Presented by Michael Hevern
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Good Morning and Welcome to Cube Wrap for Thursday 23rd of October. I am Michael Hevern for Cube Financial.
The information provided within this presentation is general advice only and you should consult the services of a financial professional in order to ascertain whether the information is applicable to your investment strategies and risk profile. Again, it is general advice only.
Well, the DOW suffered overnight as we saw yesterday it was pushing its head up against that downtrend line on the inter-day today chart there, the chart we have there and it closed in the lower range of its trading range went through around about 650 point trading range for the day and began another triple digit move 26 days out of 28 that we seen that SP500 is approaching 5 year lows and some pundits are saying that it may find support around these levels. It continued earnings this week with 10% of DOW components 25% of the SP500 components reporting. We saw disappointing profits and outlooks from a range of companies, among them bowing and merk fell 7.5% and AT&T slid 7.6%, Merk and Co fell 6.5% and they slashed 12% of their workforce. Wachovia had a big number there with third quarter loss of 24 billion dollars and that company stock was down 6% on the back of that and also Wells Fargo the company that is looking to purchase, Wachovia was down 4% on the back of that news. We saw energy stocks down as well with the oil price with Exxon down 10% and ConocoPhillips also down 9% on the session. Energy stocks index lead 10.5% overall. We also saw the gold stocks index down 17% on the session. We saw Newmont down 14% on the back of the weaker gold price and Exxon and Chevron were also down between 8% and 9.5% respectively. We also saw BHP and RIO, ADRs down overnight in the US around about 14% on the session and Alumina 5% on the session. Chicago Mercantile Exchange was also down 7.5% on the session, so no good news there across the board. A couple of stocks did not go down as much as the others, ResMed, which went down 1.4% and James Hardy which retraced 2.3% on the session.
On the NASDAQ, we also saw that pullback significantly. This is the daily chart here. We are testing the 2003 lows. Apple recovered from its report of improved profits after market of the previous session and it was up 5.8% while many of the other NASDAQ stocks were down, Microsoft down 7.8% and Cisco down 2.5% on the session.
In the UK, we saw that market was down as well. Again, see today’s chart, I think it is 30 minute chart. You can see that it is testing the yesterdays, nudging up against that downtrend line and it is obviously retraced from that level, down 4.5% on the session and testing 2003 levels again. It was pretty broad-based sell off in the UK. We saw commodities, banks and retailers all down on the back of slowing economy. BP, Shell, Cairn Energy were all down around about 5% on the session; RIO, BHP, Xstrata all down between 7% and 15%. Xstrata down 14% after it said that it was not interested in taking stake in Xstrata. Banks were also down with Barclays, Royal Bank of Scotland and hPlus all down between 1.3% and 14% on the session and elsewhere in Europe we also saw sell off in the German and French market both being down between 4.5% and 5% respectively.
In the Asian markets, we saw sell off there. The year on year market in the Japanese market was down this time, down 7% testing the 2003 lows again on the back of slowing growth going forward. Also strengthening Yen is impacting on the exporters over there. Banks were down. Mitsubishi was down 9% on the session. Mizuho and Sumitomo Mitsui have cut their earnings outlook going forward and exporters did buy a rising Yen with the Yen at a multiyear high against the Euro and also against the US dollar. Sony was down 9%, Canon down 6% on the session. Mitsubishi Corp the largest trading hazels have lost 9% on the session. Elsewhere in Asia, we saw Hong Kong down 5.2% and Chinese Market down 3% on the session.
In the commodities, oil stocks sold off expecting the US dollar was the general story there, but gold was sold off significantly up and down and finishing at $735 while we saw oil down significantly as well 6% on the session, down to 67 dollars testing that downtrend line yet again and we are trying to see if we can bounce off that level yet again. We do have open meeting towards the end of this week, but that does not seem to be helping the oil price at the moment.
Elsewhere in the commodities, we saw silver down 6%, copper down 7.5%, lead down 7%, and zinc down 2% and aluminum down 3.4% while nickel was down 6.7%. The commodities in general were down around that 20% for this month alone. On our market, we were set to follow the US definitely looking to adjust that low of the last couple of weeks and it is around about the 3930 level will likely to open off from the start with ANZ reporting their profits were down 21% and the cost-to-income ratio has increased to 47%, that is an increase of 2.5% on that figure. Macarthur coal came out yesterday and said their third quarter output was up and they saw demand still strong going forward. General property trust was not trading well yesterday as there is question about whether they need to do a capital raising and it is expected that they will announce something to market today and Oxiana Group’s Chairman says that private equity are looking to take over that particular company at this stage, but they did have a take of the 35 dollars and they are trading considerably lower than that and it is hard to see that shareholders can give value there.
ASX is likely to sell off from the open looking to see broad based selling. Those who think that this may be a retest to the bottom should look in companies with cash low debt and companies that are generating good cash flow.
Should you have any questions about the information provided within this presentation, please call the equities office desk or the CFD advisory desk on the numbers provided and as always, trade carefully.