By Stephen Hogan, Senior Private Client Adviser, Equities/Derivatives

Australian Market

The Australian market (XJO) closed up 12.0 points or 0.23% to 5135.4 today. The marked had a good run on the open, rising over 20 points in the first 15 minutes. We saw it stall at the day's high of 5,157.1, just before 11:00am to sell off for the next hour and range into the afternoon. U.S. markets closed up on Friday night but closed out the week just in the negative (except the Nasdaq). On our market SUN, WPL and WOR were trading ex-dividend. The best performing sector Gold followed by Utilities, gaining 4.87% and 1.05%, while the worst sector was Industrials, falling -0.62%.

BHP Billiton Limited ((BHP)) has announced a shuffle of management, with the runner up to take over Marius Kloppers as chief executive retiring at the end of the week. Marcus Rudolph had been in charge of the iron ore and coal divisions in BHP, reporting directly to Kloppers for a number of years. He was second favourite to be appointed to the chief executive role behind Andrew Mackenzie, who was long considered the front runner for the role. Now Mackenzie has rearranged the executive structure and the position will not be filled.

Macquarie Group Limited ((MQG))'s credit rating has been affirmed by Fitch Ratings. The ratings agency pointed out that Macquarie's earnings were more volatile than other commercial banks, but this was offset by the fact its' funding and liquidity was conservatively managed. Fitch said Macquarie's $19.8 billion in liquid assets more than covered all the wholesale debt it would have to roll over in the next year. Fitch said, "Some asset quality pressure is likely in the next 12-18 months, reflecting a modest deterioration in the Australian operating environment. "Nevertheless, asset quality continues to compare favourably with international peers. Provisioning levels appear adequate."

Reporting season continues:

Caltex Australia Limited ((CTX)) reported a June half net profit of $195 million, up from $167 million earned a year earlier. Revenue totalled $11.5 billion down from $11.8 billion a year earlier. CTX benefited from inventory gains of $24 million in the half, compared with losses of $30 million in the period a year earlier. CTX also claims that oil price movement boosted inventory gains. CTX will pay an interim dividend of 17c a share.

NIB Holdings Limited ((NHF)) reported a net profit of $67.2 million for FY13, down from $67.6 million last year, missing its guidance of $75 million in pre-tax underwriting profit, which was at $73.8 million. Chief executive Mark Fitzgibbon said the growing number of claims being made and unfavourable government policies remained the biggest challenges for the company in the current financial year. NHF blamed a rise in healthcare claims and tough trading conditions for a fall in its full-year earnings.

Boart Longyear Limited (BLY) reported a half year net loss of U.S. $329.4 million, well below the U.S. $97.7 million in profit reached a year earlier. BLY has cut more than 2800 jobs so far this year and sold its non-core environmental and infrastructure drilling services operations. BLY also flagged impairment charges worth a combined U.S. $298.3 million impacting first-half earnings, and restructuring costs adding up to U.S. $17.2 million. BLY said in a statement, "Operating conditions and key performance indicators have continued to deteriorate early in the second half of the year, and are similar to levels experienced during the previous market downturn in 2009." BLY said it would not pay an interim dividend to shareholders.

M2 Telecommunications Group Limited ((MTU)) reported a net profit of $43.8 million in FY13, up 33% from $33 million last year. MTU boosted profits with the purchase of Dodo and Eftel in May 2013, and Primus in 2012. Now MTU has forecast a net profit of $60-$70 million in FY14. MTU will pay a final dividend of 10c per share, up from 9c last year.

Specialty Fashion Group Limited ((SFH)) reported net profits of $13 million for FY13, up from a $2.8 million loss in FY12. SFH recorded a loss for the June half of $5 million, however strong momentum from the first half of the year driven by comparable store sales growth, better lease terms and keeping a hold on business costs helped push the company into profit territory. Revenue for the year was $569.5 million, down 0.5%, but it recorded underlying positive comparable store sales growth of 0.4% flowing from a net decrease in its store numbers of seven.

AUD is currently trading at $0.9033 up $0.0013 against the USD.

Top Performers

St Barbara Limited ((SBM)) up $0.14 or 17.72% to $0.93

Medusa Mining Limited ((MML)) up $0.18 or 6.87% to $2.80

Kingsgate Consolidated Limited ((KCN)) up $0.16 or 6.04% to $2.81

Horizon Oil Limited ((HZN)) up $0.02 or 5.88% to $0.36

Mineral Deposits Limited ((MDL)) up $0.15 or 5.84% to $2.72

Bottom Performers

Boart Longyear Limited ((BLY)) down -$0.065 or -11.71% to $0.49

Emeco Holdings Limited ((EHL)) down -$0.01 or -5.26% to $0.18

M2 Telecommunications Group Limited ((MTU)) down -$0.34 or -4.82% to $6.72

WorleyParsons Limited ((WOR)) down -$1.03 or -4.46% to $22.08

Energy World Corporation Limited ((EWC)) down -$0.02 or -3.96% to $0.485

Our Comments

Nice start to the week, with some heavy hitters trading ex-div. We will be looking out tonight for news from the Fed's Jackson Hole Symposium 2013 where questions were raised about whom is replacing Chairman Ben Bernanke at the end of his term.

(For a more comprehensive summary of last night's market action see FNArena's Overnight Report.)

Re-published with permission. Views expressed are not by association FNArena's (see our disclaimer).

Stephen Hogan is an Authorised Representative of Novus Capital. Authorised Representative No.345411 - http://www.stephenhogan.com.au

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