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Good morning and welcome to Cube Wrap for Friday, the 21st of November. I am Michael Hevern for Cube Financial.
Stock Market Analysis
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, this is general advice only.
Another dismal day on the Dow overnight, down another 5.6%, retracement continues here and we can see that’s it’s continued to start drifting down below that down trending line and support, really some there, in fact through the October lows and next level support is the slightly downtrend line that we have which is quite some way away.
We do have the autos still fleeting in Capitol Hill for a rescue package since the falling on deaf ears they’re still talking about the Capitol Hill. They are at 5-1/2 years lows on the Dow and the multitude of concerns at the moment is at increasing, volume is increasing along the downward side.
US Markets
We see that S&P500 was also down, broken through key support levels there. It is below 1997 lows around those lows and again it is on increasing volume and we do have the trick with the options index, futures options and the futures options all expired on the same day. So this again apparently got to add more to the volatility levels there. We see top new stories Senato pushed to compromise bailout package for automakers. So, there are still concerns there about the automakers going forward. Bank of America CEO says that the crisis is a global recession and there is no chance of a turnaround until at least the next year. I think that is even being optimistic. JP Morgan is to lay off another 3000 jobs in the investor making on and then new crisis around at 10% of the banking staff and commercial mortgages and equities are set to double in 2009. The futures has noted that the index has resumed to 75 from 51 in previous year.
We also saw that financials weighed on the US with Citi falling another 17% and Bank of America falling 5.4% on the session. The autos did state somewhat of a recovery with GM and Ford up on hopes that they may get a bail out package sooner or later. The time is running up for them. We see that the NASDAQ and Hi-Tech index was down 3.8% as well. We see this is tracking nicely that downtrending channel there, getting close to the lower edges of that channel. We see that there was board-based selling in the NASDAQ. We saw Apple, Microsoft, and Cisco all down 27 and 4%.
European Markets
We also see that in the UK, the FTSE was down 3.3%, again those downtrending lines offering good guidance of where the market is going to. It actually touched that downtrending line last night and finished above that. This is good guidance as to where the market is going forward which is positive. We see materials down and banks are mixed. Bank of England also said that they are willing to cut rates nearly as necessary. We saw Eurasian, natural resources, and Xstrata all down to 27 and 14% on the session and life insurers were sold off after there little spite yesterday with Aviva down 17%, Prudential down 16%, and legal and general down 13%.
Banking stocks were mixed with Royal Bank of Scotland up 8.8% as the investors or share holders made their own plan to take a merge of the government rescue package there for raising capital to raise the capital. Lloyds and HBOS were up 5 and 12% respectively as their ongoing merger continues. Barclays were sold off low with down 1.5% as share holders continued to discount the share price going forward because of the way that they raise their capital recently. Elsewhere in Europe, we see that the CAC is down 3.8% and the DAX was down 3% on the session.
Asian Markets
In Asia, we see that market down as well, Nikkei down 7%, sent to test the lows of October and it was on the back off stronger Yen which hurts the exporters over there. Banks was sold down heavily as well to fetch the 61% decline in second quarter profits and we also saw Sumitomo, Japan’s number 3 bank, saying it was to raise 2.9 billion dollars and preference issue. Mitsui was 6% on the session as well, Mitsubishi was 6% on the session.
We also saw the Mitsuo down 6% to a 3 week low and exporters of motor companies, Mazuzu, Honda were all down 16 and 6% respectively. Other exports High Tech exporters were down 9% and TDK down 12% on the back off slowing economic growth and the stronger Yen. Canon was also down 7%, Panasonic down almost 8% and Sony also was down 6% on the session. Elsewhere, we see that Hong Kong shares were close down 4% and Chinese stocks actually were close down 1.6%. They have been heavily earlier in the week.
We see that in oil, that price got below 50 dollars in the trading session that managed to close just above at 51 dollars over 22 month lows. The inventories for US were up for 8 straight weeks which we did report yesterday and obviously that is going on the market seen as a oversupply of the product at the moment.
Gold, above the trend, it was up 7 to 7.50. It was up around at 1.5% and finished just near that 750 mark. We see that elsewhere in commodities, silver was down 3%, aluminum down 5%, lead down 3.5%, copper down 3% and nickel down 3% while zinc was actually up 0.6%.
In our market, yesterday as expected the SPI was down again 163 point. We are looking to price support there on the downtrending line, but if you believe in being over sold the we must be getting close to that given that we pullback just about everyday since about the 5th of November that you can see on the chart. We are tracking that downtrending arrangement as well.
Of interest in the US, in the ADRs, BHP was down 13%, RIO down 12%. We see the gold stocks index down 3.5% and the oil stocks index down almost 12% on the session. We see Chevron and Exxon down 9% and 6.5% respectively. The Banking ADRs were also down with ANZ down 9% and NAB down 6% on the session. So pretty broad-based negativity over there and that we would expect that to fly onto to our market. The US do have short trading week next week. Just added to the volatility, we have Thanks Giving at the end of next week, so that will probably add to the volatility in tonights session.
In the ASX, the additional news we see that SUN was up significantly yesterday. On speculation that they make selling there, making division. Coal producers were downgraded by almost yesterday and we could see that price. Miners were likely to way on the back of lower commodity prices overnight, Babcock and Brown are on the brink of foreclosure as they desperately speaking with there banking backers as they need more time to pay the 3.1 billion dollars worth of debt. Telstra are facing industrial election in the next couple of days, so that could be interesting so the pay and conditions going forward and we expect our market to open more, again broad based selling will prevail.
Should you have any questions about the information provided within this presentation, please call equities option desk or the CFD trading desk on the numbers provided and as always trade carefully.
By Michael Hevern
Cube Financial Group
Tags: ASX, ASX News, BHP, Capitol Hill, Dow, Nasdaq, Nikkei, S&P500, stockmarket, US Market wrap
