Stock Market Analysis
Overseas Markets Crumble Below Key Levels; ASX Set to Follow
Markets were sharply lower overseas, giving a negative lead for the ASX. The key triggers for the sell-off include poor economic data from China and disappointing consumer confidence data out of the U.S. In Europe, banks need to repay $US540 billion ECB loan by 1 July and this weighed on markets across the board.
The SPI Futures is below the key level of 4400 the ASX is set to open sharply lower as the SPI closed down 93 points (or 2.1%) at 4,245. Key levels today are 4350 and 4150. Expect our market to trade sharply lower today. Remember it is the last day of the financial year. The proposed RSPT tax will continue to be in focus, with the new PM prepared to negotiate with the interested parties.
US Markets
Sectors were all lower in the U.S. They saw bellwether stocks like Apple down 4.6%; Bank of America down 4.4%, GE down 3.5% and Goldmans down 2.1%. The selling was sustained throughout the day with some minor respite in the last ten minutes of trading. The Dow was down 268 points, or 2.7 per cent, to 9,870, while in the broader market the S&P 500 index down 33 points, or 3.1 per cent, to 1,041 and the tech-heavy Nasdaq ended lower 85 points or 3.9 per cent at 2,135.
European Markets
In Europe, investor concerns were heightened as the European banks face the repayment of $US540 billion ECB loan facility by 1 July this sent the financial sector lower with stocks like Barclay’s down 5.5%. The austerity measures that will be required to meet the G-20 commitment to halve Europe’s debt by 2013 also highlighted the fact that economic growth will be impacted going forward. The Bank of England reported that the housing market is slowing. In the U.K. stocks resumed their losing streak, with the financial, miners and energy sectors all lower. In the London FTSE 100 index down 157 points, or 3.1 per cent, to 4,914 points. The German DAX down 205 points, or 3.3 per cent, to 5,952 points.
Asian Markets
The key news in Asia pointed to slowing economic recovery. The Agricultural Bank of China plans to raise $US23.2 billion and has offered share to the market at a lower than expected price raising concerns on investor sentiment. The report on China’s manufacturing sector (PMI) due out Wednesday. In Japan the Nikkei index of the Tokyo Stock Exchange down 2.3% to end at 9,570. The benchmark Hang Seng Index was down 2.3% at 20,248, and China was down 4.3% at 2,427.
Commodities Overview
Oil prices cracks below US$77 a barrel despite hurricane concerns in the Gulf. The benchmark crude NYMEX for July delivery down US$2.31 to settle at US$75.94 a barrel. Copper prices finished below the key $US3.00 a pound, Copper for July delivery fell 15.9 cents to settle at $US 2.9305 a pound. Gold closed lower, with August gold up $US3.80 to settle at $US1,242.40 an ounce.
Key News International Drivers Today
G20 – meeting agrees to cut deficits in half by 2013 government deficits, and to stabilize their debt-to-output ratios by 2016.
US – important job figures are due out Friday.
US - consumer confidence falls
UK - housing sector continues to weigh
CHINA – Watch for manufacturing PMI report
OIL – prices fall on economic growth concerns.
Markets Overview
Overseas Markets Crumble Below Key Levels; ASX Set to Follow
SP500: down 3.1% at 1,041 – Below 200 day Moving Average
DOW down 2.7% at 9,870 – Below Key 10,000 Level
NASDAQ: down 3.9% at 2,135
Dollar Index: Higher at 86.14 on lower Euro
A$ lower at 84.85
FTSE: down 3.1% at 4,914 – Financials & Miners Weigh
DAX down 3.3% at 5,952 – Breaks 6,000 level
CHINA: down 4.3% at 2,427 – Slowing Growth Concerns
HSI up 2.3% at 20,248
Oil: down 2.3% ($75.94)
Good Week Ahead of Hurricane Season
Gold: up 0.3% at ($1,242.40)
Commodities Lower
SPI: Below key Level 4500 ASX
SPI down 2.1% at 4,245
ASX News Today
The SPI Futures is below the key level of 4400 the ASX is set to open sharply lower as the SPI closed down 93 points (or 2.1%) at 4,245. Key levels today are 4350 and 4150. Expect our market to trade sharply lower today. Remember it is the laat day of the financial year. The proposed RSPT tax will continue to be in focus, with the new PM prepared to negotiate with the interested parties.
AUD – higher at 84.85
ALD – Australia’s Allied Gold has secured a $40 million World Bank loan to help revive a Solomon Islands mine that was shut down during violent ethnic unrest 10 years ago.
AWB – says the sale of its AWB Geneva business to U.S. based Gavilon LLC will take longer than originally expected.
CPB - Campbell Brothers the chemicals manufacturer expects to post a record 1H10 underlying net profit of $63 million, due to favorable trading conditions and solid contributions from acquisitions Pearlstreet and Ecowise.
DOW – says it has ample funds available to it despite reports the company has ordered payments to be withheld to meet cashflow targets for its end-of-year financial accounts.
MAH – Macmahon Holdings the engineering contractor reaffirms its FY profit guidance, but says it will not frank its final dividend due to lower than expected tax payments.
MAP – Sydney Airport’s issue of $175 million in medium term notes to repay debts will not affect the airport’s rating outlook according to Moody’s Ratings.
TTS – Tatts gambling firm has reduced the book value of its investment in U.K. gaming machine business Talarius by $140 million, following an emergency budget from the new UK government which may affect consumer spending.
GBG – Gindalbie the iron ore mine developer is looking beyond Australia for acquisitions and could branch out into mining other commodities including coal.
SGH – Slater & Gordon the law practice will raise $40 million to fund its purchase of a Queensland-based personal injury litigation firm.
WYL – Wattyl has accepted a $142 million all cash takeover bid from US paint giant The Valspar Corporation ie. $1.67/share (vs last close of $1.26).
WOR – WorleyParsons has won a contract to provide engineering services for Brazilian iron ore mining company Vale’s S11D processing facility in Brazil.
Economic Reports out today:
New PM & Wayne Swan – watch out for more on RSPT tax
Dept of Education Skilled Job Vacancy Report
RBA financials aggregate data
ABS May job vacancy report
HIA May new home sales report
Market volatility will continue near term, some speculative accumulation is underway. We the suggest trading strategy is to tighten stops. Be prepared to take profits and open/hold short positions. We are trading at the end of the financial year.
Market Summary
ASX – to open sharply lower
US & UK/Europe – Broadly Lower…
US ADRs – Broadly Lower!!!…
BHP down 5.0% & RIO down 6.2%; AWC down 7.0%
ANZ down 6.3% & NAB down 4.9%
NEM down 0.5%, JHX down 6.7%, NWS down 3.7%
Commodities Stock Index down 3.7%
Gold Stocks Index down 2.6%
Oil Stocks Index down 2.8%
By Michael Hevern
Head of Research
Tags: Asian Markets, ASX, ASX News, BHP, Commodities, European Markets, Nasdaq, Nikkei, S&P500, stock market, stockmarket, trading, US Market wrap
