Stock Market Analysis
Caution Ahead of US Employment Report;Volumes Still Low; ASX to Focus on Upcoming Earnings
US stock markets drifted, ending flat and volumes were thin, as jobless claims rise to their highest level since April and retail sales fall. In Europe the central banks leave rates on hold. The ASX is set to open flat.
The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up marginally 0.1% (or 3 pts) at 4,540. The key levels for our index today are 4600 and 4450, with pivot at 4520. M&A activity continues to drive specific stocks. Expect to see our market trade higher today. Time to position portfolios for company reporting season.
US Markets
U.S. stocks were flat on thin volumes, with all U.S. markets holding above their 200-day moving average. The US market was weighed down by a monthly retail sales reports which showed shoppers remain concerned about spending, as hiring remains scarce. The retailers followed by Thomson Reuters report same-store sales growth of 2.9%, below the 3.1% increase that analysts were expecting. A surprise jump in claims which increased to their highest level since April, also added to investor concerns. This indicates that employers are still reluctant to create jobs, which could keep a damper on economic growth the coming months. The Fed Chairman in July pointed to an “unusually uncertain” economic outlook, raising speculation that the low interest rate policy will be maintained well into 2011. The Fed meets next week. They have cited high levels of unemployment as one of the key factors to keep interest rates at a record low near zero since December 2008. Tonight investors will be focusing on the Non-Farm Payrolls report. This government report records the monthly tally of payrolls and the unemployment rate.
The market was weighed down by the Financials and Consumer Staples sectors down 0.4 percent for the session. The Dow closed down marginally -0.1% (or -5 points) at 10,675, while in the broader market the S&P 500 index down marginally -0.1% (or -1 points) at 1,126 and the tech-heavy Nasdaq ended down -0.5% (or -11 points) at 2,293.
European Markets
European shares closed mixed. Central banks ECB and BoE leaves rates on hold as expected. European Central Bank (ECB) President Jean-Claude Trichet said the euro-zone economy is strengthening, but has warned that current expansion rates are unlikely to be sustained after the summer. The financial sector again weighed overnight, as Barclays slumped 4.7 percent despite a 29 per cent jump in first half earnings, with investors worried by its investment bank performance. In London the FTSE 100 index closed down -0.4% (or -20 points) at 5,366, the German DAX up marginally 0.0% (or 2 points) at 6,334, while in France the CAC was down marginally 0.1% (or 3 points) at 3,764.
Asian Markets
Asian shares ended mixed. Chinese shares fell on reports the government plans to tighten mortgage lending in some cities and the China Banking Regulatory Commission ordered banks to conduct stress tests evaluating the impact on their loans and credit quality, based on an extreme scenario in which property prices plunge by around 50 per cent. Real estate developers on the news. Chinese investors remain cautious ahead of China’s July data due next week. In Hong Kong the market moved higher after Cathay Pacific rose 4.8 per cent, extending its 3.9 per cent rise the day before when it reported a higher-than-expected, eight-fold surge in first-half net profit. Japanese share prices continued higher aided by the weaker yen and upbeat corporate earnings forecasts. In China the SSE Composite closed down -0.7% (or -18 points) at 2,621, while in Hong Kong the Hang Seng Index was flat (or up 2 points) at 21,552 and in Japan the Nikkei 225 Index was up 1.7% (or 16458 points) at 9,654.
Commodities
The Dollar Index down marginally -0.2% at 80.76 on higher Euro, while the Australian Dollar last traded at 91.17. Commodities were mixed.
Oil prices eased for a second session. The benchmark crude NYMEX for September delivery was down 0.4% (or $US0.40) to settle at $US82.01. Copper prices are trading at 3-month highs, Copper for September delivery delivery was down marginally -0.2% (or -0.5 cents) at $US3.345 a pound. Gold rose again, with December gold was up 0.3% at $US1,195.90 an ounce.
Key News International Drivers Today
US – Retails sales fall. Companies continue to report earnings this week. Unemployment Report on Friday.
EU – Central banlks leave rates on hold. Financial weigh.
