Stock Market Analysis: Bulls Prevail But Trading Volumes Are Down

April 23rd, 20140

* US stock markets’ positive momentum continued, after recording their best five day rally since last October, as earnings reports continue to impress.
* European stock markets rose for a third straight session, after returning from holidays. Healthcare stocks led the gains on the back of M&A activity.
* Asian stock markets fell for a second session, as several markets returned from a holiday weekend.
* Commodities prices edged higher, Gold prices held at $US1,283, while crude-oil held around $US102. Copper rose above the key crucial US3.0c level.

The Australian share market closed higher up another 0.6% at 5479 yesterday, with another steady rise throughout the day, although trading volumes were down. Recent big gainers continued to lead with the chase for yield is still on with majors like the Banks, Telstra, Woolworths and Woodside all at new multi-year highs. The Australian dollar edged higher around the US93.6c level. Remember it is equities options expiry today.

The SPI 200 futures are up 0.4% at 5494, giving another positive lead for the ASX market today as it trades near six year highs. The 5490 level key near-term for the ASX200, as markets traded higher across Europe and rose again in the US overnight.

US Markets

US stock markets’ positive momentum continued, after recording their best five day rally since last October, as earnings reports continue to impress.

The three benchmark indexes continued steadily higher overnight, powering on towards new record highs. The S&P500 is again trading in the green for the year, after rising 2.7% last week and is less than 1% from its all time highs.

With the over 70 S&P500 stocks that have reported to date over 70% have beaten on profits, while analysts are predicting profits have fallen -0.9% in the first quarter (1Q), while sales are projected to have risen by 2.6%, according to Bloomberg. Recent earnings from Citigroup, Morgan Stanley and Yahoo have all beaten analysts’ forecasts. There are 125 S&P500 stocks reporting by the end of the week.

The main focus continues to be the corporate reporting and the progress on the Ukrainian situation. Trader sentiment has been boosted by recent reassurances from Fed Chair Janet Yellen that the low interest rate environment will persist for the foreseeable future and that the US economic expansion continues in most regions.

For the session Dow Jones closed up 0.4% at 16,514, the S&P500 closed up 0.4% at 1,879 and the NASDAQ closed up 0.9% at 4,161, while on 10-year Treasury notes eased to 2.71%.

European Markets

European stock markets rose for a third straight session, after returning from holidays. Healthcare stocks led the gains on the back of M&A activity.

The Europe Stoxx 600 rebounded another 1.2% for the session, but trading volumes were down -20% below the monthly average. The index is now up 2.5% for the year, after gaining four of the past five weeks. The healthcare sector surged 2.9%, it’s best performance since June. In M&A activity GlaxoSmithKline has received a bid for its UK business, while there were reports that Pfizer is on the acquisition trail.

Trader sentiment was boosted after a gauge of consumer confidence figures were better than expected. The geopolitical concerns over the Ukraine took a turn, when the US warned Russia that it will face consequences if it fails to take action to restrain the pro-Russian militants in Eastern Ukraine.

The German market surged over 2% for the session on the back of the M&A activity. The London market continued higher for a third session, its longest winning streak in two months.

For the session the German DAX 30 closed up 2.0% at 9,600, the UK the FTSE 100 closed up 0.8% at 6,81, the French CAC 40 closed up 1.2% at 4,484, while the Spanish market close up 1.4% at 10,437.

Asian Markets

Asian stock markets fell for a second session, as several markets returned from a holiday weekend.

The MSCI Pacific Index fell -0.2%, paring earlier gains. Across the region the industrial stocks led the falls, as a number of Chinese corporates are being investigated over corruption, while mining stocks were under pressure on the back of lower commodity prices.

The Chinese market found modest support, paring early losses and ahead of factory activity data due out today. Chinese equities prices have been under pressure recently,non concerns upcoming IPOs will drain funds from established company shares.

The Japanese market fell, as traders exhibited caution ahead of some key events, including an Obama-Abe meeting, 160 Japanese companies reporting earnings and Chinese data.

For the session the Shenzhen Composite closed up 0.4% at 2,1896, the Hong Kong Hang Seng closed down -0.1% at 22,730, and the Japanese Nikkei surged down -0.9% at 14,388, while the South Korean KOSPI closed up 0.3% at 2,004.

Commodities

The Dollar Index held at 79.90 on a lower Euro, and the Aussie Dollar held around four month highs at US93.6c. Commodities prices rose.

Overnight the COMEX WTI Crude for APR13 delivery closed up 0.1% at $US101.90, the COMEX Copper for APR13 delivery closed up 0.1% at 3.033, the COMEX Gold for APR13 delivery closed up 0.1% at $US1,283.

ASX News

CGF – Challenger says total group assets and funds under management at 31 March 2014 was $49.5 billion, an increase of 21% on year and 1% for the quarter, while Challenger Life annuity sales for the March 2014 quarter increased of 29% on pcp and Retail annuity sales were up 35% on pcp.

FMG – Fortescue Metals Group the Pilbara iron ore miner has boosted its iron ore shipments by 15% in the March quarter and plans to boost production by 35 per cent over the next three months.

ILU – Iluka Resources the mineral sands miner has recorded a -19% drop in production and Q1 revenue down -6.6%.

NAB – Bank of New Zealand’s head of its business bank, Anthony Healy, is to become its new chief executive.

OGC – OceanaGold has suspended production at its open pit mine at the Macraes Goldfield north of Dunedin in NZ after heavy rain caused a section of the west wall to fail.

OSH – Oil Search says its key PNG liquefied natural gas (LNG) project will deliver its first cargo a few months ahead of schedule.

PDN – Paladin Energy the uranium miner, says its revenue has fallen as the price of the nuclear energy source continues to decline.

STO – Santos has increased first quarter sales revenue by 28% on YoY, despite a flat production performance.

WPL – Woodside Petroleum the energy major, has raised its first quarter revenue despite a fall in production.

Market Summary

ASX –open higher
US & UK/Europe – higher

US ADRs – Broadly higher!…

ANZ +1.5%, NAB +0.6%, NWS +1.1%
AWC +0.3%, BHP +0.5%, RIO -0.3%, NEM -0.1%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Market Rise Continues In Shortened Trading Week

April 22nd, 20140

* US stock markets’ positive momentum continued into the new week, after recording their best weekly performance since July, as a number of earnings reports beat estimates.
* European stock markets posted weekly gains, as better corporate earnings reports outweighed risk aversion over concerns due to the geopolitical situation in the Ukraine.
* Asian stock markets fell, but several markets were closed for a holiday.
* Commodities prices edged higher, Gold prices held at $US1,289, while crude-oil held above $US104. Copper rose above the key crucial US3.0c level.

The Australian share market closed higher up 0.6% at 5454 last Thursday, with another steady rise throughout the day, after Chinese first quarter GDP figures were up 7.4% beating expectations. The chase for yield is still on with majors like the Banks, Telstra, Woolworths and Woodside all at multi-month highs. The Australian dollar held around the US93.4c level. Remember it is equities options expiry on Wednesday.

The SPI 200 futures are up 0.6% at 5454, giving another positive lead for the ASX market today. The 5450 level key near-term for the ASX200, as markets traded higher across Europe last week and rose in the US overnight.

US Markets

US stock markets’ positive momentum continued into the new week, after recording their best weekly performance since July, as a number of earnings reports beat estimates.

The three benchmark indexes continued steadily higher overnight. The S&P500 is again trading in the green for the year, after rising 2.7% last week and is again only just over 1% from its all time highs.

With the over 60 S&P500 stocks that have reported to date over 70% have beaten on profits, while analysts are predicting profits have fallen -0.9% in the first quarter (1Q), while sales are projected to have risen by 2.6%, according to Bloomberg.

