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Stock Market Analysis: Financials Rise As European Debt Concerns Ease

Thursday, September 9th, 2010

Stock Market Analysis

Financials Rise As European Debt Concerns Ease

Overseas markets continued their “melt-up” overnight, led by financials and miners. In Europe the debt concerns eased after a successful auction of Portuguese government debt. The ASX is set to trade higher today as the ABS releases their Employment report.

The SPI Futures is just below the key resistance level of 4600. The ASX is set to open higher as the SPI Futures closed up 0.7% (or 30 pts) at 4,568. The key levels for our index today are 4600 and 4500. M&A activity continues to drive specific stocks. Gold prices are pushing towards new record highs.

US Markets

US stocks resumed their rally overnight, as European debt concerns eased after a successful auction of Portuguese government debt. The gains were tempered by comments from the US Federal Reserve “Beige Book” which indicated more regions of the nations experienced slower growth late in the summer, as 5 of the 12 regions tracked by the US central bank showed mixed or slowing activity compared with just two during the most recent report in July. The gains were broad-based as Financials, Miners, Energy and Industrials sectors all rose around 1 percent. The Dow closed up 0.5% (or 46 points) at 10,387, while in the broader market the S&P 500 index up 0.6% (or 7 points) at 1,099 and the tech-heavy Nasdaq ended up 0.9% (or 20 points) at 2,229.

European Markets

European stock markets closed higher (after early weakness). The banking and commodities sectors rebounded. In London and Europe stocks rebounded from early losses on the back of reports: on the German economy, news of a successful sovereign bond issue in debt laiden Portugal and positive comments from the head of the German central bank. These reports triggered support of the Fiancials and subsequently the overall markets. In London the FTSE 100 index closed up 0.4% (or 22 points) at 5,430, the German DAX up 0.8% (or 47 points) at 6,164, while in France the CAC was up 1.0% (or 36 points) at 38.

Asian Markets

Asian stocks closed lower. Japanese share prices closed down as the yen rose to a fresh 15-year high against the US dollar, sparking further fears for export company profits. Chinese shares closed flat as gains by the mining sector due to industry consolidation offset earlier losses in financial stocks. However Chinese steel mills and mobile phone factories were idle as local governments order power cuts to meet energy-saving targets set by Beijing. Chinese will be reporting on August trade data this week. In China the SSE Composite closed down marginally -0.1% (or -3 points) at 2,695, while in Hong Kong the Hang Seng Index was down -1.5% (or -313 points) at 21,089 and in Japan the Nikkei 225 Index was down -2.2% (or -201.40 points) at 9,025.

Commodities

The Dollar Index down -0.3% at 82.57 on higher Euro, while the Australian Dollar last traded higher at 91.82. Commodities were generally higher.

Oil prices are above $US74. The benchmark crude NYMEX for September delivery was up 0.4% (or $US0.33) to settle at $US75.00. Copper prices lower, Copper for September delivery was up 0.9% (or 3 cents) at $US3.4905. Gold prices are around 2-month highs, are around key $US1,250 level, with December gold down marginally -0.1% at $US1,255.60.

Key News International Drivers Today

US – 5 of the 12 regions tracked by the US central bank showed mixed or slowing activity. Companies continue to report earnings this week.
EU – Banks may need to raise EUR105 billion of extra capital under planned Basel rules.
CHINA – China flat. Government stands firm on access to credit.
JAPAN – Japan exporters hurt as yen rose to a fresh 15-year high .

Markets Overview

Financials Rise As European Debt Concerns Ease

Market	Movement
The Dow Jones Industrial Average	Up 0.5% (or 46 pts) at 10,387
The S&P 500	Up 0.6% (or 7 pts) at 1,099
The Nasdaq	Up 0.9% (or 20 pts) at 2,229

The FTSE 100	Up 0.4% (or 22 pts) at 5,430
The German DAX	Up 0.8% (or 47 pts) at 6,164
The Fench CAC	Up 1.0% (or 36 pts) at 38

The Dollar Index	Down -0.30% at 82.57
The Australian Dollar	Last traded at 91.82
The Commodities Index	Up Marginally 0.17% at 274.3

Crude Oil Futures	Up 0.4% at $75.00
Gold Futures	Down Marginally -0.14% at $1,255.60
Copper Futures	Up 0.86% at $3.4905
SPI Futures	Up 0.7% (or 30 pts) at 4,568


Market	Movement
SSE Composite (China)	Down Marginally -0.1% at 2,695
Hang Seng Index (Hong Kong)	Down -1.5% at 21,089
Nikkei 225 Index (Japan)	Down -2.2% at 9,025

SPI: Just Below key Level 4600 – SPI up 0.7% at 4,568…

ASX News Today

The SPI Futures is just below the key resistance level of 4600 the ASX is set to open higher as the SPI Futures closed up 0.7% (or 30 pts) at 4,568. The key levels for our index today are 4600 and 4500. M&A activity continues to drive specific stocks. Gold prices are pushing towards new record highs.

AND- Andean Resources the gold explorer, Eldorado Gold has dropped out of the bidding war.

APA- APA Group has been upgraded to BUY by UBS, citing the company’s balance sheet well positioned.

AXA- ACCC is set set to make its final decision on NAB’s $13.3 billion bid, on Thursday.

AWB- AWB the agribusiness,says drought in Russia and weather damage in Europe has helped lift interest for Australian wheat.

CFE- Cape Lambert Resources the iron ore explorer, has begun legal action it says could stall a multi-billion dollar magnetite operation in the Pilbara region, WA.

CEU- ConnectEast Group says August traffic and revenue on Melbourne’s Eastlink toll road rose by more than 10 percent.

CTM- Centaurus Metals the iron ore explorer, will raise up to $18 million to advance its projects in Brazil.

DLS- Drillsearch Energy and Innamincka Petroleum have agreed to a “friendly merger” through a scheme of arrangement.

FGL- Foster’s Group has rejected a non-binding proposal to buy its Treasury Wine Estates wine assets for $2.3 to $2.7 billion.

MBN- Mirabela Nickel the Perth-based miner, is seeking to raise over $148 million through an institutional share placement.

OGC- OceanaGold CEO Paul Bibby has resigned for personal reasons after less than a year in the role.

RIO- Japan’s Kobe Steel has confirmed a deal with Rio Tinto Ltd for a 13 percent cut in the price of iron ore.

RSG- Resolute Mining announced a record for monthly production from its Syama Gold mine in Mali with 14,855 ounces produced during August 2010.

SDL- Sundance Resources Ltd has signed a deal with a Chinese firm regarding rail facilities for the iron ore explorer’s flagship project in West Africa.

SPN- SP Australia Networks the energy infrastructure business, is unaware why its share price has recently risen 9 percent.

STO- Santos could be facing a rights issue of about $2.8 billion according to JPMorgan. JPMorgan STO target is now $17.

WYL- Wattyl the paint supplier is in a trading halt as its shareholders considering a $142 million takeover offer (at $1.67/share).

Economic Reports:

ABS Unemployment data (at 11:30am) (est. 5.2%)

RBA assistant governor Guy Debelle is scheduled to address the Westpac Research and Strategy Forum in Sydney.

AOFM will auction $300 million 22 Oct’10 T-Notes, auction $600 million 17 Dec’10 T-Notes, auction $600 million 11 Feb’10 T-Notes.

Companies:
New Listing – credit guarantor Zheng He Global Capital Ltd

Dividends
GWT – GWA International Ltd Full year 2010 Ex-dividend date
RIO – Rio Tinto Ltd Interim 2010 Dividend payment date

Market Summary
ASX – to open Higher
US & UK/Europe – Higher
US ADRs – Broadly Higher!!!…

BHP up 1.4% &

RIO up 0.9%;

AWC up 4.6%

ANZ up 1.8% &

NAB up 0.8%

NEM down 0.8%,

Commodities Stock Index up 0.9%
Gold Stocks Index down 0.9%
Oil Stocks Index up 1.5%

By Michael Hevern
Head of Research<

Tags: Asian Markets, ASX, ASX News, Business News, Crude Oil, European Debt Concerns, European Markets, Nikkei, oil, S&P500, stock market, Stock Market Analysis, trading, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

Stock Market Analysis: Markets Surge on Surprisingly Upbeat Economic Data

Thursday, September 2nd, 2010

Stock Market Analysis

Markets Surge on Surprisingly Upbeat Economic Data

U.S. and European markets bounced overnight. The early gains resulted from comforting Chinese PMI manufacturing data and Australia’s growth reports and were added to once the U.S. ISM Manufacturing report came in better-than-expected. Commodities rose sharply pushing miners higher. Asian markets generally traded higher on the Aussie Growth and Chinese PMI reports. The ASX is likely trade higher again today.

The SPI Futures is above the key level of 4400 the ASX is set to open higher again as the SPI Futures closed up 1.7% (or 75 pts) at 4,568. The key levels for our index today are 4600 and 4450. M&A activity continues to drive specific stocks. Expect to see our market trade higher as the earnings season comes to an end (see below). The market will again be supported by yesterday’s rosey 2Q GDP report, which showed GDP is tracking at a better-than-expected annualised 3.3%.

US Markets

U.S. stocks traded sharply higher overnight, as investors tried to forget their worst August in nearly a decade. Strong manufacturing data in China and the U.S. and growth figures from Australia set the tone for investors. U.S. manufacturing activity expanded in August for a 13th straight month, with the ISM manufacturing better-than-expected rising to 56.3, from 55.5 in July, as the improving numbers were fueled by strong employment and production data. The gains were broad-based with Energy, Consumer Discretionary and Industrial sectors all up over 3.5 percent. The Dow closed up 2.5% (or 255 points) at 10,269, while in the broader market the S&P 500 index up 3.0% (or 31 points) at 1,080 and the tech-heavy Nasdaq ended up 3.0% (or 63 points) at 2,177.

