Welcome to Tuesday, and another down start. Here are the five things I'm looking at today on the Australian sharemarket.
- The S&P/ ASX 200 Index (Index: ^AXJO) (ASX: XJO) has again opened lower and appears headed for correction territory. A correction is deemed to be a fall of 10% or more, and the index has fallen 8.9% in the past 6 weeks.This follows continued falls on US markets overnight. The Dow Jones lost 1.4%, The NASDAQ was down 1.5% and the S&P 500 fell 1.7%.
It was the worst three-day fall since 2011, according to Bloomberg. An estimated US$1.5 trillion has been lost from global stockmarkets in the last week, on the back of weaker than expected global growth, geopolitical concerns and rising fears over the spread of Ebola. - Spot iron ore prices surged overnight, rising 4% to US$83.10, and the move is likely to see iron ore miners rise across the board today. On the London Stock Exchange overnight, BHP Billiton Limited (ASX: BHP) was up 2.9%, while Rio Tinto Limited (ASX: RIO) shares surged 4.2%.Junior miners, who are most at risk from lower commodity prices, including the likes of BC Iron Limited (ASX: BCI), Mount Gibson Iron Limited (ASX: MGX) and Atlas Iron Limited (ASX: AGO) could soar by the end of trading today.
- One iron ore miner unlikely to be among those rising is Arrium Limited (ASX: ARI).Retail investors snubbed the steelmaker cum iron ore producer's capital raising, after the share price fell to 33 cents, well below the offer price of 48 cents. Surprisingly, some retail investors still subscribed for $6 million worth of shares, when they could've bought more on market at a substantial discount.
Underwriters will now be forced to pick up the shortfall tab, but could unload those shares onto the market in the short term, potentially pushing the share price even lower.
Arrium is a stock we have shunned since its days as OneSteel. As we wrote more than two years ago, "one wonders whether Arrium has jumped from the pan into the fire," referring to the company's decision to enter the iron ore sector.
- Tweet of the Day
#Caltex starts imports at Kurnell after refinery shut. #ausbiz $CTX https://t.co/BGWgkJF4XC
Financial Review (@FinancialReview) October 13, 2014
Caltex Australia Limited (ASX: CTX) moves another step closer to becoming a pure retailer of petroleum products. - Stock of the Day – brought to you by Darryl Date-Shappard is Automotive Holdings Group Limited (ASX: AHE). In this article, Darryl notes that Automotive Holdings' fully franked dividend yield of more than 6% is higher than the big four banks, and has several levers to drive growth.