Trader sentiment has been boosted by recent reassurances from Fed Chair Janet Yellen that the low interest rate environment will persist for the foreseeable future and that the US economic expansion continues in most regions.

The main focus this week will again be the corporate reporting and the progress on the Ukrainian situation.

For the session Dow Jones closed up 0.3% at 16,449, the S&P500 closed up 0.4% at 1,871 and the NASDAQ closed up 0.6% at 4,121, while on 10-year Treasury notes jumped to 2.72%.

European Markets

European stock markets posted weekly gains, as better corporate earnings reports outweighed risk aversion over concerns due to the geopolitical situation in the Ukraine.

The Europe Stoxx 600 recovered 1.1% for the week and is now up 1.3% for the year, after gaining four of the past five weeks. The escalating geopolitical concerns has prompted the US and European leaders to consider further sanctions against Russia as armed separatists have occupied government buildings in the eastern part of the Ukraine.

The German market gained 1% for the week. The London market recovered 1% for the week, on the back of better figures from Tesco, while the French CAC jumped 1.5%, in the holiday shortened week.

For the session the German DAX 30 closed up 1.0% at 9,409, the UK the FTSE 100 closed up 0.6% at 6,625, the French CAC 40 closed up 0.6% at 4,431, while the Spanish market close up 0.2% at 10,292.

Asian Markets

Asian stock markets fell, but several markets were closed for a holiday.

The MSCI Pacific Index fell 0.2%, as traders showed caution ahead of some key events, including an Obama-Abe meeting, 160 Japanese companies reporting earnings and Chinese data. Across the region the pharmaceutical stocks led the falls.

The Chinese markets slumped the most since early March, on concerns upcoming IPOs will drain funds from established company shares.

The Japanese market held on to recent gains, with consumer finance stocks offering support, ahead of a busy reporting week.

For the session the Shenzhen Composite closed down -1.7% at 2,187, the Hong Kong Hang Seng closed up 0.3% at 22,760, and the Japanese Nikkei surged down -0.1% at 14,512, while the South Korean KOSPI closed down -0.3% at 1,999.

Commodities

The Dollar Index was higher at 79.94 on a lower Euro, and the Aussie Dollar held around four month highs at US93.4c. Commodities prices rose.

Overnight the COMEX WTI Crude for APR13 delivery closed up 0.1% at $US104.30, the COMEX Copper for APR13 delivery closed up 0.2% at 3.03, the COMEX Gold for APR13 delivery closed down -0.1% at $US1,289.

ASX News

API – Australian Pharmaceutical Industries is writing down the value of some of its assets by $131 million.

DSH – Dick Smith the electronics retailer Dick Smith has recorded a slight lift in group third quartersales, as growth in its Australian operations offset a decline in its NZ business.

CGF – Challenger says total group assets and funds under management at 31 March 2014 was $49.5 billion, an increase of 21% on year and 1% for the quarter, while Challenger Life annuity sales for the March 2014 quarter increased of 29% on pcp and Retail annuity sales were up 35% on pcp.

FMG – Fortescue Metals Group the Pilbara iron ore miner has boosted its iron ore shipments by 15% in the March quarter and plans to boost production by 35 per cent over the next three months.

ILU – Iluka Resources the mineral sands miner has recorded a -19% drop in production and Q1 revenue down -6.6%.

NAB – Bank of New Zealand’s head of its business bank, Anthony Healy, is to become its new chief executive.

STO – Santos has increased first quarter sales revenue by 28% on YoY, despite a flat production performance.

WPL – Woodside Petroleum the energy major, has raised its first quarter revenue despite a fall in production.

TPM – TPG has been fined $400,000 for failing to provide access to emergency numbers for customers who had not paid bills.

Market Summary

ASX –open higher
US & UK/Europe – higher

US ADRs – Broadly higher!…

ANZ +0.2%, NAB +0.1%, NWS +1.1%
AWC -0.3%, BHP +1.3%, RIO -0.5%, NEM +6.4%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Global Equities Resume Upward Path On Corporate Earnings

April 17th, 20140

* US stock markets’ positive momentum continued overnight, recording their best three day performance in two months, as a number of earnings reports beat estimates.
* European stock markets rebounded the most in over a month, thanks to better corporate earnings reports.
* Asian stock markets rose for the first time in four sessions, led by Japan, as data eased concerns of a hard landing in China.
* Commodities prices edged higher, Gold prices held at $US1,302, while crude-oil held above $US103. Copper slumped below the key crucial US3.0c level.

The Australian share market closed higher up 0.6% at 5420 yesterday, with a steady rise throughout the day, after Chinese first quarter GDP figures were up 7.4% beating expectations. All the Aussie sectors finished in the green. The Australian dollar rose and is trading around the US93.7c level. Remember it is index options expiry today, so expect volatility early.

The SPI 200 futures are up 0.3% at 5424, giving another positive lead for the ASX market today. The 5430 level key near-term for the ASX200, as markets traded higher across Europe and rose in the US.

temp
West Texas Crude oil is trading sideways despite the escalating geopolitical tensions in the Ukraine. However Brent Crude has hit six week highs at $US110.

US Markets

US stock markets’ positive momentum continued overnight, recording their best three day performance in two months, as a number of earnings reports beat estimates.

The three benchmark indexes continued steadily higher throughout the session. The S&P500 is again trading in the green for the year. All ten S&P 500 sectors finished in the green, with gains again led by the Materials, Energy and Industrials sectors up 1.5%, closely followed by the Tech and Financials sectors up around 1%. The major indexes recovering off key levels with the S&P500, the DOW, the Nasdaq and the Russell 2000 indexes have all been exhibiting weakness with the 13 day moving averages crossing below the 100 day moving averages.

Seventeen S&P500 stocks reported today, with Yahoo beating estimates, but IBM and Bank of America missed estimates. There over 50 S&P500 stocks to report this week and analysts are predicting profits have fallen -0.9% in the first quarter (1Q), while sales are projected to have risen by 2.6%.

In economic news Fed Chair Janet Yellen reassured investors that the low interest rate environment will persist for the foreseeable future and that the US economic expansion continues in most regions. The Commerce Department reported industrial production rose more than forecast in March, while housing starts recovered to a 946,000 annualised pace in March, the first rise in four months.

For the session Dow Jones closed up 1.0% at 16,424, the S&P500 closed up 1.1% at 1,862 and the NASDAQ closed up 1.3% at 4,086, while on 10-year Treasury notes held at 2.63%.

European Markets

European stock markets rebounded the most in over a month, thanks to better corporate earnings reports. The Europe Stoxx 600 recovered 1.3%, after having given back their gains for the year, due to the risk aversion, as military action escalates concerns over the Ukraine.

The German market regained nearly all the losses of the prior session, which were caused by a fall in investor confidence for a fourth straight month and risk aversion on concerns over the Ukraine. The London market recovered on the back of better figures from Tesco. The escalating geopolitical concerns has prompted the US and European leaders to consider further sanctions against Russia as armed separatists have occupied government buildings in the eastern part of the Ukraine.

For the session the German DAX 30 closed up 1.6% at 9,317, the UK the FTSE 100 closed up 0.7% at 6,584, the French CAC 40 closed up 1.4% at 4,405, while the Spanish market close up 1.6% at 10,267.

Asian Markets

Asian stock markets rose for the first time in four sessions, led by Japan, as data eased concerns of a hard landing in China. The MSCI Pacific Index recovered 0.9% for the session, rebounding from two week lows, as all ten sectors finished in the green.

