Morning Report Wednesday 28 January 2015
Will BHP follow Caterpillar’s poor company result?
US equities are currently getting hammered following some major disappointing earnings; Caterpillar (CAT.US) has fallen over 7% and Microsoft (MSFT.US) is down over 9%. Caterpillar’s earnings may be a very significant indicator to what comes next for the Australian mining sector, chart 1 clearly illustrates the strong correlation between the BHP and Caterpillar share price.
• Caterpillar (CAT.US), the world’s largest producers of mining and construction equipment, reported a lower than expected earnings following the fall in oil prices and subsequent lower demand from energy companies. Clearly the large resource stocks are cutting CAPEX (Capital Expenditure) as they attempt to maintain profits and dividends.
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