CHINA – China’s banking regulator told lenders to perform stress.
JAPAN – companies continue to report earnings this week.
Markets Overview
Caution Ahead of US Employment Report;Volumes Still Low; ASX to Focus on Upcoming Earning
|
Market
|
Movement
|
|
The Dow Jones Industrial Average
|
Down Marginally -0.1% (or -5 pts) at 10,675
|
|
The S&P 500
|
Down Marginally -0.1% (or -1 pts) at 1,126
|
|
The Nasdaq
|
Down -0.5% (or -11 pts) at 2,293
|
|
|
|
|
The FTSE 100
|
Down -0.4% (or -20 pts) at 5,366
|
|
The German DAX
|
Up Marginally 0.0% (or 2 pts) at 6,334
|
|
The Fench CAC
|
Down Marginally 0.1% (or 3 pts) at 3,764
|
|
|
|
|
The Dollar Index
|
Down Marginally -0.17% at 80.76
|
|
The Australian Dollar
|
Last traded at 91.17
|
|
The Commodities Index
|
Down -0.47% at 277.7
|
|
|
|
|
Crude Oil Futures
|
Down 0.24% at $82.01
|
|
Gold Futures
|
Up 0.29% at $1,195.90
|
|
Copper Futures
|
Down Marginally -0.15% at $3.3455
|
|
SPI Futures
|
Up Marginally 0.1% (or 3 pts) at 4,540
|
|
|
|
|
|
|
|
Market
|
Movement
|
|
SSE Composite (China)
|
Down -0.7% at 2,621
|
|
Hang Seng Index (Hong Kong)
|
Down Marginally 0.0% at 21,552
|
|
Nikkei 225 Index (Japan)
|
Up 1.7% at 9,654
|
SPI: Above key Level 4400 – SPI up 0.1% at 4,540….
ASX News Today
The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up marginally 0.1% (or 3 pts) at 4,540. The key levels for our index today are 4600 and 4450, with pivot at 4520. M&A activity continues to drive specific stocks. Expect to see our market trade higher today. Time to position portfolios for company reporting season.
AXA - AXA Asia Pacific shareholders should know the progress of talks between the ACCC and NAB, over the $13 billion takeover bid for the wealth manager.
DOW- Downer Engineering has won a six-year contract worth $3 billion to provide mining services to Fortescue Metals Group’s Christmas Creek project in WA Pilbara region.
GCL- Gloucester Coal will not increase the size of its recently announced capital raising, despite a strong response to the offer from institutions. Shares rose 10%.
ITO- Intoll, the toll road owner, and its Canadian pension fund suitor will extend by a week the due diligence period on a proposed $3.5 billion takeover.
NWS- News Corporation the global media giant has returned to profitability in FY10 after a massive loss the prior year amid improving advertising markets and record earnings at its film and cable television units.
RIO- Rio the mining giant reports a strong jump in 1H10 profit, thanks to strong commodity prices, but says economic conditions globally remain volatile.
TAH- Tabcorp’s full-year results were largely in line with expectations.
WHC- Whitehaven has confirmed it is in discussions in relation to potential corporate transactions.
Economic Reports :
RBA – Quarterly Statement on Monetary Policy
HIA - Australian Performance of Construction Index for July
AFOM – to auction $700 million June 2016 Treasury bonds
Companies:
PRG - Programmed Maintenance Services – Full year 2010 Results
RNY – RNY Property Trust – Interim 2010 Results
Expect to see our market trade higher today, as focus turns to our earnings season.
Market Summary
ASX – to open flat
US & UK/Europe – caution ahead of employment report
US ADRs – Mixed!!!…
BHP up 0.1% &
RIO up 0.3%;
AWC up 0.3%
ANZ down 1.4% &
NAB down 0.7%
NEM up 0.8%,
JHX down 1.6%, NWS up 2.3%
Commodities Stock Index up 0.3%
Gold Stocks Index up 0.1%
Oil Stocks Index up 0.3%
By Michael Hevern
Head of Research
