Morning Market Wrap
Overseas markets continue to slide on economic growth concerns.
US markets continued to slide on concerns over indications that the local and international economic growth is falling short of forecasts, in particular the disappointing employment figures and the lingering presence that Europe’s economic problems will derail a global recovery. Commodities prices were under pressure due to concerns that Europe’s economic recovery will stall resulting in China cutting its imports, plus a strengthening US dollar.
The SPI Futures is below the key level of 4500 the ASX is set to open sharply lower as the SPI closed down 39 points (or 0.9%) at 4,299. Key levels today are 4200 and 4400. Expect our market to continue to trade lower, on global growth concerns and European debt worries continue to weigh overseas.
The Dow Jones fell 115 points, or 1.2 per cent, to its lowest close since November 2009. The Dow lost 323 points on Friday after the government’s May jobs report fell short of expectations. And in the broader indexes the S&P 500 1.4 per cent, at 1050 and the technology based Nasdaq Composite Index fell 2 per cent at 2138. The S&P500 Financials index lost over 2%, while miners also dragged on the markets as a result a falling commodities prices.
Weak US employment data for May and comments from a Hungarian official saying the country could be hit by a Greece-like fiscal crisis have undermined confidence in global economic growth and oil demand. The new British government will be delivering an emergency budget, saying that the nation’s financial situation is worse than they were led to believe. The Euro fell below $US1.19 overnight the lowest since march 2006.
U.K. stocks fell, with the FTSE 100 Index falling 1.1 percent, to 5,069 , and in Europe the German DAX was down 0.6% and the French CAC was down 1.1%.
Chinese stocks remained at a 13-month low, on concern bank fundraising and government efforts to cool the property market will hurt shareholder stakes and dent demand for resources. The Shanghai Composite Index down 1.6% to close at 2,511 and in Hong Kong the market was down 2.0%.
Oil prices closed lower overnight on worries the debt crisis in Europe could spread and clip the recovery in global fuels demand. On NYMEX July crude oil fell 0.6% to settle at $US71.04. BP have stemmed the flow of the oil spill in the Gulf of Mexico. COMEX August gold rose $US23.10 to settle at $US1240.80 a fine ounce, while the July silver settled up 86.3 US cents at $US18.162 an ounce.
Fears that China could cut back on metals imports saw copper prices fall sharply to their lowest level in October 2009, as investors foreshadow a drop in demand for the metal. Copper for July delivery fell 5.35 to settle at $2.766 a pound. Early in the day, copper fell as low as $2.72 a pound, its lowest level since October.
Markets Overview
Overseas Markets Continue to Sell-off!
SP500: down 1.4% at 1,050 – Below “Flash Crash” Lows
DOW down 1.2% at 9,816 – Below 10,000
NASDAQ: down 2.0% at 2,174
Dollar Index: higher at 88.49 on Lower Euro
A$ lower at 81.02 (above 10-month Lows)
FTSE: down 1.1% at 5,126
DAX down 0.6% – Still in Uptrend
CHINA: down 1.6% at 2,511 – 13-month Lows as Suport becomes Resistance
HSI down 2.0%
Oil: down 0.6% ($71.04)
BP Makes Progress on Oil spill in Gulf of Mexico
Gold: up 0.2% at ($1,241)
Commodities Mixed
SPI: Above Key 4500 ASX
SPI down 0.9% at 4,299
ASX News
The SPI Futures is below the key level of 4500 the ASX is set to open sharply lower as the SPI closed down 39 points (or 0.9%) at 4,299. Key levels today are 4200 and 4400. Expect our market to continue to trade lower, on global growth concerns and European debt worries continue to weigh overseas.
AUD – weakens to 81.02, just above 10 months lows.
BXB – says it is to lose the business of ConAgra, a food company in the United States.
CEU – says traffic and revenue on its EastLink tollway in Melbourne grew in May.
NAB – A subsidiary in the U.S. has acquired US loan and deposit assets for a cash payment of $US76 million ($A90.31 million).
NDO – is in a trading halt pending the release of drilling result for its Tindalo-1 well.
Wheat – Planting in Western Australia was 60 percent to 70 percent completed while New South Wales was 70 percent to 90 percent sown, WA needs followup rains though. Commonwealth Bank of Australia this week reiterated a forecast for a 5 percent year-on-year drop in the national wheat area, resulting in a crop of 20 million to 21 million tons.
Market volatility will continue near term, Non-farm payrolls figures disappointment and European debt concerns, setting a negative tone for this week.
We the suggest trading strategy is to tighten stops. Be prepared to open/hold short positions.
Market Summary
ASX – to continue lower
US & UK/Europe – negative leads
US ADRs – Broadly Lower!!!…
BHP down 2.1% & RIO down 1.4%; AWC down 2.6%
ANZ down 1.7% & NAB down 1.7%
NEM up 2.7%, JHX down 3.6%, NWS down 2.1%
Commodities Stock Index down 0.9%
Gold Stocks Index up 2.3%
Oil Stocks Index down 0.6%
By Michael Hevern
Head of Research
Tags: ASX News, BHP, BP, Commodities, Dividend, Dow Jones, employment figures, oil prices, Rio, US Market wrap, US markets
