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Stock Market Analysis: US GDP Report Gives Pause; ASX to Trade Lower

Friday, July 30th, 2010

Stock Market Analysis

US GDP Report Gives Pause; ASX to Trade Lower

U.S. stocks finished lower overnight for a second day, as disappointing revenue from utilities and consumer companies weighed. European markets continued lower. Asian markets bucked the trend to the positive. A weaker US dollar also helped commodity prices, however our markets will likely see further profit-taking today.

The SPI Futures is above the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -0.5% (or -21 pts) at 4,473. Key levels today are 4500 and 4400, with pivot around 4450. Mining and Energy stocks may offer support with improving commodities prices overnight. M&A activity continues to drive specific stocks.

US Markets

The S&P 500 remains only just above the key 1100 level. The Dow clawed back from an initial 100 point selloff. U.S. stocks still finished lower overnight for a second day, as disappointing revenue from utilities and consumer companies overshadowed some other strong earnings reports. The market sentiment was under pressure after disappointing second-quarter revenue and guidance reports hit the utilities, consumer staples and technology sectors. Companies like Akamai Technologies, Nvidia, Symantec, and Colgate disappointed either on their profit margins, earnings or earnings forecasts. However the market is on track to close out the best month since July 2009, with the Dow currently up 7 percent for the month. Oil prices rose overnight on better-than-expected earnings from Exxon Mobil Corp and Southwest Airlines. The Dow closed down -0.3% (or -31 points) at 10,467, while in the broader market the S&P 500 index down -0.4% (or -5 points) at 1,102 and the tech-heavy Nasdaq ended down -0.6% (or -13 points) at 2,252. The sectors weighing most on the indices were utilities and consumer staples sectors, while financials and materials sectors provided some support. The key news out tonight is the U.S.gross domestic product data release.

European Markets

European stocks traded lower, despite a raft of impressive earnings, particularly in the autos and telecommunications sectors. Better-than-expected confidence data helped, with the euro-zone economic sentiment indicator rose to 101.3 from 99, its highest level since March 2008. The Euro traded above $US1.31 for the first time since May, confirming the improving investor sentiment after the successful Bank “stress tests” report. The European markets have also benefited of late from the successful government debt auctions in countries like Spain and Portugal, where much of the sovereign debt concerns were focused. Mitsubishi and Volkswagen AG turned in solid second-quarter performances, crediting healthy sales in China, and Nissan saw its quarterly sales jump 35.3 percent. Telecoms helped the markets with France Telecom rising 5.5%, after it reported a drop in second-quarter earnings and revenue but said trends are improving across markets, and Spanish telecoms company Telefonica gaining 3.2%, after its second-quarter net profit rose 16% as revenue growth in its Latin American business compensated for a weaker domestic market.

In London the FTSE 100 index closed down marginally -0.1% (or -6 points) at 5,314, the German DAX down -0.7% (or -44 points) at 6,135, while in France the CAC was down -0.5% (or 18 points) at 3652.

Asian Markets

Asian markets were mixed. In China the Shanghai Composite Index of equities continued to rise, as the central bank said China’s economic fundamentals are “good”. Industrial metals prices continued to rise on the prospect of improving demand. Japanese stocks fell for the first time in five days, weighed down by Panasonic down 7.7 percent after reporting is will raise capital for acquisition of Sanyo, however shipping lines rose as they raised their full-year profit forecasts. In China the SSE Composite closed up 0.6% (or 14 points) at 2,648, while in Hong Kong the Hang Seng Index was flat (down 3 points) at 21,094 and in Japan the Nikkei 225 Index was down -0.6% (or -57 points) at 9,696.

Commodities

The Dollar Index down -0.6% at 81.65 on higher Euro, while the Australian Dollar last traded higher at 89.08. Commodities were generally higher.