The Chinese and Hong Kong markets held after the Chinese economy grew by 7.4% in the first quarter, better than the 7.3% expected, but less than the 7.7% last quarter. Chinese industrial production also increased by 8.8% in March on year.

The Japanese market surged the most in two months, led by tech stocks after Yahoo and Softbank reported better than expected earnings, as bargain hunters stepped in, after last week the index recorded its worst weekly performance since June.

For the session the Shenzhen Composite closed up 0.1% at 2,232, the Hong Kong Hang Seng closed up 0.1% at 22,696, and the Japanese Nikkei surged up 3.0% at 14,417, while the South Korean KOSPI closed flat at 1,992.

Commodities

The Dollar Index was higher at 79.82 on a lower Euro, and the Aussie Dollar recovered towards four month highs at US93.7c. Commodities prices rose.

Overnight the COMEX WTI Crude for APR13 delivery closed up 0.1% at $US103.80, the COMEX Copper for APR13 delivery closed up 0.2% at 3.02, the COMEX Gold for APR13 delivery closed down -0.1% at $US1,302.30.

ASX News

ALZ – Australand says it has not received any proposal from major shareholder Stockland about a potential takeover.

API – Australian Pharmaceutical Industries is in suspension from trade while the drugs distributor and pharmacies operator assesses the carrying value of its assets.

BHP – BHP Billiton has raised its full year guidance for iron ore and metallurgical coal production after achieving record output so far this fiscal year.

BRL – Bathurst Resources has raised $A7.39 millionin a discounted placement to institutional investors to help fund development of its Escarpment open-cut coal mine on NZ’s Denniston Plateau near Westport.

BSL – Bluescope Australia’s largest steelmaker and owner of the NZ Steel mill, has been giver approval to acquire the assets of Fletcher Building’s Pacific Steel in a $A111.7 million deal.

CGF – Challenger says total group assets and funds under management at 31 March 2014 was $49.5 billion, an increase of 21% on year and 1% for the quarter, while Challenger Life annuity sales for the March 2014 quarter increased of 29% on pcp and Retail annuity sales were up 35% on pcp.

FMG – Fortescue Metals Group the Pilbara iron ore miner has boosted its iron ore shipments by 15% in the March quarter and plans to boost production by 35 per cent over the next three months.

ILU – Iluka Resources the mineral sands miner has recorded a -19% drop in production and Q1 revenue down -6.6%.

TPM – TPG has been fined $400,000 for failing to provide access to emergency numbers for customers who had not paid bills.

Market Summary

ASX –open higher
US & UK/Europe – higher

US ADRs – Broadly higher!…

ANZ +1.4%, NAB +0.7%, NWS +0.7%
AWC +1.2%, BHP +1.4%, RIO +0.1%, NEM -0.4%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Ukraine Tensions Escalate While The US Focus On Earnings

April 16th, 20140

* US stock markets staged a rally in the afternoon session, to erase early losses, as corporate earnings trumped concern over the Ukraine.
* European stock markets have given back their gains for the year, due to the risk aversion, as military action escalates concerns over the Ukraine.
* Asian stock markets continued lower yesterday, due concerns over the slowing Chinese economy.
* Commodities prices eased, Gold prices fell to $US1,302, while crude-oil held above $US103. Copper slumped below the key crucial US3.0c level.

Australian share market finished higher up 0.5% at 5,388, despite stocks easing off their early afternoon highs. The Aussie dollar fell below after the release of RBA minutes, where there was no indication that rates are likely to rise any time soon. The RBA said there is now a “period of stability” and “the cash rate could remain at its current level for some time if the economy was to evolve broadly as expected”. The RBA noted that the Aussie Dollar is still historically high but on a trade weighted basis it remains around 12 per cent below its peak of a year ago. The Australian dollar eased and is trading around the US93.6c level.

The SPI 200 futures are up 0.2% at 5,386, giving a positive lead for the ASX market today. The 5400 level key near-term for the ASX200, as markets traded lower across Europe and rose in the US.

US Markets

US stock markets staged a rally in the afternoon session, to erase early losses, as corporate earnings trumped concern over the Ukraine.

The three benchmark indexes recovered from early losses to close up 0.5% for the session. Trading volumes were 10% above the monthly average as the corporate earnings season get underway. All ten S&P 500 sectors finished in the green, with gains again led by the Energy sector up 1.3%, closely followed by the Healthcare and Financials rose around 1%, while the Materials, Tech and Industrial sectors rose over 0.5% for the session.

The major indexes are trading around key levels with the S&P500, the Dow, the Nasdaq and the Russell 2000 indexes all exhibiting weakness with the 13 day moving averages crossing below the 100 day moving averages. Overnight the Nasdaq and the Russell found support at their 200 day moving averages but there is now plenty of overhead resistance. The rotation out of high beta and high multiple stocks into stocks with stable and consistent earnings profiles continues.

Nine S&P500 stocks reported today, with Yahoo and Intel beating estimate,while Johnson and Johnson report a 34% rise in profits and Coca Cola reported inline. There over 50 S&P500 stocks to report this week and analysts are predicting profits have fallen -0.9% in the first quarter (1Q), while sales are projected to have risen by 2.6%.

For the session Dow Jones closed up 0.5% at 16,262, the S&P500 closed up 0.7% at 1,842 and the NASDAQ closed up 0.3% at 4,034, while on 10-year Treasury notes eased back to 2.653%.

European Markets

European stock markets have given back their gains for the year, due to the risk aversion, as military action escalates concerns over the Ukraine.

The Europe Stoxx 600 fell -1%, with trading volumes were 10% above the monthly average. Across the region the miners led the falls down -1.5%, closely followed by the Tech, Discretionary, Industrials and Financials all down over -0.7%. The German market slumped nearly -2%, as investor confidence fell to 43.2 (down from 46.6) down for a fourth straight month. The London market fell on concerns over the Ukraine, with falls led by the miners.

The escalating geopolitical concerns has prompted the US and European leaders to consider further sanctions against Russia as armed separatists have occupied government buildings in the eastern part of the Ukraine.

For the session the German DAX 30 closed down -1.8% at 9,173, the UK the FTSE 100 closed down -0.6% at 6,541, the French CAC 40 closed down -0.9% at 4,345, while the Spanish market close down -0.8% at 10,103.

Asian Markets

Asian stock markets continued lower yesterday, due concerns over the slowing Chinese economy. The MSCI Pacific Index fell another -0.8% for the session, continuing to back off its highest level since October.

The Chinese and Hong Kong markets slumped after trader sentiment was weighed down by news that Chinese new credit plummeted -19% in March on year and growth in M2 money supply contracted to 12.1% (from 13.3%). Analysts expect GDP (due out today) to have increased around 7.3% in the first quarter. The Chinese central bank has been prompted to cut lenders’ reserve requirements for the first time in two years after recent 1Q data showed the Chinese economy is expanding at the slowest pace since the GFC. The Japanese market selling eased for a second session, after last week recording its worst week since June.

For the session the Shenzhen Composite closed down -1.7% at 2,229, the Hong Kong Hang Seng closed down -1.6% at 22,671, and the Japanese Nikkei was close up 0.6% at 13,996, while the South Korean KOSPI closed down -0.2% at 1,992.

Commodities

The Dollar Index was higher at 79.79 on a lower Euro, and the Aussie Dollar recovered towards four month highs at US93.6c. Commodities prices fell.

Overnight the COMEX WTI Crude for APR13 delivery closed up 0.1% at $US103.80, the COMEX Copper for APR13 delivery closed up 0.1% at 2.986, the COMEX Gold for APR13 delivery closed up 0.1% at $US1,302.60.

