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Wall Street takes a tumble ahead of Fed decision

Last updated: 01:14 30 Jan 2014 AEDT, First published: 02:14 30 Jan 2014 AEDT

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US markets have opened sharply lower as investors wait on the Fed’s monetary policy decision today.

Downbeat earnings guidance from web portal Yahoo! and AT&T had traders hitting the ‘sell’ buttons. The Dow Jones industrial average is off 0.7% at 15,817, the S&P 500 is down 0.8% at 1,777 and the NASDAQ Composite is 0.9% lower at 4,062.

Joining Yahoo! in the doghouse is aerospace firm Boeing, despite fourth quarter earnings coming in higher than the market had been expecting. It has also caught the lowered guidance bug, with the company forecasting 2014 earnings per share (EPS) will fall in the range of US$7 to US$7.20 compared to market expectations of US$7.57.

Dow Chemical is a bright spot as it returned to the black in the fourth quarter, posting net earnings of US963mln versus a loss of US$716mln.

Later on today social networking site Facebook will announce its earnings after the market closes.

In the UK, Footsie has turned south after a bright start. The FTSE 100 is down 61 (0.9%) at 6,511, having been as high as 6,645 at one stage today. The AIM All-Share index took a bit longer to succumb to pessimism, but it too is now down, off 2 points (0.3%) at 857.

Miners are still in positive territory, however, after Anglo American (LON:AAL), Antofagasta (LON:ANTO) and Randgold Resources (LON:RRS) all issued well-received updates this morning.

At the other end of the scale, Sainsbury (LON:SBRY) is on offer after chief executive officer Justin King said he would be parking his trolley for the last time at the next AGM.

Elsewhere in the retail sector, luxury handbag maker Mulberry (LON:MUL) went out of fashion after a profit warning triggered by lower sales in the UK and Korea.

The AIM heavyweight lost a quarter of its value as it admitted pre-tax profits for the year ended March 31 would fall “substantially below current market expectations”.

The only stock faring worse than Mulberry today are those of Mobile Streams (LON:MOS), which watched 36% disappear off its already tiny market capitalisation as the Argentinian Peso’s slump took its toll.

The company, which generates 85% of revenues from Argentina, said underlying earnings fell in the six months to December due to adverse currency shifts.

Mobile Streams, which sells apps, games, music and videos for mobile devices, says it is looking at the best way of moving cash out of Argentina.

There are few things investors like more than directors putting their hands in their pockets to buy shares in their company, and three big hitters at Paragon Diamonds (LON:PRG) did their shareholders proud.

Executive chairman Martin Doyle bought 322,600 Paragon shares at 3.1p, increasing his holding to just over 1mln shares or 0.35% of the company.

Another 322,600 shares were bought at 3.1p by managing director Stephen Grimmer, who now owns 922,600 shares or 0.31%. Finance director Simon Retter bought 333,999 shares priced at 2.99p, to take his investment to 1.15mln shares or 0.39% of the company.

The shares are up 10% to 3.3p.

If diamonds are not your best friend, then maybe gold is, and there are certainly plenty of updates from junior miners today to pique your interest.

Shanta Gold (LON:SHG) again caught the eye, announcing that it is looking at least a five-year mine operation at Singida after a establishing a maiden reserve for the central Tanzania gold project.

Shanta started gold production at New Luika, also in Tanzania last year, but also now sees Singida and five other deposits in its vicinity, as part of its long-term strategy for its operations in the country.

The shares are up 2.9% at 13.25p.

Pan African Resources (LON:PAF) advanced 1.8% to 14.25p as the South African gold miner said it will report interim earnings between 8% and 15% higher than a year ago.

Patagonia Gold (LON:PGD) shares made headway on plans to increase production at the Lomada mine in Argentina, while Minera IRL (LON:MIRL) added 7% to 11.7p after handing Rio Tinto (LON:RIO) 44mln shares – giving it a 19% shareholding in Minera – as part of the pair’s option deal for the Ollachea gold project in Peru.

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