Oil prices rose due to the lower US dollar. The benchmark crude NYMEX for September delivery was higher 1.7% (or $US1.37) to settle at $US78.36. Copper continued to shine rising to an 11-week high on signs growth is sufficient in China and the U.S. to spur demand. Copper prices are trading well above the key $US3.00 a pound, Copper for September delivery delivery was up 1.4% (or 4.4 cents) at $US3.2850 a pound, the highest settlement price since mid-May. Gold rose, with August gold was uo $US8.80 at $US1,171.20 an ounce.

Key News International Drivers Today

US – U.S.gross domestic product data release. S&P 500 companies continue to report earnings this week.

EU – M&A activity. Bank shares rose after the Basel Committee on Banking Supervision relaxed some of its proposed capital and liquidity rules.

CHINA – Economic fundamentals are “good”. Industrial metals prices rise. JP Morgan says equities starting to look attractive.

JAPAN – companies continue to report earnings this week.

Markets Overview

US GDP Report Gives Pause; ASX to Trade Lower

Market	Movement
The Dow Jones Industrial Average	Down -0.3% (or -31 pts) at 10,467
The S&P 500	Down -0.4% (or -5 pts) at 1,102
The Nasdaq	Down -0.6% (or -13 pts) at 2,252

The FTSE 100	Down Marginally -0.1% (or -6 pts) at 5,314
The German DAX	Down -0.7% (or -44 pts) at 6,135
SSE Composite (China)	Up -0.5% (or 14 pts) at 2,648

The Dollar Index	Down -0.64% at 81.65
The Australian Dollar	Last traded higher at 89.08
The Commodities Index	Up 1.52% at 270.2

Crude Oil Futures	Up 1.7% at $78.27
Gold Futures	Up $8.80 at $1,171.20
Copper Futures	Up 1.36% at $3.2850
SPI Futures	Down -0.5% (or -21 pts) at 4,473


Market	Movement
SSE Composite (China)	Up 0.6% at 2,648
Hang Seng Index (Hong Kong)	Down Marginally 0.0% at 21,094
Nikkei 225 Index (Japan)	Down -0.6% at 9,696

SPI: Above key Level 4400 – SPI down 0.5% at 4,479….

ASX News Today

AUN- Austar 1H10 profit dropped 42 percent. Net profit was $20.69 million compared with $35.5 million for the same period a year earlier. Revenue lifted 6.3 per cent to $351.86 million.

CNP- Centro Properties says it will refinance and extend the debt of its US business as the restructure of the company continued.

IIF- Industrial property developer Goodman Group has confirmed it is considering taking over management of ING Industrial Fund (IIF).

IIN- iiNet the internet service provider is in a trading halt, pending an announcement by the company about a potential acquisition.

LEI- Leighton has won a five-year contract to provide construction and maintenance services to Queensland’s electricity provider, Ergon Energy.

NUF- NuFarm the embattled agricultural chemicals firm reported the U.S.and Canadian regulators have confirmed a final agreement with Nufarm on measures taken to ensure competition following it’s acquisition of AH Marks Holdings Ltd.

OZL- OZ Minerals the copper miner continues to seek acquisition opportunities and has already made non-binding offers for projects.

RIO- A state-owned Chinese company is buying a stake in a Rio Tinto iron mine in Guinea in West Africa for $1.5 billion.

SBM- St Barbara the WA gold producer said it produced 231,018 ounces in fiscal 2010, meeting annual guidance for 2010 and anticipates growth ahead.

Economic Reports :

AFOM – to auction $500 million of March 2019 Treasury notes

RBA – will report on financial aggregates data for June.

Companies:

AWE – releases quarterly report

ERA – ERA releases full year results

ORG – Origin releases quarterly report
MQG – Macquarie Group Ltd AGM today

PDN – Paladin Energy Ltd releases quarterly report
SGT – Singtel AGM today

Expect to see our market trade lower again today. Time to protect positions and take profits.