European Markets

European stocks closed higher. EU markets were buoyed by the upbeat China and Australian economic reports. The German market is still out performing and bounced off key monthly support levels overnight, as stocks are now trading at their cheapest levels relative to earnngs since 2008. However, in the U.K. investors had to battle with poor U.K. manufacturing data, as U.K. manufacturing suffered a sharp slowdown last month amid uncertainty about the extent of public spending cuts. The PMI index dropped from 56.9 to 54.3, where a figure above 50 means that companies are reporting rising activity. Growth in activity is at its lowest in nine months and manufacturing output is now expanding at its slowest rate in 11 months. The slower growth came as the equivalent index for the eurozone hit a six-month low, last week. In London the FTSE 100 index closed up 2.7% (or 141 points) at 5,366, the German DAX up 2.7% (or 159 points) at 6,084, while in France the CAC was up sharply 3.8% (or 138 points) at 3,623.

Asian Markets

Asian stock markets generally rose, as strong economic data from Australia and China helped investors move to a “risk-on” bias. The much anticipated Chinese , figures released Wednesday showed the China’s official Purchasing Managers Index (PMI) rose to 51.7 in August from 51.2 in July, while a separate PMI produced by HSBC also rose to 51.9, confirming Chinese manufacturing remains in expansion mode. Investors Chinese PMI manufacturing data showed the government-engineered economic growth is stabilizing at a moderate pace. Chinese companies are reported to be preparing an alternate bid for Canada’s Potash Corp. Even Japan managed to close higher after rebounding off 16-month lows earlier in the week. In China the SSE Composite closed down -0.6% (or -16 points) at 2,623, while in Hong Kong the Hang Seng Index was up 0.4% (or 87 points) at 20,624 and in Japan the Nikkei 225 Index was up 1.2% (or 10296 points) at 8,927.

Commodities

The Dollar Index down -0.9% at 82.46 on higher Euro, while the Australian Dollar last traded flat at 89.13. Commodities were generally higher.

Wheat prices climbed 3%. Oil prices jumped above $US74 again. The benchmark crude NYMEX for September delivery up sharply 3.0% (or $US2.12) to settle at $US74.048. Copper prices rose, Copper for September delivery was up 3.1% (or 10.3 cents) at $US3.4640. Gold prices are around 2-month highs, are above key $US1,200 level, with December gold was down marginally -0.2% at $US1,244.20.

Key News International Drivers Today

US – U.S. manufacturing activity expanded in August for a 13th straight month. Companies continue to report earnings this week.

EU – End of a bad month. U.K. manufacturing suffered a sharp slowdown last month.
CHINA – China’s official Purchasing Managers Index (PMI) rose to 51.7 in August . Government stands firm on access to credit.
JAPAN – Rebounded off 16-month lows.

Markets Overview

Markets Surge on Surprisingly Upbeat Economic Data

Market	Movement
The Dow Jones Industrial Average	Up 2.5% (or 255 pts) at 10,269
The S&P 500	Up 3.0% (or 31 pts) at 1,080
The Nasdaq	Up 3.0% (or 63 pts) at 2,177

The FTSE 100	Up 2.7% (or 141 pts) at 5,366
The German DAX	Up 2.7% (or 159 pts) at 6,084
The Fench CAC	Up Sharply 3.8% (or 138 pts) at 3,623

The Dollar Index	Down -0.89% at 82.46
The Australian Dollar	Last traded at 89.13
The Commodities Index	Up 1.64% at 268.5

Crude Oil Futures	Up 3.0% at $74.04
Gold Futures	Down Marginally -0.16% at $1,244.20
Copper Futures	Up 3.06% at $3.4640
SPI Futures	Up 1.7% (or 75 pts) at 4,568


Market	Movement
SSE Composite (China)	Down -0.6% at 2,623
Hang Seng Index (Hong Kong)	Up 0.4% at 20,624
Nikkei 225 Index (Japan)	Up 1.2% at 8,927

SPI: Above key Level 4400 – SPI up 1.7% at 4,568….

ASX News Today

AEC- Ammtec has unanimously rejected a revised offer from chemicals manufacturer Campbell Brothers, saying it does not reflect Ammtec’s strong earnings outlook.

AGO- Atlas Iron has boosted its reserve figures, which should support its aim of increasing production to 12 Mtpa by the end of 2012.

BHP- Japanese steelmakers have agreed with BHP to a seven percent cut in coking coal prices for the three-month period ending 31 Dec’10.

BHP- Canada’s Potash Corp says BHP Billiton is calling its customers “to sow seeds of doubt and confusion about the future” of the Canadian company.

CXG- Coote Industrial has posted a $124.6 million annual loss due to significant writedowns on its assets.

CXY- Cougar Energy says it may need to fold, unless the the Qld government lifts an Environmental Protection Order which has stopped work at its Kingaroy CSG pilot plant.

LEI- Leighton has finalised a $220 million contract in the United Arab Emirates (UAE) to complete its landmark “Buildings by Daman” project at Dubai International Financial Centre.

NUF- Nufarm the agricultural chemicals supplier, has maintained its annual profit guidance, but has increased its net debt estimate.

NWS- News Corp grew its profits thanks to “Avatar” and a rebounding advertising market.

QBE- QBE Insurance says CEO Frank O’Halloran will remain and dismissed reports it’s searching for a new boss.

Economic Reports:

AIG Services Index
Negotiations to resolve hung parliament

Companies:

MTS – Metcash Ltd Full year 2010 AGM

Dividends

IAG – Insurance Australia Group Ltd

Market Summary

ASX – to open Higher
US & UK/Europe – Sharply higher

US ADRs – Broadly Higher!!!…

BHP up 5.5% &

RIO up 7.3%;

AWC up 7.0%

ANZ up 5.1% &

NAB up 6.0%

NEM up 2.3%,

JHX up 0.2%,

NWS up 4.3%

Commodities Stock Index up 2.7%
Gold Stocks Index down 0.5%
Oil Stocks Index up 4.0%

By Michael Hevern
Head of Research

Tags: ASX, BHP Billiton, Commodities, Crude Oil, European Markets, gold, oil, Stock Market Analysis, stockmarket, US Market wrap
Posted in ASX Trading News, Stock Market Analysis | No Comments

Stock Market Analysis: Weekly Market Wrap

Friday, August 27th, 2010

Weekly Market Wrap – Market “Flash Crash” Lows Looming

Markets are generally trading lower for a third week, particularly in the US and Europe. In Asia the markets have been mixed, but they are still trading below their levels of 3 weeks ago. Most markets look set to test the “flash crash” lows of last May, near term. M&A activity in August has been the busiest in decades, however this has not been enough to support the underlying markets.

This week Australian company earnings reports were mixed, and this was reflected in shares activity. Forecast earnings are generally uncertain.

Within this weekly market wrap, we have outlined below some investment themes to consider.

US Markets

US markets generally traded lower this week on the back of weak economic data. Overnight, concerns remained over the uncertain outlook for jobs. There was also caution as the Fed Chairman, Ben Bernanke, will speak tonight, and also the gross domestic product data (GDP) is due to be released (estimates are for 1.4% growth).

Overnight the CBOE Volatility Index, known as the market fear gauge, has risen to 27.4, reflecting investor concerns and expectation of more drops in stocks. The Dow closed down -0.7 at 9,986, while in the broader market the S&P 500 index was down -0.8% at 1,047 and the tech-heavy Nasdaq ended down -1.1% at 2,119.

European Markets

European stocks have fallen for a third straight week. Concerns over the faltering US recovery have outweighed any good news from Europe. Financials have been under pressure on continuing worries over sovereign debt, particularly in Italy and Spain, with a debt rating downgrade. Overnight in London the FTSE 100 index closed up 0.9% at 5,156. The German DAX up marginally 0.2% at 5,913, while in France the CAC was up 0.8% at 3,475.

Asian Markets

Asian markets generally traded lower this week. Japan continues to trade below its 8-month lows and below the key 9,000 level. The Japanese export-driven economy is still suffering from the Yen trading new 15-year highs.

Hong Kong stocks are also being sold down and are trading at 5-week lows. Chinese investors remain cautious as uncertainty remains over whether the government will relax the tight credit polices which it is using to rein in growth. Overnight in China, the SSE Composite closed up 0.3% at 2,603, while in Hong Kong the Hang Seng Index was down marginally -0.1% at 20,612 and in Japan the Nikkei 225 Index was up 0.7% at 8,906.

Commodities

Wheat prices are again trading towards 2-year highs. Oil prices continued to trade below key support levels, as a weakening outlook on the economic recovery stoked fears of dropping oil demand. Overnight the benchmark for crude NYMEX for September delivery was up 0.8%, to settle at $US73.09; Copper prices have backed off 3-month highs. Copper for September delivery was up 9.5 cents at $US3.3010. Gold prices rose above the key $US1,200 psychological level and look to be heading for new record highs, with December gold down marginally -0.2% at $US1,237.70.

Overnight the US Dollar Index was down -0.4% at 82.90 but is still at 5-week highs against the Euro, while the Australian Dollar last traded lower this week at 88.33.

Investment Themes to Consider

As mentioned earlier, this week Australian shares have been mixed as company earnings reports were also mixed, and forecast earnings are generally uncertain. However there are still some opportunities in this market, including:

* Gold: For the past 10 years Gold has made two thirds of its annual gains in the last one third of the year and September has been the best performing month. So traders should keep gold and gold stocks in their sights in the next month.

* Agricultural: overseas investors are active in this segment of the market and BHP’s hostile bid for Canada’s Potash Corp has also helped. Refer to our review of trading by sectors.

ASX News

An election outcome is still at least a week away. Investors do not like uncertainty and the Australian stock market has been trading lower as a result.

At the same time investors have had to digest another barrage of company reports. The reporting season has been mixed, but the key theme is that companies remain uncertain about the economic outlook for the rest of the year.

