure that excludes stock pay). Monthly average users inched up 5.0% to just above 300.00mn. So far this year, Twitter shares were up 40.0%. CEO Dick Costolo had spent much of FY14 reorganising his management team to boost Twitter’s credibility, especially compared to its respected rival Facebook.Daimler: pretty young things: The Shanghai motor show opened on Tuesday; out front, jobless models protested organisers’ decision to ban them from this year’s event. On the same day, Daimler credited its pretty young models (of the automotive kind) for the record number of Mercedes sold in the past quarter. Daimler’s fleet is the youngest in the upscale market, and for both kind of model, youth matters. The new C-Class and compact models propelled car sales to a record 460,000 units. The company plans to launch eight car models this year (along with various van, truck and bus ones). Daimler will continue to have the youngest range into FY16, when Audi will overtake it, Citi research expects. Daimler thinks it can deliver growth in units, revenues and earnings over 10.0% next year. This is ambitious, given that the company also cut its global car market growth forecast from 4.0% to 3.0%.
T-Mobile: free to lose: By its own reckoning, T-Mobile’s first-quarter FCF was $400.00mn, one of many sterling results in its earnings report, released on Tuesday. But its version of capital investment does not include the $1.70bn it spent on spectrum in a government auction. Whether spectrum purchases should be treated as capital investment is not an academic debate. Consumers are moving to T-Mobile in droves and those subscriber gains have sent its shares up 40.0% since September. But a bigger company needs more spectrum to keep customers happy, and another auction looms. The much larger Verizon and AT&T always come to auctions with wallets open: they spent $28.00bn between them at the last one. The US mobile market is not growing much. That implies that T-Mobile’s big subscriber gains have come directly from its rivals Verizon, AT&T and Sprint. In the first quarter, T-Mobile added nearly 1m contract subscribers, while AT&T and Verizon had declines. T-Mobile is doing well, then. But it does not yet, in any meaningful sense, generate free cash. Competing in wireless is expensive, for incumbents and challengers alike.
The post Anchor Capital: Essential market review, 29 April appeared first on BizNews.com.