Market Summary

ASX – to open lower
US & UK/Europe – lower

US ADRs – Mixed!!!…

BHP up 0.4% & RIO flat; AWC up1.1%
ANZ up 1.6% & NAB up 2.5%
NEM up 0.6%, JHX down 0.4%, NWS down 0.5%

Commodities Stock Index up 0.2%
Gold Stocks Index up 0.2%
Oil Stocks Index up 0.6%By Michael Hevern
Head of Research

Tags: Asian Expansion, Asian Markets, ASX, ASX News, Commodities, European Markets, Nikkei, overseas markets, S&P500, spi, Stock Market Analysis, stockmarket, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

ASX Company News: Monitor Energy To Acquire Trinidad Oil Licences

Friday, July 30th, 2010

Australian-based oil and gas company Monitor Energy Limited (MHL) has entered into a binding Heads of Agreement (“HOA”) with SOCA Petroleum (“SOCA”) to acquire its rights for up to 90 per cent interest in a company whose wholly owned subsidiaries hold production licences for three blocks in producing onshore oilfields in Trinidad and a major local drilling company.

The production acreage and operating wells of the Project cover the Morne Diablo, Beach Marcelle and South Quarry oilfields, with the total acreage covering 13,253 gross acres on the southern coast onshore Trinidad. Current production from the fields is approximately 700 bopd, however Monitor considers that a minimal work program could lift production to more than 3500 bopd within 36 months based on known reserves. The production increase excludes exploration upside with independently identified possible recoverable resource from the Herrera formation which is producing on adjacent blocks.

“This is truly a company making transaction, we are acquiring a controlling interest in a company that has not only a pure crude play in an established oil environment, but also one of five onshore drilling companies in Trinidad,” said Monitor Energy Managing Director, Jon Roestenburg. “There is significant potential for value enhancement, as we move from 1P to 2P and 3P, plus this is a relatively low risk exploration, drilling and production operation.”

“Onshore Trinidad is a low operating cost, high profit margin environment with oil production sold at the wellhead and transported to the Pointe-a-Pierre Refinery, which has capacity for all additional planned production,” he added. In addition to the onshore acreage the proposed acquisition also includes an interest in the parent of a wholly owned drilling company located in Trinidad, which owns five onshore drill rigs, three production rigs, one swab rig, full workshop and pipe yard and storage tanks and facilities – representing substantial current and replacement value.

Fellow ASX listed oil and gas company Range Resources Ltd (RRS) is joining Monitor in this venture and is progressing agreements to acquire the other 10 percent equity share of SOCA, as announced by Range on 12 July 2010.

Monitor will use a combination of scrip and cash to purchase up to 90 per cent interest in SOCA Petroleum whose wholly owned subsidiary companies own the Project and all associated assets. Under the terms of the HOA, the Company will (in the event it takes up its full 90% option interest) issue two billion Monitor shares and raise AUD$90 Million with these proceeds being used to fund as follows:

a) The acquisition (production licences and drilling company);

b) Operational expenditure for the 3 year – 3,500 bopd production target;

c) The drilling of the Herrera formation; and

d) Capital raising costs

In addition there are two milestone performance payments of 500 million shares, as the company achieves future production targets. The proposed equity issues and cash payments will be reduced proportionately in the event that Monitor takes up an interest less than 90%.

www.monitorenergy.com.au

http://www.traderdealer.com.au/Fundamentals/mhl

Tags: MHL, Monitor Energy, New acquisition, Oil and Gas, Range Resources, RRS, Trinidad
Posted in ASX Company News | No Comments

ASX Company News: Leighton Subsidiary Thiess Secures Ergon Contract

Friday, July 30th, 2010

Queensland’s Electricity provider, Ergon Energy, has selected Thiess Services, a subsidiary of Leighton (LEI) to provide network construction and maintenance services to its growing Central and Northern regions, under a five-year agreement valued at up to $100 million.

This recent contract win extends the long standing relationship between Ergon Energy and Thiess Services. David Saxelby, Thiess’ Managing Director, said that Ergon Energy was a key strategic client and the company was excited about the opportunity to expand its service offering to these growth regions.