Our View

Markets have traded lower this week. Asian, European and US markets are all trading at or below their key support levels. In the US the Fed and GDP will be reporting tonight. Markets look set to trade down to their “flash crash” lows. The key driver will be the investor reaction to the slowing global economic growth. The earnings season has been mixed this week and the cautious company forecasts for future earnings have continued to weigh on investor sentiment. Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.

The S&P ASX200 is currently trading at 4335, the lower third of the current trading range. The bear flag pattern mentioned last week resolved itself to the downside. The key support level on the ASX is still around 4,200 and the key levels for our index next week are 4450 and 4200, with pivot at 4300. The momentum is to the downside and the 4200 will be key for support near term.

by Michael Hevern
Head of Research

Tags: Asian Markets, ASX, ASX News, Commodities, Dow, European Markets, MDS Financial, Nasdaq, Nikkei, oil, S&P500, spi, stock market, Trader Dealer, US Market wrap, Weekly Wrap
Posted in ASX Trading News | No Comments

Stock Market Analysis: Markets Broadly Lower on Poor U.S. Data

Friday, August 20th, 2010

Stock Market Analysis

Markets Broadly Lower on Poor U.S. Employment and Manufacturing Data

U.S. markets erased their early gains after first-time jobless filings in the U.S. jumped to a 9-month record and the losses deepened after the Philadelphia Fed index unexpectedly dropped. European stocks had early gains on the back of strong U.K. retail sales and an improved forecast for German growth supported stocks, but the bears won out on the day pushing stocks into negative territory. The overseas sentiment will wiegh on our market today, as we await the results on the Federal Election on the weekend.

The SPI Futures is above the key level of 4400 the ASX is set to open sharply lower as the SPI Futures closed down -1.5% (or -67 pts) at 4,387. The key levels for our index today are 4450 and 4350. M&A activity continues to drive specific stocks. Expect to see our market trade sharply lower today. Our company reporting season will continue to be in focus this week. Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.

US Markets

The U.S. stocks selloff was sparked by the weekly jobs report of U.S. initial unemployment claims that showed jobless claims unexpectedly jumped to their highest level since November 2009 and a survey of business conditions in the Philadelphia Fed Index fell to -7.7, dropping into negative territory, which raised concern that the leading indicator Institute for Supply Management’s manufacturing (ISM) indexes could start to show contraction next week. No sectors were spared from the sell-off, with all sectors down around 2 percent, but financials and miners did lead the falls. Key bellwether stocks Intel (down 3.5%) and General Electric (down 2.9%) both weighed heavily on the Dow Jones. The Dow closed down -1.4% (or -144 points) at 10,271, while in the broader market the S&P 500 index down -1.7% (or -19 points) at 1,076 and the tech-heavy Nasdaq ended down -1.7% (or -37 points) at 2,179.

European Markets

European shares ended sharply lower. Key European markets have broken key short term support levels. Stocks had early gains as strong U.K. retail sales and an improved forecast for German growth supported.U.K. retail sales figures, were a positive surprise, with sales growth of 1.1% in July (versus the 0.6% forecast). The German Bundesbank lifted its forecast for German growth in 2010 and saw little chance of a double-dip recession in the U.S. However the bears resurfaced and the gains disappeared on the back of weak economic data from the U.S. In London the FTSE 100 index closed down -1.7% (or -92 points) at 5,211, the German DAX down -1.8% (or -111 points) at 6,075, while in France the CAC was down -2.0% (or -77 points) at 3,572.

Asian Markets

Asian stocks ended higher. This week the Japanese markets have suffered with the poor quarterly GDP data and the Yen at 15-year highs. Overnight the real estate and consumer lender stocks rose on speculation of the possibility of the intervention from the central bank (BoJ) that they may introduce further monetary easing measures. Japanese, Chinese shares and Hong Kong stocks all recovered yesterday. In China the SSE Composite closed up 0.8% (or 22 points) at 2,688, while in Hong Kong the Hang Seng Index was up marginally 0.2% (or 50 points) at 21,072 and in Japan the Nikkei 225 Index was up 1.3% (or 12214 points) at 9,363.

Commodities

The Dollar Index up 0.3% at 82.46 on lower Euro, while the Australian Dollar last traded at 89.15. Commodities were generally lower.

Oil prices fell to around support. The benchmark crude NYMEX for September delivery was down -1.3% (or $US-0.99) to settle at $US74.44. Copper prices still are trading below 3-month highs, Copper for September delivery delivery was down -0.9% (or -3.2 cents) at $US3.3185. Gold prices rose above key $US1,200 level, with December gold was up 0.3% at $US1,231.80.

Key News International Drivers Today

US – GM has filed for a $US10 billion IPO. Companies continue to report earnings this week. U.S. initial unemployment claims jumped to Nov’09 levels
EU – Strong U.K. retail sales. Forecast of improved German growth. Commodity-sector stocks were the worst performers
CHINA – China overtakes Japan as the world’s second largest economy.
JAPAN – Japan’s poor quarterly GDP data and the Yen at 15-year highs hurts. Companies continue to report earnings this week.

Markets Overview

Markets Broadly Lower on Poor U.S. Employment and Manufacturing Data

Market	Movement
The Dow Jones Industrial Average	Down -1.4% (or -144 pts) at 10,271
The S&P 500	Down -1.7% (or -19 pts) at 1,076
The Nasdaq	Down -1.7% (or -37 pts) at 2,179

The FTSE 100	Down -1.7% (or -92 pts) at 5,211
The German DAX	Down -1.8% (or -111 pts) at 6,075
The Fench CAC	Down -2.0% (or -77 pts) at 3,572

The Dollar Index	Up 0.28% at 82.46
The Australian Dollar	Last traded at 89.15
The Commodities Index	Down -0.62% at 268.3

Crude Oil Futures	Down -1.3% at $74.44
Gold Futures	Up 0.33% at $1,231.80
Copper Futures	Down -0.94% at $3.3185
SPI Futures	Down -1.5% (or -67 pts) at 4,387


Market	Movement
SSE Composite (China)	Up 0.8% at 2,688
Hang Seng Index (Hong Kong)	Up Marginally 0.2% at 21,072
Nikkei 225 Index (Japan)	Up 1.3% at 9,363

SPI: Below key Level 4400 – SPI down 1.5% at 4,387….

ASX News Today

ABC- Adelaide Brighton, the cement and lime supplier expects higher demand for its products in FY11, and reported has increased 1H profit 57 percent. Shares rose 3.6%.

AMP- AMP, the wealth manager increased 1H10 profit 17 percent but expressed caution about the global economic outlook and ongoing market volatility. Shares fell 4.3%.

ASX- ASX increased FY10 profit 4.6 percent as the operator of the ASX Exchange benefitted from high levels of corporate capital raisings.

BXB- Brambles, the pallets supplier is well placed to grow in FY11, even after reporting lower FY10 profit. FY10 earnings fell just 1%, beating expectations even as U.S. sales fell 5%. Shares rose 4.0%.

BHP- Fitch places BHP Billiton on Watch negative, as a result of the hostile unsolicited $US39 billion all-cash offer to acquire Canadian potash producer Potash Corp.

CLO- Clough, the engineering and construction contractor said the outlook was positive for its gas-focused client base, but they reported a small dip in FY10 net profit. Shares rose 5.0%.

DOW- Downer EDI the engineering company, reported a 98 percent drop in net profit in FY10 but expects earnings to rise in the current year. Shares rose 6.8%.

GMG- Goodman Group the property group, reported FY10 net loss with net profit down 8.3%, due to property and equity investment revaluations, but said its after-tax operating profit in FY11 should increase.

HSP- Healthscope, the healthcare provider reported a 37 percent increase FY10 and forecast strong demand and growth in the current year.

MRM- Mermaid Marine, the marine services provider for the offshore oil and gas sector, has reported a jump in FY10 net profit up 43% and EPS up 41%, and says it will continue to increase earnings in the FY11. Shares rose 3.0%.

PPX- PaperlinX the stationer, posted an FY10 net loss, and is taking more steps to reduce overheads as substantial market improvement still is some way off.

QBE- QBE Insurance, Australia’s biggest insurance company 1H profit declined 39 percent as lower investment income from cash and fixed income investments.

WES- Wesfarmers posted a 2.8 percent rise in FY10 profit and says outlook for growth in the company’s businesses is encouraging.

Economic Reports:

Australia & New Zealand Full year 2010 Trading statement

Companies:
BBG – Billabong International Ltd Full year 2010 Results
CMJ – Consolidated Media Holdings Full year 2010 Results
CQR – Charter Hall Retail REIT Full year 2010 Results
DUE – Duet Group Full year 2010 Results
IRE – IRESS Market Technology Ltd Interim 2010 Results
MAP – MAP Airports International Ltd July Traffic Results
PPC – Peet Ltd Full year 2010 Results
SPT – Spotless Group Ltd Full year 2010 Results
WHG – WHK Group Ltd Full year 2010 Results

Expect to see our market trade sharply lower today, as focus remains on our earnings season.

Market Summary

ASX – to open lower
US & UK/Europe – Sharply Lower
US ADRs – Broadly Lower!!!…

BHP down 1.2% &

RIO down 2.2%;

AWC down 2.8%

ANZ down 2.9% &

NAB down 2.2%

NEM down 1.8%,

JHX down 3.0%, NWS down 2.6%

Commodities Stock Index down 1.7%
Gold Stocks Index down 0.9%
Oil Stocks Index down 1.8%

By Michael Hevern
Head of Research

Tags: Asian Markets, ASX, ASX News, BHP, Crude Oil, Europen Markets, oil, Stock Market Analysis, stockmarket, US Market wrap
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Stock Market Analysis: Markets Positive Overnight Due to M&A and Positive Earnings

Wednesday, August 18th, 2010

Stock Market Analysis

Markets Positive Overnight Due to M&A and Positive Earnings

US stocks rallied overnight up over 1 percent, as M&A and positive earnings encouraged investors. In Asia, Japan hits 8-month lows but China and Hong Kong hold on to recent gains. In Europe, investors pushed markets higher after successful bond auction in Ireland and Spain. Trading volumes remain light. The positive sentiment will likely support on the ASX today.