ASX News

ANZ – ANZ Bank says it is aiming to provide Australian companies easier access to Chinese government-controlled capital, under a widened agreement with the powerful China Development Bank.

BRL – Bathurst Resources says it needs an extra day to complete a discounted share placement raising funds to develop its controversial Escarpment open-cut coal mine on the Denniston Plateau near Westport.

CCL – Standard and Poor’s the ratings agency has downgraded Coca-Cola Amatil’s credit rating after the recent profit downgrade in earnings.

DJS – Independent expert Grant Samuel will provide an assessment of the proposed $2.15 billion takeover offer, taking into account the value of David Jones’s property portfolio, which is in the books at $612 million but could be worth between $650 million and $1 billion if the four CBD properties were redeveloped or air rights exploited.

IAG – Insurance Australia Group has reaffirmed its full year guidance for gross written
premium growth of 3% to 5%.

NUF – Nufarm the agricultural chemicals manufacturer will close its NZ manufacturing plant and shift regional production to Victoria.

OZL – OZ Minerals’ copper production in the first quarter of 2014 is in line with the previous quarter, while gold production fell.

RIO – Rio Tinto produced and shipped less iron ore during the first three months of 2014 after bad weather affected its ports and mining operations in WA.

WRT – Westfield the shopping centre group split of its Australian and NZ assets from its international operations has been backed by financial services firm KPMG.

Market Summary

ASX –open flat
US & UK/Europe – EU lower, US higher

US ADRs – Broadly lower!…

ANZ -0.8%, NAB -0.7%, NWS -0.7%
AWC -0.2%, BHP -1.6%, RIO -2.5%, NEM -2.3%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Bargain Hunters Step In After Solid Weekly Sell-off

April 15th, 20140

* US stock markets rebounded from their worst week since 2012, as the bulls went bargain hunting after better retail sales figures.
* European stock markets recovered after recording their worst weekly sell-off in a month, due to the risk aversion and growing concerns over the Ukraine.
* Asian stock markets continued lower yesterday, but expect some bargain hunting today.
* Commodities prices eased, Gold prices rose to $US1,327, while crude-oil held above $US103. Copper held above the key crucial 3.0c level.

The ASX200 index dropped -1.3% at 5358, yesterday. Beware the bull trap, as the Australian share market hit a 9-day today only days after hitting six year highs. Sellers were slow out of the gates but got more active as the day progressed, with the banks and the insurers giving way. Nickel stocks bucked the trend as teh metal price jumped, with western Areas and Mincor shares up over 5.3% for the session. The Australian dollar begins the week trading up around the US94.2c level.

The SPI 200 futures are up 0.5% at 5,370, giving a positive lead for the ASX market today. The 5390 level key near-term for the ASX200, as markets recovered across Europe and in the US.

temp
The tech-heavy Nasdaq finds supports at key level.

US Markets

US stock markets rebounded from their worst week since 2012, as the bulls went bargain hunting after better retail sales figures.

The three benchmark indexes recovered 0.8% for the session, as stocks pared their mid-session losses. Trading volumes were down ahead of the earnings season. All ten S&P 500 sectors finished rebounded, with gains led by the Energy sector up 1.4%, closely followed by the Materials, Financials, Tech and Discretionary sectors were all up over 0.8% for the session.

Trader sentiment was boosted by retail sales figures which increased in March by 1.1%. We are seeing a rotation out of high beta and high multiple stocks into stocks with stable and consistent earnings profiles.

There over 50 S&P500 stocks to report this week and analysts are predicting profits have fallen -0.9% in the first quarter (1Q), while sales are projected to have risen by 2.6%.

For the session Dow Jones close up 0.9% at 16,173, the S&P500 closed up 0.8% at 1,830 and the NASDAQ closed up 0.6% at 4,022, while on 10-year Treasury notes recovered to 2.65%.

European Markets

European stock markets recovered after recording their worst weekly sell-off in a month, due to the risk aversion and growing concerns over the Ukraine.

The Europe Stoxx 600 recovered 0.4%, paring early losses. Across the region the miners led the rebound up 1.9%, the Energy sector also finished higher up 0.3%. The German market recovered and is still trading near all-time highs, having risen for thirteen sessions in the past eighteen. The London market recovered from its worst weekly fall in a month as the miners and consumer staples stocks found support late in the session.

In economic news eurozone data showed industrial production rose 0.2% in february in line with expectations. The geopolitical concerns are escalating prompting Europeans leaders to consider further sanctions against Russia as armed separatists have occupied government buildings in the eastern part of the Ukraine.

For the session the German DAX 30 closed up 0.3% at 9,339, the UK the FTSE 100 closed up 0.3% at 6,583, the French CAC 40 closed up 0.4% at 4,384, while the Spanish market close down -0.2% at 10,188.

Asian Markets

Asian stock markets continued lower yesterday, but expect some bargain hunting today. The MSCI Pacific Index fell another -0.4% for the session, as five stocks fell for every gainer, continuing to back off its highest level since October.

The Chinese markets held on to last week’s gains of 3.5%, as trader sentiment was boosted by recent news that China will introduce stimulus reforms. The Chinese central bank has been prompted to cut lenders’ reserve requirements for the first time in two years after recent 1Q data showed the Chinese economy is expanding at the slowest pace since the GFC.

The Japanese market selling eased after being down over -6% last week and was the worst performing developed market, recording its worst week since June. The selling is equities is due to a resurgent yen and the new sales tax regime. The Hong Kong market resumed its nine session winning streak.

For the session the Shenzhen Composite closed down -0.1% at 2,268, the Hong Kong Hang Seng closed up 0.2% at 23,038, and the Japanese Nikkei was close down -0.4% at 13,910, while the South Korean KOSPI closed down -0.4% at 1,997.

Commodities

The Dollar Index was higher at 79.75 on a lower Euro, and the Aussie Dollar recovered towards four month highs at US94.2c. Commodities prices eased.

Overnight the COMEX WTI Crude for APR13 delivery closed down -0.5% at $US103.50, the COMEX Copper for APR13 delivery closed down -0.5% at 3.021, the COMEX Gold for APR13 delivery closed up 0.1% at $US1,327.70.

ASX News

ANZ – ANZ Bank says it is aiming to provide Australian companies easier access to Chinese government-controlled capital, under a widened agreement with the powerful China Development Bank.

API – Australian Pharmaceutical Industries the drugs wholesaler and pharmacies operator is in a trading halt ahead of an announcement by the company on the carrying value of its assets.

BBL – Bathurst Resources, which has cut jobs and delayed the start to its controversial Escarpment open-cut coal mine on New Zealand’s Denniston Plateau, may raise up to $A6.41 million in a discounted share placement.

CCL – Coca-Cola Amatil slumped -7% after Goldman Sachs gave a brutal assessment of the outlook for the stock following its recent 15% profit warning. Coca Cola Amatil’s credit rating has been cut from A- to BBB+ by Standard & Poor’s, which is slap in the face for a compnay that has had credit that has always been one of the local market’s strongest names.

QBE – QBE the insurer says it is exploring options for a potential sale of all or part of the middle market business which represents around $US900 million of gross written premium, mainly in property and casualty insurance. Share have hit a seven week low.

WOW – The Federal Court has ruled Woolworths shopper dockets breached deal with competition regulator.

WRT – Westfield the shopping centre group split of its Australian and NZ assets from its international operations has been backed by financial services firm KPMG.