“I am delighted we have the opportunity to build on our solid, six year relationship with Ergon Energy and are keen to work more closely with them to deliver their vision of providing increased services to these regional communities” he said. Thiess Services, has a national electricity distribution capability and is leading the way in areas of safety, technical training, project management and resource flexibility. The company is ready for the new challenge, according to Thiess Services Executive General Manager, Michael Wright.

“This contract will enable us to expand our presence in regional Queensland, and extend our current service offering. We will continue to provide the high standards of safety and service delivery that we have been able to achieve and sustain,” “Overall, we’re excited about this opportunity with Ergon Energy to help make a difference for regional people and their communities in Queensland, during this period of regional growth and development.”

www.leighton.com.au

http://www.traderdealer.com.au/Fundamentals/LEI

Tags: Electricity Supply, Ergon Energy, LEI, Leighton, New contract, Thiess
Posted in ASX Company News | No Comments

ASX Company News: Rio Tinto Finalises Iron Ore JV Agreement With Chalco

Friday, July 30th, 2010

Rio Tinto (RIO) and Chalco signed a binding agreement to establish a joint venture (JV) covering the development and operation of the Simandou iron ore project in Guinea. The binding agreement follows the signing of a memorandum of understanding between Rio Tinto and Chalco’s parent Chinalco announced on 19 March 2010. The agreement covers all aspects of how the JV and project itself will operate and be governed, including planning, construction and management of the mine and associated rail and port infrastructure.

Jan du Plessis, chairman, Rio Tinto and Xiong Weiping, president, Chinalco, and chairman and chief executive officer, Chalco today attended a signing ceremony in the Great Hall of the People in Beijing. Government officials from China, Guinea, the United Kingdom and Australia were represented at the event.

Mr du Plessis said: “Developing our relationship and business links with China is a key priority for Rio Tinto. This agreement takes our relationship with China and our largest shareholder Chinalco to a new level, building on a line of successful partnerships between Rio Tinto and China dating back to the start of the Channar iron ore joint venture in the Pilbara a generation ago. The formation of partnerships is integral to our business engagement with China. We are confident that the knowledge and experience gained from these other ventures will help make this joint venture our most successful yet undertaken with a Chinese partner.”

Mr Xiong said: “The establishment of a joint venture will make use of Chinalco’s advantages in the infrastructure field and its profound understanding of the Chinese market as well as Rio Tinto’s technologies and experience in the operation of large mining projects, so as to form a complementary and powerful union. We believe the successful development of the Simandou project will greatly quicken the pace of local infrastructure construction and economic development. This project can also efficiently balance China’s need for security of supply on the global iron ore market. We expect the two sides will regard cooperation on the Simandou project to be the foundation for further pushing forward the cooperation of these two companies in other resource projects.”

Tom Albanese, chief executive, Rio Tinto said: “We are excited about formalising our partnership with Chinalco through its subsidiary Chalco. Rio Tinto, Chinalco and the IFC together form an extremely strong development team. We expect to realise great economic and social benefits for the people of Guinea from the development of the Simandou project. This is a world-class iron ore project. We firmly believe this agreement will deliver great value for our shareholders. We remain committed to continued engagement with the Guinean Government and other key stakeholders. We continue to invest funds to keep this important project moving forward and anticipate mining operations would start within five years.”

Luo Jianchuan, president, Chalco, said: “This transaction is consistent with the company’s development strategy to seek development opportunities in the mining industry and to seek high-quality overseas mineral projects. We hope Chalco and Rio Tinto can join efforts to enable the Simandou project to be put into production according to the development schedule reached by the two sides, so as to bring huge value to all related parties.”

Under the terms of the agreement, Rio Tinto’s 95 per cent interest in the Simandou project will be held in the new JV. Chalco will acquire a 47 per cent interest in the new JV by providing US$1.35 billion on an earn-in basis through sole funding of ongoing development work over the next two to three years. Once Chalco has paid its US$1.35 billion, the effective interests of Rio Tinto and Chalco in the Simandou project will be 50.35 per cent and 44.65 per cent respectively. The remaining five per cent will be owned by the International Finance Corporation (IFC), the financing arm of the World Bank.

