Daily Agenda: Has the Commodities Rout Touched Bottom?

BHP Billiton slashes dividend as iron ore pops; StanChart posts loss; PBOC lower reference rate; Home Depot beats estimates.


Carla Gottgens

BHP Billiton today announced that the company would slash its dividend by more than 70 percent versus the prior year, after a posting a half-year loss of more than $5.5 billion. The Australian company, which is the world’s largest mining firm by market capitalization, has become the latest basic materials producer to announce sharp losses in the face of cooling demand from China and other developing economies. As of yesterday the basic materials sector of the Standard & Poor’s 500 had declined by only 4.6 percent year-to date, after a sharp rebound in February, according to Yardeni Research. After iron ore prices rose significantly in London trading on Monday, investors may begin to believe that despite the lingering effects of sluggish demand, the industry group may have found a bottom.

Standard Chartered posts loss. Full year financial results released by Standard Chartered today revealed a net loss of more than $2 billion for 2015, the first annual loss at the Asian-centric, London-based bank in over 20 years. Critically, the bank also reported a near doubling of troubled loans and a write down of some operations in developing Asia. Despite an announcement that executive bonus payments would be eliminated, the bank’s shares fell by as much as 12 percent in trading in London in response to the news.

Home Depot beats estimates. On Tuesday, Atlanta-based home-renovation supply giant Home Depot released fiscal fourth-quarter financial results that exceeded consensus analysts’ estimates. The company posted earnings of $1.17 per share for the period, with same-store sales rising by more than 7 percent, according to the big-box retailer, indicating that U.S. homeowners are continuing to invest in home improvement.

PBOC lowers currency reference level. Policymakers at the People’s Bank of China lowered the yuan reference-rate band to the lowest rate in more than a month. The 0.17 percent cut helped spur a slight decline in the value of the yuan versus the dollar.

German business sentiment slips. Business leaders in Germany polled by the Ifo institute were less confident in February with the headline business-climate index, with sentiment declining to 105.7 from a prior 107.3 and the expectations index declining to 98.8 versus a previous 102.3. Recent export data releases have indicated that cooling global demand is having an impact on German manufacturers.

Valeant to restate earnings. Embattled Valeant Pharmaceuticals International on Tuesday announced that a review of accounting practices would result in restatement of earnings for prior quarters relating to the treatment of sales via a specialty pharmacy company. Although the amount to be adjusted is less than $60 million in revenues the company shifted from fiscal 2014 to 2015, the news comes after months of scrutiny of the company’s relationship with Philidor Rx Services following a report from Citron Research accusing the firm of improper accounting.