Online Stockmarket Trading Update

* US stock markets finished higher overnight, as investors played catchup after a public holiday.
* European stock markets rose for a second session overnight, as investors chose to focus on the positive growth data from China, the US and Germany.
* Asian stock markets rallied yesterday as the Chinese economy expanded at a better-than-expected 8.9% during the fourth quarter.
* Commodities prices traded mostly higher. Gold prices rose higher to around $US1,658 and crude-oil closed up around $US100.

The SPI Futures is trading below the key pivot level of 4180, ending down -0.2% (or -9 points) at 4,177. The key levels for our index today are 4150 to 4250.

Yesterday Australian shares climbed steadily, assisted by the better-than-expected Chinese growth data, with the annual GDP figure coming in at 9.2 percent, down from 10.4 percent a year earlier.  Shares in the All Ordinaries (XAO) traded steadily higher, closing up 1.6% at 4278, as the S&P/ASX 200 (XJO) closed up 1.7% at 4216.

Aussie shares are expected to continue to rise today and traders are expected to continue looking for bargains after positive leads from the US and European markets.  Short-term traders may look to position themselves ahead of earnings reporting season in the US.
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See below for ASX listed companies in the news today.

US Markets

US stock markets finished higher overnight, as investors played catchup after a public holiday.  Investor sentiment was boosted by strong economic data in the US, China and Germany which laid the platform for the highest close since last July, though trading volumes were down.

The financial sector limited the gains, as Citigroup plunged -6.7% after the bank reported fourth-quarter results that missed analyst expectations, as the company struggled with weaker revenue from trading.

Cruise liner operator Carnival plunged -14% after one of the company’s cruise ships capsised off the coast of Italy on the weekend.

In economic news a gauge of New York manufacturing activity beat expectations, as a German economic sentiment indicator also rose to the highest level since July 2011 and China’s economy expanded a better-than-expected 8.9% during the fourth quarter.

All ten company groups that make up the S&P index traded higher except for the Financials sector which was down -0.8%. Materials were up 0.6%, Energy was up 0.7%, the Industrials sector was up 0.5%, Technology was up 0.5%, and Consumer Staples were up 0.3%.

The Dow Jones closed up 0.5% (or 60 points) at 12,482, the S&P 500 index up 0.4%  (or 5 points) at 1,294, the Nasdaq ended up 0.6% (or 17 points) at 2,728 and the smaller cap Russell 2000 was up 0.2%.

European Markets

European stock markets rose for a second session overnight, as investors accepted the well publicised eurozone downgrades, and chose to focus on the positive growth data from China and the US, and good economic news from Germany. The Stoxx Europe 600 index rose 0.9%.

The ZEW indicator of economic sentiment for Germany jumped 32.2 points in January to -21.6 points, its highest level since July.  Successful bond auctions also helped as Spain held its first debt auction since Standard & Poor’s downgraded its credit rating last week. Borrowing costs are falling with 1-year bill yields at 2.049%, down from 4.05% last week.  Commodity prices rose across the board overnight.

In London the FTSE 100 index closed up 0.7% (or 36 points) at 5,694, the German DAX was up 1.8% (or 113 points) at 6,332 while in France the CAC was up 1.4% (or 45 points) at 3,270, Spain was up 1.0% and Italy ended up 0.7%.

Asian Markets

Asian stock markets rallied yesterday as China reported GDP figures showing the economy grew at 8.9 percent for the fourth quarter, the slowest expansion since the June quarter of 2009, but beating analysts’ forecasts of 8.7% growth.

The Chinese growth has slowed for five consecutive quarters, as the government reversed some of its stimulus policies in a bid to keep control inflation. The annual figure came in at 9.2 percent, down from 10.4 percent a year earlier.

Across the region financial stocks also rose and growth-sensitive commodity stocks were bought up after the positive Chinese economic growth news.  In China these stocks were the best performers after dropping in the last four trading days and the Shanghai Composite surged 4.2%, its biggest gain since October 2009. In Japan exporters were among best gainers, as the euro strengthened against the yen.
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In China the SSE Composite was closed up 4.2% (or 92 points) at 2,298, while in Hong Kong the Hang Seng Index was up 3.2% (or 615 points) at 19,628 and in Japan the Nikkei 225 Index closed up 1.1% (or 88 points) at 8,466. The South Korean KOSPI was up 1.8% for the session, while the Indian market surged up 6.5%.

Commodities

The Dollar Index was lower at 81.24 on a higher Euro, while the Australian Dollar last traded higher at 1.0379. Commodities prices traded mostly higher.

For the session the benchmark crude NYMEX for January delivery was up 2.3% (or $US2.25) to settle at $US100.95.  Copper prices are seeking a support level as Copper for January delivery was up 2.6% (or 9.4 cents) at $US3.7260.  January gold was up 1.5% (or $US24.80) at $US1,658. 

ASX News Today

BHP – BHP and Rio Tinto said they are set to report solid iron ore output growth in the December quarter as they continue to expand mining in Australia, betting any loss in China’s appetite for the steelmaking material is only temporary.  Both companies reaffirmed that sales orders to China, the world’s largest buyer, are showing no signs of weakening despite a slowdown in Chinese steel production.

BOL – Boom Logistics has been nominated as the successful bidder for a five-year contract to supply crane services to BHP Billiton’s Olympic Dam operations.

CFE – Cape Lambert Resources says its African Iron’s major shareholder has formally accepted a take-over offer from South African miner Exxaro.

GRR – Grange Resources the iron ore pellet producer forecast a lift in full year output by as much as 15 percent because of better conditions at its Savage River mine in Tasmania.

OMH – OM Holdings the manganese miner expects to post a loss of about $12 million for the 2011 calendar year, due to the high Australian dollar and several one-off costs.

PDN – Paladin Energy the uranium miner surged today, after reporting a 24 percent gain in output and predicting an increase in prices for the nuclear fuel.  They said uranium prices are starting to show signs of strengthening as new demand emerges.

RIO – Rio Tinto has easily beaten its full year iron ore production guidance but copper output was hampered by industrial action.

Market Summary 

ASX – to open higher
US & UK/Europe – EU higher
Commodities Stock Index  up 0.2%
Gold Stocks Index udown -2.1%
Oil Stocks Index up 1.3% 

US ADRs – Broadly Higher

BHP up 1.8% & RIO up 3.2%; AWC up 3.4%
ANZ up 0.1% & NAB up 0.6%
NEM  down -3.9%, JHX up 0.6%, NWS up 1.9%

By Michael Hevern
Head of Research

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