Market Summary

ASX –open higher
US & UK/Europe – higher

US ADRs – Broadly higher!…

ANZ -0.4%, NAB -0.2%, NWS +0.9%
AWC +2.1%, BHP +1.2%, RIO +2.1%, NEM +0.7%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Stock Markets Extend Their Retreat From Recent Highs

April 14th, 20140

* US stock markets recorded their worst week since 2012, despite edging higher early in the session, the selling was led by the tech heavy Nasdaq, as the bears took advantage of the recent jump in stock prices.
* European stock markets recorded their worst weekly sell-off in a month, due to the negative lead from the US and growing concerns over the Ukraine.
* Asian stock markets finished the week lower, capping two weeks of gains, as we saw profit taking after weakness in the US and disappointing Chinese data.
* Commodities prices rose, Gold prices rose to $US1,32, while crude-oil held above $US103. Copper held above the key crucial 3.0c level.

The ASX market hit new six year highs last week, as the bulls took control, but we are seeing profit taking Friday and the ASX200 finished flat for the week. The miners had a great start to the week on the back of rising commodity prices, the retailers got a shot in the arm after the announcement of a takeover bid for David Jones, at a 25% premium and the banks are drifting higher ahead of their reporting and dividend season.

The ASX200 market saw some solid selling Friday but found support just above the 5400 level (after hitting 5500 in the prior session). The 5400 level key near-term for the ASX200, as markets across Europe and in the US are backing off key levels. The Australian dollar begins the week trading up around the US93.8c level. Key levels for the ASX200 index this week are around 5360 and 5480, with 5420 the key near term pivot level.

The SPI 200 futures are down -0.3% at 5,406, giving a negative lead for the ASX market today. The 5400 level key near-term for the ASX200, as markets sold down across Europe and fell sharply in the US.

The US dollar Index is approaching key levels in the near-term. US dollar weakness has been fuelling the recent strength in the equities markets, but it is approaching a key support level, so it and the US Nasdaq are keys to monitor this week as the S&P500 earnings season gets underway.

US Markets

US stock markets recorded their worst week since 2012, despite edging higher early, the selling was led by the tech heavy Nasdaq, as the bears took advantage of the recent jump in stock prices. For the week Dow Jones closed down -2.4%, the S&P500 closed down -2.6% and the NASDAQ and Russell 2000 closed down over -3.1% for the week.

The three benchmark indexes fell over -1.0% for the session, with the tech-heavy Nasdaq plunging over -1.3%. The S&P500 is now down over -4% from its April peak. All ten S&P 500 sectors finished solidly lower again, with falls led by the Materials, Financials, Tech and Discretionary sectors were all down over -1.2% for the session. The Biotech stocks continued their falls down -4.5% for the week and Social Media stocks continued weaker. For the week the Financials and the Healthcare sectors were the worst performers down over -4%. For the year to date the Utilities sector has outperformed up 9.9% as investors use dividends as a margin of safety, but as a consequence it is now the third most expensive sector in the S&P500.

In earnings the financial stocks began reporting on Friday with JP Morgan disappointing and Wells Fargo showing the US domestic economy is still growing. There over 50 S&P500 stocks to report this week.

For the session Dow Jones close down -0.9% at 16,027, the S&P500 closed down -0.9% at 1,815 and the NASDAQ closed down -1.3% at 3,999, while on 10-year Treasury notes slumped to 2.62%.

European Markets

European stock markets recorded their worst weekly sell-off in a month, due to the negative lead from the US and growing concerns over the Ukraine. However these markets are still only around -3% from their six year highs.

The Europe Stoxx 600 down another -1.4%, continuing the weakness. The index is down -3.1% for the week, recording its first weekly loss in a month.

For the week the German DAX 30 closed down -3.9%, the UK the FTSE 100 closed down -2.0%, the French CAC 40 closed down -2.7%, while the Spanish market close down -4.4%. Across the region the there was broad based profit taking with the losses led by the Travel, Banks, Retails Tech and Insurance sectors all down over -4.1% for the week, with the rest of the sectors down around -2.3%.

The German market backed off sharply from near all-time highs, having risen for twelve sessions in the past sixteen. The London market backed off three week highs, for its worst weekly fall in a month as the financials and discretionary stocks saw profit taking due to concerns over valuations. Last week the BoE left interest rates on hold at record lows at 0.5% and kept asset purchase at GBP375 billion.

For the session the German DAX 30 closed down -1.5% at 9,315, the UK the FTSE 100 closed down -1.2% at 6,651, the French CAC 40 closed down -1.1% at 4,365, while the Spanish market close down -1.3% at 10,205.

Asian Markets

Asian stock markets finished the week lower, capping two weeks of gains, as we saw profit taking after weakness in the US and disappointing Chinese data.

The MSCI Pacific Index fell -1.0% for the week, backing off its highest level since October.
Across the region six of the ten sectors finished in the red, with the Tech and Telecom sectors the worst performers, down over -1.2% and -2.1% respectively.

The Chinese markets bucked the global trend and finished up 3.5% fore the week, as trader sentiment was boosted by recent news that China will introduce stimulus reforms. However the Chinese Customs Administration has reported that imports slumped -11% in March on year, well below the expected 3.9% gain, while exports contracted -6.6% in March, short analysts estimates of a gain of 4.8%.

The Japanese market was down over -6.3% for the week and was the worst performing developed market, recording its worst week since June, with selling due to a resurgent yen and the new sales tax regime. The Hong Kong market fell snapping a nine session winning streak.

For the session the Shenzhen Composite closed down -0.1 at 2,270, the Hong Kong Hang Seng closed down -0.8% at 23,003, and the Japanese Nikkei was close down -2.4% at 13,960, while the South Korean KOSPI closed down -0.4% at 1,997.

Commodities

The Dollar Index was higher at 79.45 on a lower Euro, and the Aussie Dollar surged to new four month highs at US93.8c. Commodities prices higher.

Overnight the COMEX WTI Crude for APR13 delivery closed up 0.1% at $US103.60, the COMEX Copper for APR13 delivery closed up 0.1% at 3.044, the COMEX Gold for APR13 delivery closed up 0.3% at $US1,322.60.

ASX News

BOQ – Bank of Queensland has increased its 1H14 cash earnings by 17 percent to $140.2 million.

CCL – Coca Cola Amatil (CCA) announced a 15 percent decline in its first half earnings due to weakness in its Australian operations and increasing cost pressures in Indonesia.

EGP – Echo Entertainment Group’s chief executive Matt Bekier has started his new job with the casino operator as it announces a rise in revenue.

IRON_ORE – Iron ore majors BHP, RIO, and FMG saw further profit taking Friday.

QHL – Quickstep the Sydney-based manufacturer has sexured a $US139 million deal to supply carbon fibre components for the F-35 Lightning II Joint Strike Fighter (JSF) aircraft.

LEI – The Foreign Investment Review Board (FIRB) will not stand in the way of German-based Hochtief’s $1.2 billion bid to increase its stake in construction giant, Leighton Holdings.

WOR – WorleyParsons the global engineering group will cut more jobs in a new restructure that will hit this year’s bottom line by $35 million.

Market Summary

ASX –open lower
US & UK/Europe – lower for the week

US ADRs – Broadly lower!…

ANZ -0.6%, NAB +0.1%, NWS -1.3%
AWC +0.6%, BHP -0.2%, RIO -1.0%, NEM -2.3%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Weekly Market Wrap: Nervous Week For The Bulls As Bears Take Profit

April 11th, 20140

Weekly Market Wrap

The bulls have been nervous this week, as markets pushed to new highs. We saw profit takers step in late in the week even as central banks across the globe remain accommodative. The bulls were impressed by the US Fed clarification over impending interest rate levels in the near-term and commodity prices continued higher as the US dollar continued to weakness against currencies across the globe. The Ukrainian geopolitical crisis took a back seat to developments from the central banks and data out of China. The tech heavy Nasdaq market seems to be the “canary in the coal mine” and is leading any weakness in global markets.