Both Rio Tinto and Chalco are keen to progress the project as soon as possible and are working with all stakeholders to expedite the process. The formation of the JV will be finalised in consultation with the Guinean Government and following satisfaction of various regulatory requirements.

www.riotinto.com

http://www.traderdealer.com.au/Fundamentals/rio

Tags: Iron Ore, JV Agreement, New contract, Rio, Rio Tinto
Posted in ASX Company News | No Comments

Stock Market Analysis: US and Europe Give Negative Lead for ASX

Thursday, July 29th, 2010

Stock Market Analysis

US and Europe Give Negative Lead for ASX

U.S. stocks traded lower, while European markets halted a six-day rally. The U.S. market was lower across the board. Asian markets buck the trend to the positive. Our markets will likely see further profit-taking today.

The SPI Futures is above the key level of 4400, the ASX is set to open lower as the SPI Futures closed down -0.5% (or -23 pts) at 4,485. Home buyers are likely to be spared an interest rate rise from next Tuesday’s Reserve Bank board meeting. Key levels today are 4550 and 4450, with pivot around 4500. M&A activity continues to drive specific stocks.

US Markets

The S&P 500 remains above the key 1100 level, but traded lower, weighed by Fed’s Beige Book reporting economic conditions though still improving in most of its 12 regional districts, advances were modest, with retail sales posting only small gains, housing and construction still weak; sentiment also weighed by data showing demand for durable goods slid for second month in June. The U.S. Commerce Department’s durable-goods report showed that orders and shipments for nonmilitary capital goods excluding aircraft climbed 0.6 percent in June. Nine of 10 industries sectors in the S&P 500 fell after orders for U.S. durable goods dropped 1 percent in June, due to a falling demand for aircraft, government data showed. The Fed also added to the negative sentiment saying that U.S. economic growth slowed in some areas over the past two months, dragged down by commercial real estate and the expiration of a tax credit for home buyers.

The Dow closed down -0.4% (or -40 points) at 10,498, while in the broader market the S&P 500 index down -0.7% (or -8 points) at 1,106 and the tech-heavy Nasdaq ended down -1.0% (or -24 points) at 2,265.

European Markets

European stocks traded lower. In the U.K. stocks declined the most in more than a week after some disappointing earnings reports. In London the FTSE 100 index closed down -0.9% (or -46 points) at 5,320, the German DAX down -0.5% (or -28 points) at 6,179.

Asian Markets

Asian markets rose again. In China the Shanghai Composite Index of equities jumped to a two-month high as the central bank said China’s economic fundamentals are “good”. Economic data reported by the statistics bureau showed profits of Chinese industrial companies in 24 regions jumped 72 percent to 1.61 trillion yuan ($237.5 billion) in the first half of 2010 from a year earlier. Industrial metals prices rose on the back of this. The Chinese index is up 11 percent from its yearly lows, as the jump in industrial profits and the prospects for increased spending and tourism boosted the domestic economic outlook. Japan is also in focus this week with the reporting season starting off well, sending the index to its biggest gains in 3-weeks. The Yen reached its lowest level against the Euro since May, this helped exporters rise around 5 percent, Banks rise around 3.5 percent after Basel Committee eases capital assessment stance and Property developers rose. In China the SSE Composite closed up 2.3% (or 58 points) at 2,634, while in Hong Kong the Hang Seng Index was up 0.6% (or 118 points) at 21,091 and in Japan the Nikkei 225 Index was up 2.7% (or 256 points) at 9,753.

Commodities

The Dollar Index down marginally -0.1% at 82.13 on higher Euro, while the Australian Dollar last traded lower at 89.08. Commodities were generally higher. The US dollar slipped versus the yen on the back of an unexpected drop in American durable-goods orders further added to evidence the economic recovery is slowing.

