17
NOVEMBER 2014
ACT
BUSINESSNEWS
AUTHOR:
CHRISSLEIGHT
is
one of theworld’smost
internationally renowned
construction businesswriters,
with specialist expertise in
financial markets and stock
market analysis. He is editor
of KHL’smarket-leading
International Construction
and
is a regular contributor to
ACT’
s sister publication,
International Cranes
and Specialized
Transport
.
Due to a weakening
outlook for their
products, heavy
equipment
manufacturers’
share prices took a
tumble as the third
quarter closed.
Chris Sleight
reports.
S
tockmarkets
ingeneralwent
througha few
wobbles in the latterpart of the
summer, but by lateSeptember
and earlyOctobermanykey
indexeshad regained some
ground. TheDowbounced
around the17,000pointmark
formost of September and
earlyOctober, havingbeen in
themid16,000s inAugust, and
therewas a similar rebound for
theS&P500.
Most impressiveof all the
major indexeshoweverwas
theNASDAQ,which surged
inSeptember to thekind
of highs thatwere last seen
during thedot.comboom
of 2000.Although its all-
time recordof 5,132points,
established in that era, looks a
distant prospect right now, the
4,500-point high-tidemark it
achieved inSeptember is the
best this indexhasbeen for
more than14years.
In contrast, equipment
manufacturers, as represented
by the
ACT
HeavyEquipment
Index (HEI) fell furtherwhile
themainstream indicators
rebounded. The first blipof the
yearwasdue togeneralmarket
forces– the failureofBanco
EspiritoSanto inPortugal,
turmoil in theMiddleEast, the
West’s strained relationswith
RussiaoverUkraine, etc.
Industry specific
However, the continued
decline for the equipment
sectorwasdue to some
industry-specific factors.
Terex, for example, said that
crane sales inparticular
were lookingweaker than
previously expecteddue to
weakness inmany emerging
markets. Theseproblemshad
emergedover JulyandAugust,
andTerexadded that one
of the issues for customers
indeveloping countries
was adifficulty in securing
financing.
Whenonemanufacturer
makes a statement like this, it
tends to rippleout across the
whole stockmarket sector,
particularly if it isbacked
byotherdata. Thatwas
ACT Heavy Equipment Index (HEI)
DOW
NASDAQ
S&P500
25%
20%
15%
10%
5%
0%
-5%
% change
52weeks to October 2014
arguably the casehere,with
economicgrowth in some
emergingmarkets known tobe
weakening.
Another general factor in
theheavy equipment sector
is that theglobalmining
industry still looksweak, and
that is something that impacts
Caterpillar inparticular.As
by far thebiggest construction
equipmentmanufacturer in
theworld,Caterpillar acts as
somethingof abellwether for
the sector, soagainbadnews
fromone company tends to
pull thewhole industrydown.
Nodoubt thepicturewill
be clearer as the thirdquarter
financial results seasongets
into full swing– the first
companies toannounce their
resultswere scheduled todo so
as
ACT
went topress.
The results announcements
will not onlyprovide anupdate
on themost recent quarter’s
trading, butmany companies
will alsoprovideguidance, and
it is thiswhichwill be closely
watched for cluesofwhere the
market isheading.
■
ACT’
s Heavy Equipment Index
(HEI) tracks the performance
of eight of America’smost
significant, publicly-traded
construction equipment
manufacturers – Astec
Industries, Caterpillar, CNH,
Deere & Company, Joy Global,
Manitowoc and Terex.
Equipment dip