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.4% (or 17 pts) at 4,471. The key levels for our index today are 4550 and 4420. M&A activity continues to drive specific stocks. Expect to see our market trade higher today. Our company reporting season will continue to be in focus this week. Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.

US Markets

US stocks rose as a string of cautiously positive data and earning reports, gave investors some reasons to look for bargains after last week’s selloff. The Fed also reported a higher-than-expected 1.0 percent rise in industrial production in July on the back of auto manufacturing. Earnings reports painted a more positive view on the U.S. consumers. Wal-Mart the world’s largest retailer, reported a better-than-expected 2.8 percent rise in sales to $US103 billion in 2Q10 and upgraded its yearly earnings forecast. Home Depot, the home improvement chain also reported a better-than-expected quarterly net profit of 6.8 percent and increased its profit outlook. However, housing remain weak in the U.S. was confirmed with some mixed news on U.S. Housing, as the US government reported construction of new homes rose in July by 1.7 percent but permits issued for future housing construction plunged, this news was expected. BHP Billiton shares fell, as it offered a $38.56 billion takeover for Potash Corp,
which has been rejected but they are open to higher offers. The Dow closed up 1.0% (or 104 points) at 10,406, while in the broader market the S&P 500 index up 1.2% (or 13 points) at 1,093 and the tech-heavy Nasdaq ended up 1.3% (or 28 points) at 2,209.

European Markets

European stocks rose overnight, as investors digested news of: the successful Irish and Spanish bond auctions, falling German investor confidence and lower British inflation. Ireland sold the maximum intended EUR1.5 billion in government bonds overnight, and the Spanish government also had a successful bond auction. This news reassured investors that demand remains strong for high-yielding European sovereign bonds. Dampening the sentiment was a report that expectations for Germany’s economy fell sharply in August, according to a survey by the ZEW economic research institute. In London the FTSE 100 index closed up 1.4% (or 74 points) at 5,351, the German DAX up 1.6% (or 96 points) at 6,206, while in France the CAC was up 1.8% (or 68 points) at 3,663.

Asian Markets

Asian markets were mixed. The Japanese market fell again yesterday to its lowest close in more than eight months, with the strong Yen continues to pressure the export-driven economy. The 9000 level is key. Chinese shares rose again led by real estate developers, as investors hope for an easing in credit policy. A Chinese report said new home sales in the Shanghai soared last week, while medium sized lenders gained on expectations China Everbright Bank will post modest gains on its debut today. In China the SSE Composite closed up 0.4% (or 10 points) at 2,672, while in Hong Kong the Hang Seng Index was up marginally 0.1% (or 25 points) at 21,137 and in Japan the Nikkei 225 Index was down -0.4% (or -3499 points) at 9,162.

Commodities

The dollar advanced again overnight as rising fears of a global economic slowdown weighed on the euro and increased the appeal of the U.S. currency as a flight to safety. The Dollar Index down -0.4% at 82.24, as the Euro was positive after 5 losing days, while the Australian Dollar last traded higher at 90.52. Commodities were generally higher.

Oil prices bounced off support. The benchmark crude NYMEX for September delivery was up 0.7% (or $US0.51) to settle at $US75.77. Copper prices are trading below 3-month highs, Copper for September delivery delivery was up 2.0% (or 6.1 cents) at $US3.3375 . Gold prices rose above key $US1,200 level, with December gold was up 0.2% at $US1,226.60 .

Key News International Drivers Today

US – Business conditions slightly improved in August for New York manufacturers, but showed weaker-than-expected growth. Companies continue to report earnings this week.

EU – markets higher after successful bond aution in Ireland and Spain.
CHINA – China overtakes Japan as the world’s second largest economy.
JAPAN – Japan’s hits 8-month lows. Companies continue to report earnings this week.

Markets Overview

Markets Positive Due to M&A

Market	Movement
The Dow Jones Industrial Average	Up 1.0% (or 104 pts) at 10,406
The S&P 500	Up 1.2% (or 13 pts) at 1,093
The Nasdaq	Up 1.3% (or 28 pts) at 2,209

The FTSE 100	Up 1.4% (or 74 pts) at 5,351
The German DAX	Up 1.6% (or 96 pts) at 6,206
The Fench CAC	Up 1.8% (or 68 pts) at 3,663

The Dollar Index	Down -0.36% at 82.24
The Australian Dollar	Last traded at 90.52
The Commodities Index	Up 0.78% at 270.2

Crude Oil Futures	Up 0.7% at $75.77
Gold Futures	Up Marginally 0.21% at $1,226.60
Copper Futures	Up 2.00% at $3.3375
SPI Futures	Up 0.4% (or 17 pts) at 4,471


Market	Movement
SSE Composite (China)	Up 0.4% at 2,672
Hang Seng Index (Hong Kong)	Up Marginally 0.1% at 21,137
Nikkei 225 Index (Japan)	Down -0.4% at 9,162

SPI: Above key Level 4400 – SPI up 0.4% at 4,471….

ASX News Today

The SPI Futures is above the key level of 4400 the ASX is set to open higheras the SPI Futures closed up 0.4% (or 17 pts) at 4,471. The key levels for our index today are 4550 and 4420. M&A activity continues to drive specific stocks. Expect to see our market trade higher today. Our company reporting season will continue to be in focus this week. Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.

AWB – AWB the agribusiness, has a new takeover suitor Canada-based Agrium Inc with an unsolicited $1.23 billion ($1.50/share).

BHP – BHP Billiton shares fell overnight, as its $38.56 billion takeover for Potash Corp was rejected.

BLD- Boral will sell its formwork and scaffolding business to a local private equity firm for $35 million, as Boral refocusses on its core business.

CCP- Credit Corp the debt collector increased annual profit by 25 percent and expects to deliver further growth this year.

CDD- Cardno the engineering services firm posted a 10 percent rise in FY10 profit and says its markets continue to improve

CFX- CFS Propery Trust has returned to profit after positive property revaluations.

CPA- Commonwealth Property Office Fund has returned to profit after positive property revaluations.

COU- Count Financial recorded a 24 percent rise in FY10 net profit and expects double digit earnings growth in the current year.

CPU- Computershare the world’s largest share registry, will sell its employee options administration business in the US and Canada to Solium Capital Inc for a 20 per cent interest in the buyer.

GUD- GUD Holdings the consumer and industrial products supplier will proceed with the compulsory acquisition of the remainding 10 percent of shares in Dexion Ltd it does not already control.

FXL- FlexiGroup, which arranges finance and leases for consumers and small businesses, has upgraded its net profit forecast as lease volumes grew on strong commercial sales. Shares jumped 9.8%.

GWT- GWA International the designer and importer posted a steady annual net profit, but expects trading profit to be higher in this year.

MAH- Macmahon Holdings the engineering contractor increased its FY10 profit 120 percent and expects to maintain revenue in the current year.

MGX- Mount Gibson Iron the iron ore miner has been awarded damages of US$114 million in arbitration with Chinese steel mill Rizhao Steel Holding Group Co Ltd. Shares rose 3.2%.

MND- Monadelphous Group the engineering services firm increased FY10 profit 12 percent and has a healthy workload in sectors such as resources and energy. Shares rose 3.3%.

MSL- The Mac Services Group the mining accommodation and services provider posted a 16 percent rise in FY10 profit and forecast further growth over the copuple of years.

OST- OneSteel the steel maker has increased FY10 profit 12 percent and expects a gradual pickup in demand on the back of increased infrastructure construction.

OZL- OZ Minerals is reversing a $201 million impairment recorded on plant and buildings at Prominent Hill in 2008 due to a better market outlook, with a $141 million benefit on net profit in FY10. Shares rose 3.3%.

PRY- Primary Health Care the medical centres operator posted a 21.7 percent rise in FY10 net profit, but expects earnings to be at the lower end of guidance this year. Shares fell 3.0%.

RFG- Retail Food Group the food franchisor posted a 10.6 percent rise in FY10 net profit, and says expects its storng cash flow this year.

SAI- SAI Global reported a 29.2 percent increase in FY10 net profit and expects continued growth in the period ahead. Shares rose 6.4%.

SKC- Sky City Entertainment the casino operator reported a 12 percent rise in underlying net profit to $101.75 million, revenue fell 1 percent. Shares fell 5.8%.

UGL- United Group the train manufacturer and engineering firm has increased full-year profit 1.5 per cent on falling revenue and targets underlying earnings growth of up to 15 percent. Shares rose 4.6%.

Economic Reports :

June Westpac-Melbourne Institute Indexes of Economic Activity
August Skilled Vacancies Index
Labour Price Index 2Q

Companies:

BLD – Boral Limited Full year 2010 Results
CSL – CSL Limited Full year 2010 Results
DXS – Dexus Property Group Full year 2010 Results
IOF – ING Office Fund Full year 2010 Results
WHG – WHK Group Ltd Full year 2010 Results
WPL – Woodside Petroleum Interim 2010 Results
WDC – Westfield Group Interim 2010 Results
MAP – MAP Interim 2010 Dividend payment date

Expect to see our market trade higher today, as focus remains on our earnings season.

Market Summary

ASX – to open higher
US & UK/Europe – Higher
US ADRs – Broadly Higher!

