04/08/2016 - 06:28

RIO posts a 50% fall in earnings… but will the stock go up.. or down today?

04/08/2016 - 06:28


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The last two days on the ASX have been tough, losing ~ 120 points, however, we should have a strong start today, with the SPI + 28

Good Morning,




The last two days on the ASX have been tough, losing ~ 120 points, however, we should have a strong start today, with the SPI + 28


All eyes will be on RIO, after the miner reported its lowest underlying earnings since 2004 (50% drop to $US1.6 Billion)

Rio Tinto's new chief executive Jean-Sebastien Jacques says he will approach the company's iron ore division on a value-over-volume basis and the recent pick-up in Gold, Copper, Zinc and Iron Ore, should support earnings in FY16/17.

We believe that the market will focus on the positives and drive the stock price higher today…

In the US, Goldman Sachs agreed to pay $US36.3 million over allegations that former employees obtained confidential documents from the Federal Reserve in a settlement that requires the bank to beef up its policies to prevent another lapse.

Wall Street was higher on Wednesday after a sharp rise in oil prices boosted energy shares, while robust jobs data helped financial stocks. 

Data showed the US private sector added 179,000 jobs in July, beating estimates of 170,000.

“There’s slow movement in a market that’s looking for a reason to go up or go down -- it just hasn’t found any,” said Jeff Carbone, managing partner of Cornerstone Financial Partners, which oversees almost $1.1 billion in assets in Charlotte, North Carolina. “We haven’t seen that breakout that would suggest the market is based on fundamentals, it’s still very tied to central banks.”

What's on today?

No local data

Bank of England releases its decision on the benchmark interest rate, asset-purchase facility and the Inflation Report with its latest forecasts.

We believe that the BOE will cut interest rates further, putting further pressure on the GBP, driving export growth higher… so a positive….

Stocks in Focus

A few companies are set to report this morning and we will also focus on RMD, CCP and SVW, which have so far beat analyst forecasts.

The SPI is up 28 points this morning


Niv Dagan is an Executive Director of Melbourne based boutique funds management and corporate advisory firm, Peak Asset Management (www.peakassetmanagement.com.au). He is also a regular financial commentator on Sky Business


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