Morning (AM) Market Report

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Published on Monday, 22 August 2016 00:00

U.S. stocks finished lower on Friday and flat for the week as investors pondered the possibility of a rate hike by the Federal Reserve in September, according to media reports.

Monday, 22nd August, 2016

Looking at the rotation that has already started taking place in stocks, the market seems poised for higher rates.

At the close, the Dow and the S&P 500 were down 0.2% and 0.1%, respectively, while the Nasdaq was little changed.

U.S. factory automation equipment maker Emerson (EMR) announced its intent to acquire Pentair's valves and controls business for $3.15 billion in cash. The acquisition earmarks most of the estimated $4.3 billion in after-tax proceeds that Emerson expects to receive from its own recently announced divestitures. Applied Materials (AMAT) once again provided an impressive outlook, along with solid quarterly results, ultimately sending shares to multiyear highs in after-hours trading. While display orders remained strong, the major surprise this quarter was foundry orders from the likes of Taiwan Semiconductor Manufacturing and Samsung. Department store chain Ross Stores (ROST) drove strong revenue and profitability gains in the second quarter. In the long term, Ross is likely to ber able to sustain mid-single-digit top-line growth on new store openings and 3% average annual comparable sales growth and that operating margin can expand from the high 13% range to the low 14% range over the next five years. While showing improvement in a couple of areas, Gap's (GPS) overall second-quarter performance was still marked with market share losses when compared with apparel category growth in the Gap and Banana Republic brands.

For Australian ADRs listed on the NYSE, BHP Billiton slipped 57 cents (-1.75%) to $31.94, ResMed added 50 cents (0.72%) to $70.07, Telstra Corporation lost 51 cents (-0.51%) to $21.69, Spark New Zealand gained 10 cents (0.76%) to $13.34 and Westpac declined 17 cents (-0.73%) to $22.97. At 8:00 am (AEST), the 10-year Treasury note yield was 1.58% and the 5-year yield was 1.16%.

European markets ended lower on Friday, with the FTSE 100, French CAC 40 and Germany's DAX losing 0.2%, 0.8% and 0.6%, respectively. Asian markets closed mixed. India's Sensex and the Hang Seng fell 0.2% and 0.4%, respectively. The Nikkei 225 and Shanghai Composite added 0.4% and 0.1%, respectively.

Ahead of the local open, SPI futures were 6 points lower at 5,490