RIO up 1.9%

up 1.6%

ANZ up 2.3%

NAB up 3.2%

NEM up 1.2%

JHX up 2.8%,

NWS up 1.4%

Commodities Stock Index up 3.1%
Gold Stocks Index up 0.7%
Oil Stocks Index up 1.2%

By Michael Hevern
Head of Research

Tags: Asian Markets, ASX, ASX News, BHP, Commodities, Crude Oil, European Markets, gold, oil, Stock Market Analysis, stockmarket, trading, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

Stock Market Analysis: Markets Trade Flat on Slowing Global Trade Data

Tuesday, August 17th, 2010

Stock Market Analysis

Markets Trade Flat on Slowing Global Trade Data

US stocks closed flat as global trade slows, trading volumes were at the lowest levels for the year. In Asia, Japan’s economic growth and languid local manufacturing figures raised further doubts about the global economic recovery. In Europe investors remain concerned over financial health and growth prospects. This negative sentiment will likely weigh on the ASX today.

The SPI Futures is just above the key level of 4400 the ASX is set to open flat as the SPI Futures closed down marginally -0.1% (or -5 pts) at 4,415. The key levels for our index today are 4450 and 4320, the key support level on the ASX is still around 4,200. M&A activity continues to drive specific stocks. Expect to see our market trade flat to lower today. Our company reporting season will continue to be in focus today. Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.

US Markets

Stocks closed flat for the session, with the lowest volumes for the year. Stocks have been under pressure since the Fed decided to revive its crisis stimulus spending to prop up the ailing US economy, in an endeavour to pump prime the recovery. The Fed Bank of New York reported business conditions slightly improved in August for New York manufacturers, but showed weaker-than-expected growth, as new orders and shipments indices have dropped below zero for the first time in a year. The National Association of Home Builders index fell to its lowest level since March 2009. M&A activity in tech helped Cisco (up 2.6%) and Intel (up 1.7%). The Dow closed down marginally 0.0% (or -1 points) at 10,302, while in the broader market the S&P 500 index up marginally 0.0% (or 0 points) at 1,079 and the tech-heavy Nasdaq ended up 0.4% (or 8 points) at 2,182.

European Markets

European stock markets closed flat. Investors remain concerned about European financial health and growth prospects, particular watching the Irish debt auction due Tuesday to gauge demand for the bonds. The cost of insuring Irish sovereign debt against default overnight hit its highest level since March 2009. In London the FTSE 100 index closed flat at 5,276, the German DAX flat at 6,111, while in France the CAC was down -0.4% (or -14 points) at 3597.

Asian Markets

Asian markets were mixed. Japanese investors jumped ship, as Japan’s gross domestic product (GDP) expanded at an annualised 0.4 percent (versus an expected 2.3 percent). The GDP growth is at the slowest pace in the three quarters in the June period as the export-driven recovery faltered due to faltering demand at home and abroad. The BoJ is rumoured to be considering action on the Yen as it is trading at 15 year highs. China now looks set to overtake Japan as the world’s second largest economy, and the Chinese market is still consolidating. In China the SSE Composite closed up 2.1% (or 55 points) at 2,662, while in Hong Kong the Hang Seng Index was up marginally 0.2% (or 41 points) at 21,112 and in Japan the Nikkei 225 Index was down -0.6% (or -57 points) at 9,197.

Commodities

The dollar advanced again overnight as rising fears of a global economic slowdown weighed on the euro and increased the appeal of the U.S. currency as a flight to safety. The Dollar Index up 0.4% at 82.59, as the Euro was slightly positive after 5 losing days, while the Australian Dollar last traded higher at 89.16. Commodities were generally mixed.

Wheat prices has backed-off to 2-year highs last week. Oil prices fell again as a weakening outlook on the economic recovery continues to stoke fears of dropping oil demand. The benchmark crude NYMEX for September delivery was down -0.1% (or $US-0.15) to settle at $US75.24). Copper prices are trading below 3-month highs, Copper for September delivery delivery was up 0.9% (or 2.75 cents) at $US3.2795 a pound. Gold prices rose above key $US1,200 level, with December gold was up $US9.60 at $US1,226.20.

Key News International Drivers Today

US – Business conditions slightly improved in August for New York manufacturers, but showed weaker-than-expected growth. Companies continue to report earnings this week.
EU – Watching the Irish debt auction due Tuesday to gauge demand for the bonds.
CHINA – China now looks set to overtake Japan as the world’s second largest economy.
JAPAN – Japan’s gross domestic product (GDP) expanded at an annualised 0.4 percent (versus an expected 2.3 percent). Companies continue to report earnings this week.

Markets Overview

Markets Trade Flat on Slowing Global Trade Data

SPI: Just Above key Level 4400 – SPI down 0.1% at 4,416….

ASX News Today

Australian investors spent last week de-risking their portfolios, pricing in slower economic growth into their investment outlook, as Australian shares have taken a hit from poor earnings reports from key bellwethers. The SPI Futures is below the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -1.1% (or -50 pts) at 4,380, (down 3.0% for week). The key levels for our index this week are 4500 and 4250, the key support level on the ASX is still around 4,200. M&A activity continues to drive specific stocks. Expect to see our market trade lower today. Our company reporting season will continue to be in focus this week. Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.

AWB- AWB the agribusiness, has a new takeover suitor Canada-based Agrium Inc with an unsolicited $1.23 billion ($1.50/share). Shares jumped 30%.

BSL- Bluescope Steel reported FY10 net profit of $126 million, on the back of a strong performance in Asia, (vs a $192 million loss in pcp).

CEY- Centennial the coal miner announced a 28 per centfall in FY10 net profit in 2009/10, but the expects exports to rise in the current year.

FUN- Funtastic the toy and leisure goods wholesaler unaudited results for 1H10 shows a return to profitability.

GNS- Gunns will post a 50 per cent drop in annual net profit due to impairments.

IIN- iiNet the telecomm provider increased FY10 net profit 35 percent and looks to continue its growth as it integrates recent acquisitions. Shares rose 3.1%.

LEI- Leighton Holdings, Australia’s biggest construction company reported a 39 percent rise in FY10 profit and forecast further growth as economic conditions improve. Shares rose 5.9%.

LLC- Lend Lease, Australia’s biggest property developer, posted a rise in profits but issued caution on construction markets, but says U.S. construction business remains weak.

MQG- Macquarie Group, has launched a new crop fund focusing on grain and oilseed production in Brazil and Australia.

NCM- Newcrest is on track to increase gold production to 2.3 million ounces (Moz) by FY14, excluding output from the proposed acquisition of Lihir Gold and up from 1.7Moz in FY10. FY10 underlying net profit was $763.7 million (vs $681.4 million expected).

SIP- Sigma has agreed to sell its pharmaceuticals division to Aspen Pharmacare Holdings Ltd for $900 million.

SDL- Sundance Resources shareholders have overwhelmingly ratified the appointment of the iron ore explorer’s caretaker board.

WPL- Woodside Petroleum, the oil and gas producer said its Alaric-1 prospect offshore from WA intersected with gas over several zones. Shares rose 3.8%.

Economic Reports :

New Motor Vehicle Monthly Sales
Monetary Policy Meeting Minutes

Expect to see our market trade flat to lower today, after a tough week in offshore markets, as focus remains on our earnings season.

Companies:

CFU – Ceramic Fuel Cells Ltd Full year 2010 Preliminary results
CFX – CFS Retail Property Trust Full year 2010 Results
CPA – Commonwealth Property Office Full year 2010 Results
GWT – GWA International Limited Full year 2010 Results
JBH – JB Hi-Fi Ltd Full year 2010 Ex-dividend date
OST – OneSteel Limited Full year 2010 Results
PRY – Primary Health Care Ltd Full year 2010 Results
SAI – SAI Global Ltd Full year 2010 Results
UGL – United Group Ltd Full year 2010 Results
CCL – Coca-Cola Amatil Ltd Interim 2010 Ex-dividend date
CPU – Computershare Full year 2010 Ex-dividend date

Market Summary

ASX – to open lower
US & UK/Europe – Flat

US ADRs – Mixed!!!…

BHP up 00.9% &

RIO up 1.7%;

AWC up 4.5%

ANZ up 1.6% &

NAB down 0.7%

NEM up 1.8%,

JHX down 1.2%, NWS flat

Commodities Stock Index up 0.4%
Gold Stocks Index up 1.3%
Oil Stocks Index down 0.1%

By Michael Hevern
Head of Research

Tags: Asian Markets, ASX, ASX News, Crude Oil, European Markets, Nasdaq, oil, Stock Market Analysis, stockmarket, stockwatch, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

Stock Market Analysis: Global Markets finish off Worst Week in Six Weeks

Sunday, August 15th, 2010

Stock Market Analysis

Global Markets Cap-off Worst Week in Six Weeks

U.S. stocks fell completing the worst weekly performance since 2 July, as investors worry about the sustainability of the economic recovery. In Europe, shares started the session slightly higher, with a small boost from strong economic data, but continuing worries about euro-zone sovereign debt pushed markets lower for the week. In Asia, stocks prices were generally higher on Friday, though caution was evident as markets closed down for the week after volatile trading. This negative sentiment will weigh on the ASX.

Australian investors spent last week de-risking their portfolios, pricing in slower economic growth into their investment outlook, as Australian shares have taken a hit from poor earnings reports from key bellwethers. The SPI Futures is below the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -1.1% (or -50 pts) at 4,380, (down 3.0% for week). We are trading in the middle of a trading range. The key levels for our index this week are 4500 and 4250, the key support level on the ASX is still around 4,200. M&A activity continues to drive specific stocks. Expect to see our market trade lower today. Our company reporting season will continue to be in focus this week. Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.

