Stock Market Analysis
Overseas Markets Drift Lower; RBA to Leave Rates on Hold
Overseas markets continue to trade lower, with the U.S. giving us a negative lead. The Dow Jones finished at a none month low. European markets also finished a torrid week lower. This all points to a lower ASX today.
The SPI Futures is just below the key level of 4200 the ASX is set to open marginally lower as the SPI closed down 13 points (or 0.3%) at 4,195. Key levels this week are 4350 and 4000, with pivot of 4200. Expect our market to trade flat to lower again today, given the negative leads from overseas. The coal sector will be in focus, the RBA is likely to leave interest rates on hold today. M&A is back with $5 billion in deal tabled yesterday.
US Markets
The U.S. is closed for Independence Day celebrations tonight. Markets closed Friday with the Dow down 46 points, or 0.5 per cent, to 9,686 (down 4.4% for week), while in the broader market the S&P 500 index down 5 points, or 0.5 per cent, to 1,022 (down 4.9% for week) and the tech-heavy Nasdaq ended lower 9 points or 0.5 per cent at 2,092 (down 6.1% for week).
European Markets
In Europe stocks continues their two week declines on concerns on faultering recovery, and disappointing economic data. Benchmark stocks indices all fell in the key EU countries. In the U.K. miners lead the falls down around 2 percent in the session, while retail sales figures for May (up 2.3 percent) supported the big retailers. In the London FTSE 100 index down 15 points, or 0.3 per cent, to 4,823 points, the German DAX pulled back 18 points, or 0.3 per cent, to 5,816 points, while in France the CAC pulled back 16 points, or 0.5 per cent, to 3,332 points.
Asian Markets
In Asia China continues to weigh, on fears of a halting recovery. The China services industry index fell to a 15-month low, also demand for power continues to slow indicating a pull back in industrial output. In Japan the Nikkei index of the Tokyo Stock Exchange up to end at 9,267. The benchmark Hang Seng Index was down 0.3% at 19,842 and China was down 0.8% at 2,363.
Commodities Overview
Commodities markets were closed on NYMEX.
Key News International Drivers Today
US – Close for Independence Day holiday
EU – Markets fall on continuing debt concerns. Bank “stress test” data will be available in a couple of weeks.
CHINA – Chinese markets have fallen to 15-month lows, as the PMI manufacturing data came in worst than expected.
Markets Overview
Overseas Markets Drift Lower; RBA to Hold Rates
US – Close for Independence Day holiday
FTSE: down 0.3% at 4,823 – Financials & Miners Weigh
DAX down 0.3% at 5,816 – Below 6,000 level
CHINA: down 0.8% at 2,363 – Slowing Growth Concerns
HSI down 0.3% at 19,842
Oil: up 0.2% ($72.28)
Economic Growth Concerns
Gold: up 0.13% at ($1,207.40)
Commodities Lower
SPI: At key Level 4200
SPI down 0.6% at 4,195
ASX News Today
The SPI Futures is just below the key level of 4200 the ASX is set to open marginally lower as the SPI closed down 13 points (or 0.3%) at 4,195. Key levels this week are 4350 and 4000, with pivot of 4200. Expect our market to trade flat to lower again today, given the negative leads from overseas. The coal sector will be in focus, the RBA is likely to leave interest rates on hold today. M&A is back with $5 billion in deal tabled yesterday.
AUD – higher at 83.82
BANKS – are holding cash of $12.7 billion, shoring up balance sheets in case of European debt contagion.
CDD - Cardno Ltd is to seek $49 million through a capital raising, to fund acquisitions and strengthen its balance sheet.
CEY – recommends all cash takeover offer from Thailand-based Banpu Public Company Ltd at $6.20 per share.
CSR – agrees to sell its sugar and renewable energy business, Sucrogen, to Singapore-based Wilmar International Ltd for $1.75 billion.
DOW – Downer will not be downgraded by credit rating agency Fitch Ratings, after the consortium tasked to build NSW’s passenger trains, in which the company has a stake, received a notice from its banks.
ELD – ASIC is investigating its compliance with its continuous disclosure obligations leading up to a profit downgrade on June 22.
NQM – Heemskirk Consolidated Ltd has outbid Conquest Mining Ltd with an $84 million scrip offer for North Queensland Metals Ltd (NQM).
Economic Reports:
RBA rate decision is due a 2:30pm Tuesday. They are expected to leave the interest rate at 4.5% says a consensus survey from Bloomberg.
Market volatility will continue near term, some speculative accumulation is underway. We suggest the trading strategy is to tighten stops. Be prepared to take profits and open/hold short positions. Market Summary
ASX – to open flat to lower
US & UK/Europe – U.S. closed, Europe & Asia Drift Lower…
US ADRs – Closed…
By Michael Hevern
Head of Research
Tags: Asian Markets, ASX, ASX News, BHP, European Markets, mining, Nasdaq, Nikkei, RBA, S&P500, stock market, trading, US Market wrap