Oil prices eased to a 1-week low as government data showed an unexpected gain in U.S. inventories. The benchmark crude NYMEX for September delivery was down -0.7% (or $US-0.51) to settle at $US76.99. Copper continued to shine rising to an 11-week high on signs growth is sufficient in China and the U.S. to spur demand. Copper prices are trading well above the key $US3.00 a pound, Copper for September delivery delivery was up 1.2% (or 4.0 cents) at $US3.2455 a pound, the highest settlement price since mid-May. Gold rose, with August gold up marginally 0.2% at $US1,160.40 0 an ounce.

Key News International Drivers Today

US – S&P 500 companies continue to report earnings this week.

EU – M&A activity. Bank shares rose after the Basel Committee on Banking Supervision relaxed some of its proposed capital and liquidity rules.

CHINA – Economic fundamentals are “good”. Industrial metals prices rise. JP Morgan says equities starting to look attractive.

JAPAN – companies continue to report earnings this week.

Markets Overview

US and Europe Give Negative Lead for ASX

Market	Movement
The Dow Jones Industrial Average	Down -0.4% (or -40 pts) at 10,498
The S&P 500	Down -0.7% (or -8 pts) at 1,106
The Nasdaq	Down -1.0% (or -24 pts) at 2,265

The FTSE 100	Down -0.9% (or -46 pts) at 5,320
The German DAX	Down -0.5% (or -28 pts) at 6,179
SSE Composite (China)	Up 2.3% (or 58 pts) at 2,634

The Dollar Index	Down Marginally -0.06% at 82.13
The Australian Dollar	Last traded lower at 89.08
The Commodities Index	Up 0.64% at 266.2

Crude Oil Futures	Down -0.7% at $76.99
Gold Futures	Up Marginally 0.21% at $1,160.40
Copper Futures	Up 1.22% at $3.2455
SPI Futures	Down -0.5% (or -23 pts) at 4,485.0


Market	Movement
SSE Composite (China)	Up 2.3% at 2,634
Hang Seng Index (Hong Kong)	Up 0.6% at 21,091
Nikkei 225 Index (Japan)	Up 2.7% at 9,753

SPI: Above key Level 4400 – SPI down 0.5% at 4,485….

ASX News Today

The SPI Futures is above the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -0.5% (or -23 pts) at 4,485. Home buyers are likely to be spared an interest rate rise from next Tuesday’s Reserve Bank board meeting. Key levels today are 4550 and 4450, with pivot around 4500. M&A activity continues to drive specific stocks. Investors will digest the impact of the surprise CPI report from yesterday. The RBA are due to decide on interest rates on Tuesday, and are now expected to leave interest rates on hold, after the closely watched underlying rate of inflation slid to 2.7 per cent, the first time it has been below 3 per cent and within the Reserve’s target band for three years. Also on the jobs front Australia created 45,900 jobs in June, the 11th successive month in which employment has climbed, however almost all of the jobs created in June were in the mining dominated states of Western Australia and Queensland.

ALS- Alesco dissapoints again with another annual net loss of $123.4 million and says it remains cautious about the next 12 months.

ARD- Argent Minerals will undertake a capital raising to fund its $5.3 million purchase of the Bullant underground gold mine in WA.

BSL- BlueScope Steel and Japan’s Nippon Steel Corporation have signed a long-term joint technical collaboration agreement to develop next-generation coated steel products.

CFU- Ceramic Fuels Cells reported that Canberra Institute of Technology (CIT) is to install its gas-to-electricity BlueGen power generating unit.

DOW- Downer the engineering firm said it secured contracts worth $2 billion with a coal mining venture of BHP and Mitsubishi Development. Shares rose 5.9%.

LGL- Lihir the gold producer says June quarterly production is in line with guidance and up six percent on the previous quarter.

MCC- Macarthur Coal says it has achieved a sales record for fiscal 2010 up 15.3 percent, form increased production, improved economic conditions and a sell down of coal stocks, however there was a lagging performance in the June quarter.