US Markets

U.S. stocks fell completing the worst weekly performance in 6-weeks, as investors worry about the sustainability of the economic recovery, due to the high unemployment and a bleak housing market. Shares traded in a narrow range and volumes were again light. A report showing small increases in U.S. retail sales and consumer sentiment could not support the market, as a bigger than expected rise in U.S. business inventories came as sales fell, suggesting the growth in stockpiles was not planned. The Dow is now off 1.2% for the year. The broader indices are also well off their yearly highs, with the S&P500 declining 3.2% for the year, and the Nasdaq is now off 4.2% for the year. The Dow closed down marginally -0.2% (or -17 points) at 10,303, (down 3.3% for week), while in the broader market the S&P 500 index down -0.4% (or -4 points) at 1,079, (down 3.9% for week) and the tech-heavy Nasdaq ended down -0.8% (or -17 points) at 2,173, (down 5.1% for week).

European Markets

European stock markets closed lower last week, on concern that economic data is confirming faltering economic growth. However on Friday Germany did report its GDP recorded 2.2% quarterly growth well above the 1.3% forecast, and much better than the 0.2% growth last quarter. This failed to boost markets though, as investors focused on reports that industrial production the EU had unexpectedly fell in June as a result of declines in output in France and Germany, according to data from the EU Eurostat statistics office. Sovereign debt concerns resurfaced late in the week as the ECB reportedly had to purchase short-dated Irish government bonds, in an attempt to calm market volatility stemming from concerns of the creditworthiness of Irish banks. Across in Greece the economy contracted sharply (1.5%) in the second quarter as government austerity measures savaged incomes. In London the FTSE 100 index closed up marginally 0.2% (or 9 points) at 5,275, (down 1.0% for week), the German DAX down -0.4% (or -25 points) at 6,110, (down 2.3% for week), while in France the CAC was down -0.3% (or -10 points) at 3,610, (down 2.7% for week).

Asian Markets

Asian markets fell last week. The Japanese export-driven economy was hit by the Yen reaching 15 year highs, though it did manage to end Friday’s session in the green, as bargain hunters tentatively stepped in, ahead of Japan’s economic-growth data for the fiscal first quarter, due out Monday. Hong Kong’s GDP slowed more than expected and weighed on the index. Chinese investors managed to finish the week on a more positve note, despite economic data from earlier in the week showing that Chinese import growth slowed for a fourth consecutive month raising concerns that slowing Chinese growth will impact the global recovery. In China the SSE Composite closed up 1.2% (or 31 points) at 2,607, (down 2.1% for week), while in Hong Kong the Hang Seng Index was down marginally -0.2% (or -34 points) at 21,072, (down 2.9% for week) and in Japan the Nikkei 225 Index was up 0.4% (or 4087 points) at 9,253, (down 4.1% for week).

Commodities

The dollar advanced again overnight as rising fears of a global economic slowdown weighed on the euro and increased the appeal of the U.S. currency as a flight to safety. The Dollar Index up 0.4% at 82.59 on lower Euro, while the Australian Dollar last traded at 89.16. Commodities were generally lower.

Wheat prices has backed-off to 2-year highs last week. Oil prices fell again as a weakening outlook on the economic recovery continues to stoke fears of dropping oil demand. The benchmark crude NYMEX for September delivery was down -2.9% (or $US-2.22) to settle at $US75.80, (down 6.5% for week). Copper prices are trading below 3-month highs, Copper for September delivery delivery was up 0.9% (or 3.0 cents) at $US3.2720 a pound. Gold prices rose above key $US1,200 level, with December gold was up 1.4% at $US1,215.30, (up 0.8% for week).

Key News International Drivers Today

US – Unemployment still concerns. US July CPI was up 0.3% on higher energy prices. Business inventories rose. Companies continue to report earnings this week.

EU – German GDP recorded 2.2% quarterly growth (vs forecast 1.5%). EU Industrial production fall. Geek economy contracted 1.5% in second quarter.

CHINA – Government reports import growth lower for fourth month. Hong Kong’s GDP slowed more than expected last quarter.

JAPAN – Yen continues to rise hurting the export-driven economy. Companies continue to report earnings this week.

Markets Overview

Global Markets Cap-off Worst Week in Six

Market	Movement
The Dow Jones Industrial Average	Down Marginally -0.2% (or -17 pts) at 10,303
The S&P 500	Down -0.4% (or -4 pts) at 1,079
The Nasdaq	Down -0.8% (or -17 pts) at 2,173

The FTSE 100	Up Marginally 0.2% (or 9 pts) at 5,275
The German DAX	Down -0.4% (or -25 pts) at 6,110
The Fench CAC	Down -0.3% (or -10 pts) at 3,610

The Dollar Index	Up 0.37% at 82.59
The Australian Dollar	Last traded at 89.16
The Commodities Index	Up Marginally 0.03% at 268.9

Crude Oil Futures	Down -2.9% at $75.80
Gold Futures	Up 1.44% at $1,215.30
Copper Futures	Up 0.92% at $3.2720
SPI Futures	Down -1.1% (or -50 pts) at 4,380


Market	Movement
SSE Composite (China)	Up 1.2% at 2,607
Hang Seng Index (Hong Kong)	Down Marginally -0.2% at 21,072
Nikkei 225 Index (Japan)	Up 0.4% at 9,253

SPI: Below key Level 4400 – SPI down 1.1% at 4,380….

ASX News Today

The SPI Futures is below the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -1.1% (or -50 pts) at 4,380, (down 3.0% for week). We are trading in the middle of a trading range. The key levels for our index this week are 4500 and 4250, the key support level on the ASX is still around 4,200. M&A activity continues to drive specific stocks. Expect to see our market trade lower today. Our company reporting season will continue to be in focus this week. Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.

AND- Andean Resources responed to its ASX “speeding ticket” after it 14% rise, says it cannot explain but noted the completion of C$234.5 million gross bought deal financing Thursday.

EQN- Equinox Minerals the Africa focussed miner, has returned to profit, with higher copper production and lower costs in the 1H10. Shares rose 3.1%.

JHX- James Hardie downgraded by Credit Suisse and Citi after disappointing earnings forecast spurred by stalled U.S. housing market. Target now $7.60 (from $9.30)

KRM- Kingrose Mining Ltd has poured its first gold and silver bars at the Way Linggo mine on the Indonesian island of Sumatra. Shares jumped 6%.

LYC- Lynas Corp upgrade by JPMorgan price target upgraded 43% to $1.30. Citing an increase in LYC’s basket price for rare earths, plus a 2.5% increase in 1H20 production.

MBN- Mirabela Nickel says output is improving despite a slower than expected ramp-up at its key operation in Brazil and expects production at the bottom end of guidance.

RMS- Ramelius Resources expects to decide to start mining at its newly acquired Mt Magnet project in WA by mid-2011.

RIO- Rio Tinto will focus on “organic growth from within the Rio Tinto project pipeline” with US$9 billion capex announced for 2011 “mostly iron ore”

TCL- Transurban was upgraded to Buy by Citi,after FY11 distribution guidance “surprises to the upside”. Target now $5.20.

TLS- Telstra shares hit record lows, but Telstrs has struck a deal to offload its interest in a Chinese property website for around 63 percent more than it paid for it 4 years ago. Share were lower again 1%.

TSE- Transfield Services the asset manager and maintenance services provider has secured work worth $200 million from the Australian Rail Track Corporation.

Economic Reports :

New Motor Vehicle Monthly Sales

Monetary Policy Meeting Minutes

Companies:

AXA – AXA Asia Pacific Holdings Interim 2010 Ex-dividend date.
BSL - BlueScope Steel Ltd Full year 2010 Results

LEI – Leighton Holdings Full year 2010 Preliminary results
LLC – Lend Lease Corp Full year 2010 Results
NCM – Newcrest Mining Ltd Full year 2010 Result

Expect to see our market trade lower today, after a tough week in offshore markets, as focus remains on our earnings season.

Market Summary

ASX – to open lower
US & UK/Europe – Lower for the week
US ADRs – Mixed!!!…

BHP up 0.5% &

RIO up 0.8%;

AWC up 4.5%
ANZ up 0.3% &

NAB up 0.8%

NEM down 1.8%,

JHX down 1.5%,

NWS down 0.9%

Commodities Stock Index up 0.4%
Gold Stocks Index down 1.0%
Oil Stocks Index down 0.3%

By Michael Hevern
Head of Research

Tags: ASX, ASX News, BHP, Crude Oil, Ex Dividend, gold price, oil, spi, Stock Market Analysis, stockmarket, trading, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

Stock Market Analysis: Overseas Markets Negative on Growth Concerns; Negative Lead for the ASX

Monday, July 19th, 2010

Stock Market Analysis

Markets Negative on Growth Concerns; Negative Lead for the ASX

Overseas markets traded lower last week as resistance of the April downward trend line continued to offer resistance. Japan sold off on Friday ahead of a shortened week this week. Locally trading activity has been on low volumes and may be held back even further by the Federal elections announced for 21 August. Our market will trade lower today, with negative leads across the boards overseas.

The SPI Futures is below the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -1.80% (or -79 pts) at 4,327 (down 1.8% for week). Key levels this week are 4500 and 4200, with pivot around 4350. Expect our market to see further weakness, after Wall Street and European markets were weaker last week.

US Markets

US markets traded lower last week as resistance from the April downward trend line continued to offer resistance. Investor sentiment turned last week as the 2Q earnings reports and economic data disappoint. U.S. consumer confidence fell in July to the lowest level in a year down to 66.5 from 74 a month earlier. Bank of America (BoA), Citi and GE all reported sales and revenues worst-than-expected. The sell-off was broad based with Miners down 2.7%, Energy down 2.4%, Industrials are down 3.3% and Financials down 4.2%. The markets ran up ahead of the 2Q earnings reporting and suffered last week because of that. Of the 23 companies that have reported 20 beat their lowered forecasts, with revenues up only 2.6%, and forecasts have also been disappointing. The FinREG bill will be signed into law this week.

The Dow closed down -2.5% (or -261 points) at 10,098 (down 1.0% for week), while in the broader market the S&P 500 index down -2.9% (or -32 points) at 1,065 (down 1.3% for week) and the tech-heavy Nasdaq ended down -3.1% (or 0 points) at 2,179 (down 0.7% for week).