US stock markets were sold down after the monthly employment data failed to impress. The three benchmark indexes are all backing off new highs, with the tech-heavy Nasdaq leading any selling and is down nearly -8% from its march highs, as the Biotech and Social Media stocks have been carted in recent weeks. We are seeing sector rotation in the US, where companies with earnings tied to economic growth are being bought up, as traders take profits on the high multiple stocks ahead of the upcoming earnings season. The key news this week has been the Fed release of its March meeting minutes where officials removed the link between the benchmark interest rate and the threshold unemployment figure, clarifying the prospect of low interest rates for the foreseeable future. In earnings the financial stocks begin reporting with JP Morgan and Wells Fargo due out tonight and the season gets underway next week.

European stock markets have eased back from multi-year highs. The Europe Stoxx 600 has pared its recent gains, but is still up 1.7% for the year. Traders chose caution as Ukrainian forces were sent to its eastern regions after Russian protestors seized a number of government buildings. Any weakness has come in the absence of any new economic news and despite the ECB leaving rates at 0.25% a record low as expected and the ECB President Draghi reaffirming that the ECB is ready to act if necessary to safeguard the eurozone economy. Late in the week we saw profit taking on the back of disappointing Chinese trade figures, but these markets are still only around -2% from their six year highs. The German market backed off near all-time highs and looks to be faltering around current levels. The London market held around three week highs, as the BoE left interest rates on hold at record lows at 0.5% and kept asset purchase at GBP375 billion.

Asian stock markets have bounced off key levels in recent weeks with Chinese and Hong Kong markets rising for the past few weeks, as across the region investors have pushed stocks and have been rewarded for speculating that the recent data would trigger a new round of stimulus for China. The Chinese markets have built on early session gains as trader sentiment was boosted by recent news that China will introduce some mini-stimulus reforms. However we are seeing some profit taking today as the Chinese Customs Administration has reported that imports slumped -11% in March on year, well below the expected 3.9% gain, and the Premier stated that there is unlikely to be further major stimulus in the near-term. The exception has been the Japanese market which has slumped to the lowest level since early February as investors positioned themselves cautiously as they adjust to a resurgent yen, the April sales tax increases and the BoJ left its monetary base target of between YEN60-YEN70 trillion yen, not adding further stimulus.

The ASX market hit new six year highs this week, as the bulls took control, but we are seeing profit taking today. The miners have had a great week on the back of rising commodity prices, the retailers got a shot in the arm after the announcement of a takeover bid for David Jones, at a 25% premium and the banks are drifting higher ahead of their reporting and dividend season.

The ASX200 market is seeing some solid selling today and is trying to find support above the 5400 level (after hitting 5500 yesterday). The 5420 level key near-term for the ASX200, as markets across Europe and in the US are backing off key levels. The Australian dollar has had a great week and is holding up around the US94c level. The primary focus this week has again been around the iron ore, gold and copper prices, as we saw strength through keys levels. Crude Oil is is up around the $US103 level. Copper has recovered above the key crucial US3.0c level, while the Gold price is back up around the $US1,320 level.

In today’s Analyst’s Eye article we discuss the Dividend Capture Collar In Your Super, where we show you how to hold on to your bank stocks for the upcoming dividends, while limiting your downside risk. The Dividend Capture Covered Call Collar – is ideal for participating in future gains and picking up the dividend, while being protected on the downside.

XJO Daily Chart

The Australian share is market looking to finish flat for the week, paring back its substantial earlier gains. Key levels for the ASX200 index next week are around 5380 and 5500, with 5440 the key near term pivot level. Note volatility has picked up this week as the market has searched for direction. The ASX Sectors are finishing the week modestly higher.

Those investors that took yesterday’s opportunity to establish some protection or to do some stock replacement, in order to either insure that they hold on to their recent gains are being rewarded.
Remain attuned to the news from overseas, particularly from the eurozone (Greece/Ukraine), China (stimulus) and the US (Fed). Monitor the US dollar for a guide to the future direction of commodities and equities prices.

Contact me at D2MX Advisory on 1300 610 024 and we can help you trade, using a number of strategies that will give you the tools to navigate this market and help you improve your returns on investment.

Michael Hevern
Investment Adviser D2MX Advisory

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

Dividend Capture Collar in Your SMSF – Part 18 of Super Strategies

April 11th, 20140

Part 18 of Super Strategies for Self-Managed Super Funds

We highlighted last week that the dividend season cycle is one of the more reliable market cycles and discussed the risks of chasing yield given the strong run the banks have had recently.

Today we show you how to hold on to your bank stocks for the upcoming dividends, while limiting your downside risk. The equities markets continue to trade higher, hitting six year highs this week. The Dividend Capture Covered Call Collar – is ideal for participating in future gains and picking up the dividend, while being protected on the downside.

Dividend Capture Covered Call Collar Strategy

The Dividend Capture Covered Call Collar, is an options trading strategy that investors can use to protect an existing position that has recently surged into a key resistance level and is about to pay a dividend. Rather than simply taking profits on the share position and potentially missing out on the dividend and future upside, the investor enters into a Dividend Capture Covered Call Collar. This options trading strategy seeks to protect your existing share position while still participating in some of the upside, including the dividend, for a modest outlay.

If you are of the opinion that a stock is likely to run into key resistance and the share has little chance of breaking that key resistance level, but you still want to hold on to it for the dividend, or because you do not want to realise capital gains, you could use a Dividend Capture Covered Call Collar options strategy. This strategy is similar to the protective put options strategy in that you also buy put options as protection. The difference is that you will now finance all or part the purchase of those put options with the proceeds from writing an equal number of out of the money call options.

The position will still protect you from losses below the strike price of the put options at minimal cost to yourself, but it will stop the position from profiting beyond the strike price of the short call options should the stock stage a rally and you could miss out on the dividend if this rally happens before the Ex-dividend date. That is you would miss out on a strong rally in exchange for putting on the protection of the put options for free (apart from commissions of course).

ANZ Bank Ex-Dividend Performance

ANZ has a tendency to sell-off between 12% to 17% after going Ex-dividend as seen in the chart below.

ANZ Performance
CHART 11: ANZ performance after paying dividend.

Recent Trade – ANZ Bank – Dividend Protection

Here is a recent trade we recommended for holders of ANZ, in order to protect their downside and to collect the upcoming dividend. ANZ has had a spectacular run since bottoming in early February, around the $30.00 level and is now trading above its November highs.

The ANZ share price is now trading around $34.20 and has now been trading higher for the past eight weeks. If you wanted to hold on to your ANZ stock for the dividend, (ANZ goes Ex-div around $0.75 on 9th May), then you could take advantage of this Dividend Capture collar strategy.

This trade is intended to capture to the dividend and the share price which is expected to meet resistance in the near-term.

So with ANZ trading at $34.17, we you could buy protection at $33.50 by buying 3350 JUN14 Put for $0.82 and simultaneously write the 3501 JUN14 Calls for $0.24. This trade cost 58 cents but we are now protected until June expiry down below $33.50 and profits will be capped at $35.01 if the stock price trades above that level at June expiry. Note the 3501 Call option is an European option and there cannot be exercised until expiry.

ANZ Dividend Capture Covered Call Collar Trade
CHART 12: ANZ Dividend Capture Covered Call Collar Trade

Note ANZ tends to oscillate around the 13 week moving average and the stock is now trading at the upper band of its trading range, as seen on the chart.

