Australian Stock Market Report - Midday July 20, 2015

• Local shares have started in a cautious start on Monday with the index trading through a narrow range in early trade. At the lows of the session the ASX 200 was down 19 points and up 12 points at the best levels of the morning. The lack of initiative on t he part of buyers and sellers reflected mixed fortunes for US and European share markets at the weekend.

• European shares were flat to slightly lower on Friday with investors dissecting earnings results and taking profits on gains recorded earlier in the week. The FTSEurofirst 300 fell by less than 0.1% with the German Dax down by 0.4% while the UK FTSE was down by 0.3%. US share markets were mixed on Friday. Shares In Boeing lost 1.1%, weighing on the Dow Jones index. But shares in Google rose by 16.3% after reporting solid advertising revenue growth. And shares in Facebook rose by 4.5% to record highs. The Dow Jones ended lower by almost 34 points or 0.2% but the S&P 500 rose by 0.1% while the Nasdaq gained 47 points or 0.9%. For the week, the Dow gained 1.8%, the S&P rose by 2.4% and the Nasdaq rose by 4.3%.

• In terms of sector performances Materials were the worst decliners in early trade held back by BHP which was down more than 1per cent, while Rio Tinto was 0.7 per cent higher. Shares in Newcrest (NCM) were down more than 7per cent on the back of reports that operations at the Hidden Valley mine were halted after an employee fatality. Financials firmed in a late morning trade as a group led by the ANZ which was up 1per cent.

• In company news Sonic H ealthcare ( SHL) downgraded its earnings forecast by 3–4% for the 2015 financial year to approximately $730m, due to conditions impacting its Australian pathology division. SHL expects to follow this up with a roughly 20% jump in earnings before interest, tax, depreciation and amortisation (EBITDA) in the 2016 financial year to $850–$875m. Non-recurring costs of around $13m related to a restructure of its American CBLPath business will also be expensed against the 2015 result, Sonic said. Shares in Sonic fell 4.3% to $20.92 shortly after the market opened. They reached a 12-month high of $23.73 just last Wednesday, 15 July.

• Energy utility owner Duet Group (DUE) has launched a takeover bid for gas producer Energy Developments (ENE) . Duet has offered $8 a share to take control of clean energy provider Energy Developments in a scheme implementation deed. To fund the proposed acquisition, Duet has launched a fully underwritten $1.67 billion equity raising. The transaction values the supplier of waste natural gas extracted from mine sites and garbage dumps at almost $1.92 billion. DUE shares were in a trading halt as the capital raising proceeded. ENE shares were recently at $7.95 a gain of 23 cents or 2.9%.

Tom Piotrowski - Market Analyst (Author)

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