European Markets

European markets finished the week lower. European markets closed weaker as the economic data from the U.S. and China pointed to a slowing recovery, and US bank earnings disappointed. Financial and big miners led the declines with Credit Suisse down 3.4%, Deutsche Bank down3.2% and Barclays down 5.3%, while BHP and RIO were down 2.2% and 5.3% respectively. The S&P ratings body has placed Greece-Based Piraeus Bank on a negative credit watch. BP has finally succeeded in stopping the flow of oil into the Gulf of Mexico for the first time since April, and are expected to approve the sale of $US14.5 billion in assets at its 22 July board meeting. In London the FTSE 100 index closed down -1.01% (or -52 pts) at 5,159 (up 0.3% for week), the German DAX down -1.77% (or -109 pts) at 6,040 (down 0.8% for week), while in France the CAC was down -1.5% (down 2.0% for week).

Asian Markets

Asian markets traded lower. The key news from last week was that the Chinese government to reported GDP of 10.3% for the quarter, slightly below forecasts (versus 11.9 percent in the previous quarter). China’s GDP has maintained in double-digit growth for the third quarter in a row but is slowing. It appears that the government is successfully engineering its economic slowdown, after scaling back its huge stimulus spending and tightening its lending policies. Banks however led falls in the index, following the weak debut in China of the $US22 billion IPO of Ag Bank of China listing (finished up 2.2% in Hong Kong).In China the SSE Composite closed down -0.1% (or 2 pts) at 2,424 (down 1.4% for week), while in Hong Kong the Hang Seng Index was down marginally -0.1% (or -5 pts) at 20,250 (down 0.9% for week) and in Japan the Nikkei 225 Index was down -2.9% (or -277 pts) at 9,408 (down 2.1% for week).

Commodities

The Dollar Index down -0.1% at 82.56 (down 1.8% for week) on a higher Euro, while the Australian Dollar last traded lower at 86.88. Commodities were generally higher.

Crude oil prices rose last week on a better-than-expected supply report, which pushed prices 3% higher on Tuesday, but prices faded later in the week. The benchmark crude NYMEX for August delivery down US$0.79 or 0.8% to settle at US$76.01 a barrel (down 0.4% for week). Copper prices are trading above the key $US3.00 a pound, Copper for July delivery was down -2.70% (or 8.2 cents) at 2.9200 a pound (down 4.0% for week). Gold was lower, with August gold down $US20.04 or 1.7% to settle at $US1,188.00 an ounce (down 1.7% for week).

Key News International Drivers Today

US – The FinREG bill will be signed into law this week. Goldman’s settled for $US550 million with SEC, not admitting to liability. U.S. bank earnings disappoint.EU – Bank “stress test” results will be released on the 23 July. BP says stage 1 of plug on Gulf spill was completed successfully.CHINA – Economy slowing. Government to reports GDP of 10.3% slightly below forecasts. $US22 billion IPO of Ag Bank of China lists flat.Markets Overview

Overseas Markets Give Negative Lead for the ASX

Market	Movement
The Dow Jones Industrial Average	Down -2.52% (or -261 pts) at 10,097.9
The S&P 500	Down -2.88% (or -32 pts) at 1,064.9
The Nasdaq	Down -3.11% (or 0 pts) at 2,179.1

The FTSE 100	Down -1.01% (or -52 pts) at 5,158.9
The German DAX	Down -1.77% (or -109 pts) at 6,040.3
SSE Composite (China)	Down -2.24% (or -1 pts) at 36.3

The Dollar Index	Down Marginally -0.09% at 82.56
The Australian Dollar	Last traded at .00
The Commodities Index	Down 0.80% at 262.22

Crude Oil Futures	Down -0.80% at $76.01
Gold Futures	Down -1.66% at $1,188.00
Copper Futures	Down 8 cents at $2.9200
SPI Futures	Down -1.80% (or -79 pts) at 4,327.0


Market	Movement
SSE Composite (China)	Down -1.87% at 2,424.3
Hang Seng Index (Hong Kong)	Down Marginally -0.03% at 20,250.2
Nikkei 225 Index (Japan)	Down -2.86% at 9,408.4

ASX News Today

AOE – Arrow Energy’s spin off of its Dart Energy Ltd unit, has been given the Federal Court has approval, this will be followed by a $3.4 billion joint takeover of Arrow by Royal Dutch Shell Shell and PetroChina.

CSL- says hundreds of jobs will be created in Melbourne with a $235 million expansion of Australia’s largest biotech facility.

CXY- Qld underground gas project has been shut down and a government worker has been stood aside over underground water contamination. Qld’s Department of Environment and Resource Management has ordered Cougar Energy (CXY) to stop its underground coal gasification (UCG) trial near Kingaroy after toxic chemicals were found in water from nearby bores.

FML- Focus Minerals the gold miner/explorer has unearthed rich mineralisation at its Treasure Island tenement in its WA eastern goldfields region.

FMG- US hedge fund Harbinger Capital Partners has in recent months sold most of its stake in iron ore miner Fortescue.

GDY- Geodynamics the geothermal hopeful is moving closer to creating an operating heat exchanger and validating the geological model of its joint venture Innamincka project in South Australia.IEF – ING Real Estate Entertainment Fund (IEF) is raising $65 million through new equity and the sale of its NZ assets to pay down debt.

ITO- Intoll the takeover target for a Canadian Pension Fund has reported significant June quarter revenue and traffic growth on its two toll roads.

MMX- Korean steel giant POSCO has become the Murchison’s largest shareholder after boosting its holdings in the Perth-based firm to 13.9% (from 12.3%). US hedge fund Harbinger Capital Partners last week reduced its to 11.6%.

MTE- MetroCoal says first approval by Chinese authorities had been received for its planned $30 million coal mining JV with a Chinese entity in Qld. Shares were up 5.4%.

NAB- is in discussions to extend the period in which NAB has to satisfy competition concerns about its $13.3 billion bid for AXA APH.

OZL- OZ Minerals traded higher and has increased its annual gold production guidance to 150,000 ozs (from 120,000) and copper output is up 4% and will meet their copper forecasts.

SDL- Sundance the iron ore explorer has received environmental approval from the Cameroon government for its Mbalam project in the West African nation.

VBA- Air New Zealand has advised the NZ stock exchange it had not bought any shares in airline Virgin Blue (VBA), but has not ruled out such a move.

SUN- Suncorp says FY after tax profit will benefit by between $110 and $125 million from the insurer’s sale of stakes in joint ventures.

Economic Reports :

NAHB Housing Market Index

Expect to see further weakness today. Be prepared to open/hold short positions.

Market Summary

ASX – to open lower
US & UK/Europe – finished the week lower.

US ADRs – Broadly Lower!!!…

US ADRs – Lower!!!…

BHP down 2.9% & RIO down 2.9%; AWC down 4.2%
ANZ down 3.7% & NAB down 3.4%
NEM down 3.0%, JHX down 5.2%, NWS down 4.2%

Commodities Stock Index down 2.9%
Gold Stocks Index down 3.4%
Oil Stocks Index down 2.9%

By Michael Hevern
Head of Research

Tags: Asian Markets, ASX News, BHP, Commodities, Crude Oil, European Markets, finance news, gold, Nasdaq, oil, Share Purchase Plan, Stock Market Analy, stockmarket, trading, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

Stock Market Analysis: Overseas Markets Drifted Lower

Friday, June 25th, 2010

Stock Market Analysis

Overseas Markets Drifted Lower; ASX to Trade Lower

U.S. stocks continued their slide overnight, as the investors were worried about the impacts of financial reforms and that the G-20 meeting will no longer offer a unified approach to resolving the GFC aftermath. Our markets are likely to close the week lower.

The SPI Futures is below the key level of 4500 the ASX is set to open lower as the SPI closed down 59 points (or 1.3%) at 4,428. Key levels today are 4550 and 4350. Expect our market to trade lower today, remember there will be increased activity this morning due to options exercises. The proposed RSPT tax will continue to be in focus, with the new PM prepared to negotiate with the interested parties, this saw the key mining stocks rise yesterday, however in London overnight they were sold off again. The G-20 meeting will be in focus over the weekend, there are concerns that the “unified” approach towards the resolution to the GFC is start to fracture.

US Markets

The US markets traded lower falling for a fourth day on continuing concerns over the poor performance of the housing sector and comments from the Fed warning of slowing growth. Trade volume were light however all sectors suffered. The Department of Commerce reported that orders for “big-ticket” items fell in May, on slumping aircraft orders. The Dow was down 145 points, or 1.4 per cent, to 10,152, while in the broader market the S&P 500 index lost 18 points, or 1.7 per cent, to 1,074, and the tech-heavy Nasdaq ended 1.6 per cent lower at 2,217.

European Markets

European shares slumped overnight, ahead of the G-20 meeting. Renewed concerns over the solvency of Greece hit the markets and prompted the EU and IMF to agree to $US155 billion in loans to Greece at below market rates. This move means the Greek government does not need to borrow money on the bond market. This prompted a rise in the Euro to above $US1.23.

In the U.K. the London FTSE 100 index fell 78 points, or 1.5 per cent, to 5,100 points. The German DAX down 89 points, or 1.4 per cent, to 6,115 points, while in France, the CAC 40 fell 83 points or 2.4 per cent, to 3,555 points.

Asian Markets

Asian markets were flat yesterday. In Japan the Nikkei index of the Tokyo Stock Exchange up 0.2% to end at 9,928. The benchmark Hang Seng Index was up 0.2% at 20,733, and China was down 0.1% at 2567.