Assuming you picked up ANZ in the past twelve months around $30.00, either since the February bottom or mid last year for the November dividend, the payoff diagram for the Dividend Capture Covered Call Collar strategy is as follows:

Payoff Diagram
CHART 13: The payoff diagram for the ANZ Dividend Capture Covered Call Collar Trade (assuming share cost of $30.00) and 3501 JUN14 Call/ 3350 JUN14 Put Collar

Trade Note

It is early days for this trade but ANZ trading is up 14% from its recent swing low and we are out laying 2% of the share price to have a protected position capped at $35.01. ANZ is trading at the all time highs again and only time will tell where the share price will end up at expiry, but we are protected until June expiry below $33.50, but profits will be capped at $35.01.

The Trade

Options can be used in order to reduce your risk while still participating in potential profits from a significant move by the underlying stock. We have explained the Dividend Capture Covered Call Collar strategy that can be used in your super fund, allowing you to participate is some of the future gains up to the sold strike price and the dividend (plus franking credits), while being protected by the put position.

In future articles we will talk about the High Yield Covered Call strategy and the Covered Call Stock Reversal strategy which may be particularly relevant to this market.

If you want to take advantage of the bank dividend season, then we have a number of strategies that can boost your yield and returns. Call 1300 610 024 or email advisory@d2mx.com.au.

Michael Hevern
Investment Adviser – D2MX Advisor

Also in this series:

Part 1: Boosting Dividend Yield in Your Self-Managed Super Fund (SMSF)
Part 2: Compounding in Your Self-Managed Super Fund
Part 3: Post-Election Investment Opportunities
Part 4: Simple Breakout Finder for Your Self Managed Super Fund
Part 5: Simple Trade Signal Setups for Your SMSF
Part 6: Protecting Your Self Managed Super Fund
Part 7: Investing For Profit in Your Self-Managed Super Fund
Part 8: Tracking Profits in Your Self-Managed Super Fund
Part 9: Investing in Dividends in Your Self-Managed Super Fund
Part 10: Franking Credits in Your Self-Managed Super Fund
Part 11: Accumulating Dividends in Your Self-Managed Super Fund
Part 12: Margin of Safety and Dividends in Your Self-Managed Super Fund (SMSF)
Part 13: Boosting Dividends Using Capped Instalment Warrants in Your SMSF
Part 14: Protecting Hard Fought Gains in Your SMSF
Part 15: Yielding Results for Your Super Fund Investing
Part 16: Staying On The Right Side of the Market in Your Super Fund Investing
Part 17: Profiting From The Downside In Your Super

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.


Stock Market Analysis: Asian Traders Brace For Profit Taking

April 11th, 20140

* US stock markets plunged overnight led by the tech heavy Nasdaq, as the bears took advantage of the recent jump in stock prices.
* European stock markets sold down on the back of disappointing Chinese trade figures, but these markets are still only just around -2% from their six year highs.
* Asian stock markets rose to new five month highs, as commodity prices continued to rise yesterday, but expect profit taking today.
* Commodities prices eased, Gold prices rose to $US1,318, while crude-oil held around $US103. Copper held above the key crucial 3.0c level.

The Australian share market closed up 0.3% at 5480, near six year highs, on the back of the recovery in the US and European markets. Trader sentiment was boosted by official data that showed an unexpected fall in the Australian unemployment rate, but the miners eased after Chinese trade data showed the trade surplus expanded more than forecast in March. The Banks were broadly stronger, and the bigs miners eased back from their recent highs, while the retail stocks finished mostly higher.

The SPI 200 futures are down -0.9 at 5,425, giving a negative lead for the ASX market today. The 5430 level key near-term for the ASX200, as markets sold down across Europe and fell sharply in the US. The Australian dollar rose to US94.1c. Locally the Employment report surprised with the unemployment rate of 5.8% well below the 6.1% expected and the Chinese trade figures disappointed.

temp
The US dollar Index is approaching key levels in the near-term. US dollar weakness has been fuelling the recent strength in the equities markets, but as can be seen above the US dollar is approaching a key support level.

US Markets

US stock markets plunged overnight led by the tech heavy Nasdaq, as the bears took advantage of the recent jump in stock prices.

The three benchmark indexes slumped over -1.6% for the session, with the tech-heavy Nasdaq plunging over -3%. The S&P500 is now down over -3% from its April peak. All ten S&P 500 sectors finished solidly lower, with falls led by the Healthcare sector down -3.3%, as the Boiotech stocks resumed their falls and Social Media stocks continued weaker. The Materials, Financials, Tech and Discretionary sectors were all down over -2.1% for the session.

In economic news the US ADP Labour data show jobless claims fell by 300,000 last week and the Fed released in March meeting minutes where officials removed the link between the benchmark interest rate and the threshold unemployment figure, clarifying the prospect of low interest rates for the foreseeable future.

In earnings the financial stocks begin reporting with JP Morgan and Wells Fargo due out tonight.

For the session Dow Jones close down -1.6% at 16,170, the S&P500 closed down -2.1% at 1,833 and the NASDAQ closed down -3.1% at 4,054, while on 10-year Treasury notes slumped to 2.65%.

European Markets

European stock markets sold down on the back of disappointing Chinese trade figures, but these markets are still only around -2% from their six year highs.

The Europe Stoxx 600 down -0.5%, resuming the weakness. The index is still up 1.7% for the year. Across the region the there was broad based profit taking with the losses led by the Communications and Tech sector down over -1.6%, the Industrials and Utilities sectors fell around -0.3%, while thereat of the sectors were down modestly.

The German market backed off near all-time highs, having risen for twelve sessions in the past sixteen. The London market held around three week highs, as the miners and discretionary stock held on to gains. The BoE left interest rates on hold at record lows at 0.5% and kept asset purchase at GBP375 billion.

For the session the German DAX 30 closed down -0.5% at 9,454, the UK the FTSE 100 closed up 0.1% at 6,641, the French CAC 40 closed down -07% at 4,413, while the Spanish market close down -1.4% at 10,336.

Asian Markets

Asian stock markets rose to new five month highs, as commodity prices continued to rise yesterday, but expect profit taking today.

The MSCI Pacific Index rose another 0.6%, to its highest level since October. Across the region investors have pushed stocks higher for the past couple of weeks as they have been rewarded for speculating that the recent data would trigger a new round of stimulus for China, however we expect to see some profit taking today.

The Chinese markets built on prior session gains as trader sentiment was boosted by recent news that China will introduce stimulus reforms. However the Chinese Customs Administration has reported that imports slumped -11% in March on year, well below the expected 3.9% gain.

The Japanese market halted its sell off as traders adjust to a resurgent yen and the new sales tax regime. The Hong Kong market continued higher, rising for a ninth straight session.

For the session the Shenzhen Composite closed up 1.6% at 2,273, the Hong Kong Hang Seng closed up 1.5% at 22,186, and the Japanese Nikkei was close up 0.1% at 14,300, while the South Korean KOSPI closed up 0.5% at 2,006.

Commodities

The Dollar Index was down at 79.41 on a higher Euro, and the Aussie Dollar surged to new four month highs at US94.1c. Commodities prices eased.

Overnight the COMEX WTI Crude for APR13 delivery closed down -0.2% at $US103.40, the COMEX Copper for APR13 delivery closed up 0.3% at 3.045, the COMEX Gold for APR13 delivery closed down -0.1% at $US1,317.80.

ASX News

DJS – David Jones shares continued to rise after the retailer received a $2.15 billion takeover offer from South Africa’s Woolworths worth $4/share.

IRON_ORE – Iron ore majors BHP, RIO, and FMG saw profit taking late yesterday.

QHL – Quickstep the Sydney-based manufacturer has sexured a $US139 million deal to supply carbon fibre components for the F-35 Lightning II Joint Strike Fighter (JSF) aircraft.