NCM- Newcrest planned $9.5 billion Lihir merger is on track.

QR – Queensland Rail the coal and freight rail operator QR National is on track for fourth quarter this year, the biggest float since Telstra’s T1 in 2007.

RIV- Riversdale Mining the Mozambique-focused coal miner says sales have increased by 51 percent, although production dropped in the June quarter due to excessive water and gas in the main mine shaft.

RXM- Rex Minerals says its Hillside project in South Australia could become one of Australia’s largest copper mines. Ongoing drilling success at Hillside could see with drilling has the potential for the project rank behind BHP’s Olympic Dam mine in SA and Xstrata’s Mount Isa operations in Qld. Shares were up 8.7%.

SIP- Sigma the beleaguered drugs maker and distributor has appointed Jeff Sells as CFO.

TLS- Telstra has been fined $18.5 million for illegally blocking broadband competitors from using its local exchanges.

WDC- Westfield the world’s largest shopping center owner will pay a distribution of 32 cents/share for the six months to June 30.

WPL-Woodside workers are being prosecuted over a strike at the Pluto gas project in WA and face fines totaling more than $40 million. Woodside has taken the action over an eight-day strike in January at the $12 billion Pilbara project.

Economic Reports :

AFOM – to auction $500 million of October 2010 Treasury notes.

CTX – MD to address American Chamber of Commerce

Companies:

AUN – Austar Ltd – 1H10 results

OGC – Ocenanagold Ltd – second half results

Expect to see our market trade lower today. Time to protect positions and take profits.

Market Summary

ASX – to open lower
US & UK/Europe – lower

US ADRs – Broadly Lower!!!…

BHP up 0.3% & RIO flat; AWC down 1.1%
ANZ down 0.3% & NAB down 0.5%
NEM down 0.7%, JHX down 2.7%, NWS down 1.8%
Commodities Stock Index down 1.0%
Gold Stocks Index up 0.5%
Oil Stocks Index down 0.7%
By Michael Hevern
Head of Research

Tags: Asian Markets, ASX, ASX News, BHP, European Markets, Nasdaq, Nikkei, S&P500, Stock Market Analysis, stockmarket, trading, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

ASX Company News: Downer EDI Secures $2 billion BHP Mining Contract

Thursday, July 29th, 2010

Downer EDI Limited (DOW) announced that its Mining Division has signed contracts with BHP Billiton Mitsubishi Alliance (BMA) to June 2015 at Goonyella Riverside and Norwich Park Mines in the Bowen Basin, Central Queensland. The contracts, jointly valued at approximately A$2 billion, are for load and haul of prestrip material and drill and blast services at Goonyella Riverside Mine, and for load and haul of prestrip material at Norwich Park Mine.

The contracts provide better utilisation of equipment and resources across both mine sites and will result in substantially improved productivity and returns for Downer. New equipment for the contracts totalling approximately A$190 million will be deployed progressively over the coming 12 months and funded primarily through operating cash flow and new finance and operating leases. Downer has ample funding capacity for the BMA contracts and also the Fortescue Metals Group contract at Christmas Creek for which Downer is preferred bidder. Downer will remain well inside its target leverage range of 25% – 35%. Downer is rated investment grade BBB- (stable outlook) by Fitch Ratings.

www.downeredi.com

http://www.traderdealer.com.au/Fundamentals/dow

Tags: BHP, BHP Billiton, Coal mining, Dow, Downer EDI, New contract
Posted in ASX Company News | No Comments

ASX Company News: Intec Phase 2 Testing Of Waste Recycling Approved

Thursday, July 29th, 2010

Intec Ltd (INL) is pleased to announce that EPA Victoria has approved the commencement of the second of three phases for the technology development programme to recycle spent pickle liquor and other wastes from the galvanizing industry.

GB Galvanizing Service Pty. Ltd. and EPA Victoria signed an agreement in January 2010 for $780,000 of HazWaste funding for the research, demonstration and engineering portion of a proposed $2.85 million project.