Oil prices held just below US$77 a barrel overnight. The benchmark crude NYMEX for July delivery up US$0.16 to settle at US$76.51 a barrel. Copper prices finished above the key $US3.00 a pound, Copper for July delivery up 7 cents to settle at $US 3.0055 a pound. Gold closed higher, with August gold up $US11.10 to settle at $US1,245.90 an ounce.

Key News Drivers Today

G20 – meeting to be held in Toronto this week. Key issues will be the Chinese currency revaluation and the cut backs in stimulus spending and their impact on global growth.

BP – shares again fall to 13 year lows as a result of the oil spill in the Gulf of Mexico.

YUAN – China to end its two-year yuan peg to the US dollar. China has signaled a “more flexible yuan” currency policy, which will allow its currency appreciate in an orderly manner against the US dollar. The yuan has been pegged at 6.83 against the US dollar since mid-2008. It will not be a one-off revaluation.

OIL – Goldman Sach’s cuts its oil price forecast to $US87 for the next few months (vs previous $US96).

Markets Overview

U.S. Markets Cointinue to Weaken Technically; ASX to Trade Lower

SP500: down 1.7% at 1,074 – Below 200 day Moving Average

DOW down 1.4% at 10,152 – Above 10,000

NASDAQ: down 1.6% at 2,217

Dollar Index: lower at 85.74 on Higher Euro

A$ lower at 86.68 FTSE: down 1.5% at 5,100 – Financials & Miners Weigh

DAX down 0.7% at 6,115 -Off Highs but Still in Outperforming

HSI down .% at 20,733

Oil: up 0.2% ($76.51)

U.S. Inventories Up

Gold: up 0.7% at ($1,245.90)

Commodities Lower

SPI: Below key Level 4500 ASX

SPI down 1.3% at 4,428

ASX News Today

AUD – lower at 86.68

AGK – AGL plans to fast track its Macarthur wind farm project following changes to the Renewable Energy Target scheme approved by the Senate on Wednesday.

GFF – Goodman Fielder says NZ’s removal of building depreciation for tax purposes will result in a non-cash write down in deferred tax assets by $13 million.

MQG – Macquarie says market conditions are adversely affecting some of its business activity levels for FY11. This prompted concerns that it may be the next to downgrade earnings. Shares dived 4.7%.

RIV – A Chinese steel company is poised to take an 8% stake in Riversdale Mining, as part of a deal that will also see it help to fund a key coal project.

RSPT – New PM’s comments on the mining tax will impact BHP, FMG, RIO shares today.

SDL – Sundance shares remain suspended from trading while the company rearranges its corporate governance.

SVW – Seven Group is investing $287.16 million in the IPO which will see the last of China’s big four banks float its shares. Qatar’s heavy weight investment fund, have stumped up $6.26 billion for the Agricultural Bank of China IPO even before the share sale officially starts.

Economic Reports out today:

New PM – watch out for more commentary on RSPT tax

Market volatility will continue near term, some speculative accumulation is underway.

We the suggest trading strategy is to tighten stops. Be prepared to take profits and open/hold short positions, remember there will be increased activity this morning due to options exercises and we are trading into the end of the financial year.

Market Summary

ASX – to open lower

US & UK/Europe – Negative leads…

US ADRs – Broadly Lower!!!…Commodities Stock Index down 2.4%
Gold Stocks Index down 0.6%
Oil Stocks Index down 2.5%

By Michael Hevern

Head of Research

BHP down 2.3% & RIO down 4.1%; AWC down 4.2%
ANZ down 3.2% & NAB down 1.1%
NEM down 0.2%, JHX down 0.9%, NWS down 4.9%

Tags: ASX, ASX News, BHP, European Markets, Nasdaq, Nikkei, oil, RSPT, S&P500, stockmarket, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

Wednesday, 2nd June 2010 Morning Wrap

Wednesday, June 2nd, 2010

Morning Market Wrap

Pessimism rules as bears take control late in the session.

After trading flat for the bulk of the day, the bears stepped in late to sell-off the markets, despite good US economic reports regarding manufacturing and construction from earlier in the day.

The Reserve Bank (RBA) has left its cash rate at 4.5% and is sticking with its upbeat view on the economic recovery, which it says is on track despite recent turmoil in Europe and growing fears of a double-dip global recession. Though it did say it is reviewing the effects of Europe’s debt crisis, but the world’s growth prospects remained healthy

Financial and Energy sectors were the biggest drag, down over 2% on the day. The selling was triggered by the government on the possibility of criminal charges into the Gulf of Mexico oil spill and ongoing concerns about Europe’s financial sector. BP PLC was heavily hit because it operated the rig that caused the spill, it fell almost 15 per cent.

European stocks had a mixed day with continuing concerns over debt, and employment. In the 16 nation eurozone (EU), the unemployment rate rose to a record 10.1 per cent in April from 10 per cent the prior month, official data showed. Eurozone manufacturing activity slowed in May to a level not seen since the collapse of the US investment bank Lehman Brothers, in September 2008, according to a purchasing managers index (PMI) compiled from an industry survey.

In the U.K. London’s FTSE index closed down 25.13 points, or 0.48 per cent, at 5163, while in Europe Germany’s DAX closed up 16.94 points, or 0.28 per cent, at 5981 while in Paris, the CAC 40 index closed almost flat, down 4.48 points, or 0.13 per cent, at 3503.

The euro slid as low as $US1.2112, its lowest level since April 2006, before climbing back to $US1.2298.

Oil prices slid on concerns over slowing economic growth, particularly in China and the EU. NYSE main contract, light sweet crude for delivery in July, closed at $US72.58 a barrel, down $US1.39. In London, Brent North Sea crude for July dropped $US1.94 to settle at $US72.71.

Gold had its highest close in two weeks, in a flight to safety as the commodity was bought up after a report said European banks face sizeable write-offs. Gold for August delivery added $US11.90 to settle at $US1226.90 an ounce. In July contracts, copper lost 4.15 US cents to settle at $US3.063 a pound and silver gained 12.9 US cents to $US18.551 an ounce.

US Markets

U.S. Markets Sees Selling After Long Weekend

SP500: down 1.2% at 1,070 Energy & Financials Weigh
DOW down 1.1% at 10,024
Just Holds Above 10,000
NASDAQ: down 1.5% at 2,222

Dollar Index: Up at 86.85 on Lower Euro
A$ lower at 83.20 (towards 10-month Lows)

FTSE: down 0.5% at 5,163 – Financials Weigh
DAX up 0.3% – Europe Debt sitll Concerns

CHINA: down 0.9% at 2,568 – Suport beComes Resistance
HSI down 1.4%

Oil: down 1.9% ($71.90)
Oil spill in Gulf of Mexico Still a Problem

Gold: up 1% at ($1,224.90)
Commodities Lower

SPI: Below Key 4400 ASX
SPI down 1.0% at 4,366

ASX News

The SPI Futures is below the key level of 4400 the ASX is set to open lower as the SPI closed down 44 points (or 1.0%) at 4,366. Key levels for the SPI today are 4250 and 4450. Expect our market to trade lower, following the U.S. The Reserve Bank (RBA) has left its cash rate at 4.5% and is sticking with its upbeat view on the economic recovery, which it says is on track despite recent turmoil in Europe and growing fears of a double-dip global recession. Though it did say is reviewing the effects of Europe’s debt crisis, but the world’s growth prospects remained healthy

ABS – Australian Bureau of Statistics releases national accounts figures, including gross domestic product for the March quarter. The market forecast is for an increase of 0.5 per cent in the March quarter, down from 0.9 per cent for the December quarter.

AUD – weakens, towards 10 months lows.

AXA – has extended an exclusivity agreement with NAB, as the NAB looks for ways to satisfy the competition watchdog in its attempt to buy the wealth manager.

BANKS – Downgraded. Morgan Stanley remains cautious on sector, saying Australian banks still rely heavily on wholesale funding and revenue headwinds are significant. NAB is their preferred. Targets cuts: CBA to $47.30 (vs $54.00), ANZ to $21.00 (vs $23.00), WBC to $22.90 (vs $27.30). Goldmans also trimmed their banks tragets similarly.

DOW – Downer EDI share price plunged, as its Fitch credit rating was downgraded to one notch above junk bond status, after it reported a substantial cost blowout for a government train project and tax impairments on other assets. Its NSW train carriages project required an additional $190 million, while it will also book a $66 million impairment on other assets. Shares down 26% at $4.58.

JHX - will hold an EGM in Amsterdam for a shareholder vote on the second stage of its proposed move of its domicile to Ireland.

LEI – Friction due to board’s knocked back of a takeover bid for Leighton this year is likely to boil over, as CEO Wal King and his fellow Leighton Holdings directors are headed for a showdown with directors of the group’s German parent, Hochtief, at a board meeting in Hong Kong on Sunday.

MTS – reported a 12.4% rise in annual net profit and forecast up to 8% earnings growth in the current fiscal year.

RIO – says it paid an average effective tax rate in Australia of 35.6% over the decade to the end of calendar 2009, in stark contrast to goernment reports. CEO Tom Albanese said the new RSPT tax could lift the company’s effective tax rate in Australia to “well over 50%.”.

Miners will be presenting at the two day conference in Canberra.

Market volatility will continue near term, with pressure still to the downside.

We think the trading strategy is to accumulate, using covered calls and tight stops. Resources Rent Tax will continue to be topical.

ASX – to open lower
US & UK/Europe – US and Europe end lower

US ADRs – Broadly Lower

BHP down 3.4% & RIO down 2.9%; AWC down 3.2%
ANZ down 3.8% & NAB down 3.8%
NEM up 1.5%, JHX down 1.7, NWS down 2.7%

Commodities Stock Index down 3.7%
Gold Stocks Index down 0.6%
Oil Stocks Index down 5.1%%

By Michael Hevern
Head of Research

Tags: ASX News, AXA, European Stocks, gold, NAB, oil, RBA, resource rent tax
Posted in Morning Wrap, Stock Market Analysis | No Comments

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