TCL – The upgrade of Sydney’s major Hills M2 toll road contributed to a near 13 percent jump in Transurban’s quarterly revenue.

TEN – Ten Network Holdings has posted an $8 million first half loss, a huge improvement on the $243 million loss it suffered 12 months ago.

WOR – WorleyParsons the global engineering group will cut more jobs in a new restructure that will hit this year’s bottom line by $35 million.

Market Summary

ASX –open lower
US & UK/Europe – lower

US ADRs – Broadly lower!…

ANZ -0.9%, NAB -1.0%, NWS -2.0%
AWC -1.1%, BHP -2.6%, RIO -0.3%, NEM -0.8%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.

Stock Market Analysis: Accommodative Central Banks & M&A Activity Fuel Markets Higher

April 10th, 20140

* US stock markets jump after the the Fed clarified its stance on when interest rates are likely to rise. Tech stocks saw bargain hunters push higher for their biggest gain in two months.
* European stock markets recovered overnight and is still only just over -1% from their six year highs.
* Asian stock markets rose to five month highs, as commodity prices continued to rise; Japan was the exception.
* Commodities prices higher, Gold prices eased to $US1,306, while crude-oil rose to around $US103. Copper held above the key crucial 3.0c level.

The Australian share market closed up 1% at 5,463, a new five and a half year high yesterday, after hitting its highest level since June 2008 intraday. There were gains across the board, particularly in the retail sector after David Jones shares surged 23% after the retailer received a $2.15 billion takeover bid from South African retailer Woolworths. Around 60% of the ASX200 companies are trading above their 50 day moving average; this level reached over 70% back at the March highs. Commodities were again in focus after spot iron ore prices rose to the highest since February as Chinese mills restocked on the back of impending stuimulus reforms. Iron ore is up 13% from its 17-month March lows at $US118.

The SPI 200 futures are up 0.7% at 5,504, giving another positive lead for the ASX market today. The 5480 level key near-term for the ASX200, as markets recovered across Europe and continued higher in the US. The Australian dollar rose to US93.8c. Locally the Employment report is due out today with the unemployment rate expected to edge higher to 6.1%, and the Chinese trade figures are due out today.

temp
The Chinese market has bounced off recent support levels with the 2150 the key level near-term.

US Markets

US stock markets jump after the the Fed clarified its stance on when interest rates are likely to rise. Tech stocks saw bargain hunters push higher for their biggest gain in two months.

The three benchmark indexes jumped over 1.1% for the session, with the tech-heavy Nasdaq surging 1.7%. Trading volumes were 10% below the monthly average.

Eight of the ten S&P 500 sectors finished higher with the Healthcare sector surging 2.1%, closely followed by the Materials, Industrails, Tech and Discretionary sectors were all over 1.3% higher. Biotech and Social Media stocks which have suffered the brunt of the recent selling led the gains. Sector rotation is being employed in the US, since the beginning of March, where companies with earnings tied to economic growth are being accumulated.

In economic news The Fed released if March meeting minutes where officials removed the link between the benchmark interest rate and the threshold unemployment figure. The IMF forecasts US to grow 2.8% this year and 3% in 2015, as GDP in the US grew 1.9% last year.

For the session Dow Jones close up 1.1% at 16,437, the S&P500 closed up 1.1% at 1,872 and the NASDAQ closed up 1.7% at 4,183, while on 10-year Treasury notes held at 2.69%.

European Markets

European stock markets recovered overnight and are still only just around -1% from their six year highs.

The Europe Stoxx 600 rose 0.4%, recovering from its first consecutive losing sessions in over three weeks. The index is now up 2.1% for the year. Trading volumes were 17% below the monthly average.

Traders put aside concerns over Ukrainian forces being sent to its eastern regions after Russian protestors seized a number of government buildings. Across the region the Tech sector surged 2.8% on the back of bargain hunting, Discretionary and Communications sectors also led gains up over 1.3%, with the automobile makers delivered solid gains, as they were upgraded on the back of a potential recovery in Europe and cheap valuation metrics.

The German market recovered to near all-time highs, having risen for twelve sessions in the past fifteen.  The London market rebounded towards three week highs, and is still only -3.4% off fourteen year highs, as the miners continued to recover.

For the session the German DAX 30 closed up 0.2% at 9,506, the UK the FTSE 100 closed up 0.7% at 6,635, the French CAC 40 closed up 0.4% at 4,442, while the Spanish market close up 0.1% at 10,485.

Asian Markets

Asian stock markets rose to five month highs, as commodity prices continued to rise. Japan was the exception as they adjust to a resurgent yen and the new sales tax regime.

The MSCI Pacific Index rose 1.0%, to its highest level since October, with two shares gaining for every loser. Across the region investors have pushed stocks higher for the past couple of weeks as they have been rewarded for speculating that the recent data would trigger a new round of stimulus for China, in the near-term.

The Chinese markets held on to the prior session gains as trader sentiment was boosted by recent news that China will introduce reforms including economic stimulus plans as it targets the 7.5% growth, including railway and infrastructure spending and tax relief to support the economy and to create jobs. Chinese trade figures are due out today.

The Japanese market gave back another -2% as the yen rose for a fourth day, after the BoJ kept its stimulus on a level key, reaffirming its monetary base target of between YEN60-YEN70 trillion yen. The nation’s sales tax rose to 8% (up from 5%) from 1 April. The Hong Kong market continued higher, rising for a eighth straight session.

For the session the Shenzhen Composite closed up 0.1% at 2,238, the Hong Kong Hang Seng closed up 1.1% at 22,843, and the Japanese Nikkei was closed down -2.1% at 14,299, while the South Korean KOSPI closed up 0.3% at 1,999.

Commodities

The Dollar Index was down at 79.52 on a higher Euro, and the Aussie Dollar surged to new four month highs at US93.8c. Commodities prices higher.

Overnight the COMEX WTI Crude for APR13 delivery closed up 1.0% at $US103.60, the COMEX Copper for APR13 delivery closed down -0.5% at 3.037, the COMEX Gold for APR13 delivery closed up 0.1% at $US1,305.90.

ASX News

AWC – Alumina’s aluminium producing parent Alcoa lost $US178 million in 1Q14, as revenue fell on lower aluminium prices. However profit beat expectations after excluding charges to idle capacity at aluminum smelters and mills.

BDR – Beadell Resources the gold miner, announced it is restarting its Duckhead mine.

CAB – Cabcharge the taxi payments company, shares fell as a change to surcharges in NSW is set to cut its income by $14 million.

DJS – David Jones has recommended its shareholders accept a $2.15 billion takeover offer from South African retailer Woolworths, ie. $4/share bid (a 25% premium).

RIO – Rio Tinto has gifted its stake in one of the world’s largest copper mine to two charities.

TWE – New CEO of Treasury Wine, Michael Clarke, says he has no emotional attachment to any part of the business except for the top luxury brand, Penfolds.

TCL – The ACCC competition watchdog will not oppose toll road owner Transurban’s proposed purchase of several government-owned Brisbane roads.

WOR – WorleyParsons the global engineering group will cut more jobs in a new restructure that will hit this year’s bottom line by $35 million.

WRT – Westfield Group has secured $22 billion in funding for its plans to split its Australian and NZ operations from its international business.

Market Summary

ASX –open higher
US & UK/Europe – higher

US ADRs – Broadly higher!…

ANZ +2.1%, NAB +1.2%, NWS -1.0%
AWC +2.8%, BHP +1.3%, RIO -0.3%, NEM 0.2%

By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email advisory@d2mx.com.au.