Intec, as the technology service provider, has now received all scheduled payments for the completion of Phase 1, which commenced in November 2009. Finishing within budget, Phase 1 comprised the successful conduct by Intec of continuous pilot plant trials over 175 hours of operation, during which the plant demonstrated the recovery and electrowinning of zinc metal product, and also iron separation and recovery. (See ASX announcement on 7 April 2010).

In this phase, specialised product recovery equipment will be constructed and operated at Intec’s Burnie Research Facility, and 50,000 litres of GBG’s spent galvanizing pickle liquor will be recycled on a zero waste basis to produce high quality zinc (to be used directly in the galvanizing bath), replenished acid and saleable hematite and gypsum products.

Intec Ltd is an Australian company which owns the Intec Process for superior and sustainable metals production. The Intec Process comprises a set of patented chloride-based hydrometallurgical processes that have been demonstrated to produce high purity base and precious metals from concentrates of sulphide and oxide ores, tailings and industrial wastes. The Intec Process has substantial environmental and cost advantages over both the widely used conventional smelting and refining processes and other known hydrometallurgical processes.

www.intec.com.au

http://www.traderdealer.com.au/Fundamentals/inl

Tags: Government Approval, INL, Intec, Waste recycling
Posted in ASX Company News | No Comments

ASX Company News: Austal Secures Middle East Maintenance Contracts

Thursday, July 29th, 2010

Austal (ASB) announces the expansion of its vessel support and maintenance presence in the Middle East following the award of a technical services contract with Saudi Arabian ferry operator The Maritime Company for Navigation. The contract award follows the recent opening of Austal service hubs in Egypt and Oman, and a new regional headquarters in the United Arab Emirates (Dubai).

Under the contract, Austal will provide rapid response to technical issues related to three large Austal vehicle ferries, including spare parts supply, for a period of up to five years. Austal Chief Operating Officer Andrew Bellamy commented; “Valued at just under AUD $1 million over 5 years, this is another important strategic step in growing Austal’s presence in the Middle East region.” “With similar contracts also in place in Oman, Egypt, Malta and Trinidad and Tobago, Austal’s vessel service and support offering is now providing long‐term, predictable revenue streams independent of our order book.” The three vessels include the Kingdom of Saudi Arabia’s two 69 metre vehicle ferries “Jazan” and “Farasan”, delivered in 2009, and 56 metre vehicle ferry “Fares 1”, delivered in 2002.

Austal is the world leader in the design and construction of customised, high performance aluminium vessels for both commercial and defence applications. With shipyards in Western Australia and the USA (Mobile, Alabama), Austal has delivered more than 200 vessels for customers around the world.

Established in Western Australia in 1988, Austal’s product range includes passenger and vehicle‐passenger ferries, patrol boats, theatre support vessels, combat ships, multi‐role vessels and luxury private live‐aboards. Austal is also an established provider of worldwide vessel maintenance and management services.

www.austal.com

http://www.traderdealer.com.au/Fundamentals/asb

Tags: ASB, Austal, Maintenance, New contract, Shipping
Posted in ASX Company News | No Comments

Stock Market Analysis: Consumers not so Confident in the US; Negative Lead for ASX

Wednesday, July 28th, 2010

Stock Market Analysis

Consumers not so Confident in the US; Negative Lead for ASX

U.S. stocks took a breather despite further good earnings reports from Dow component DuPont and Cummins. Consumer confidence has hit a five-month low due to the poor employment outlook. Our market is likely to see some profit taking today, investors should take out some protection.

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.4% (or 19 pts) at 4,490. Miners, Energy and Consumer Discretionary stocks will likely see profit-taking today. Key levels today are 4550 and 4400, with pivot around 4500. M&A activity continues to drive specific stocks.

US Markets

The S&P 500 remains above the key 1100 level, but consumer confidence fell in July to its lowest point since February, hurt by concerns about the job market, according to a report from the Conference Board. DuPont (up 3.6 percent) supported the Dow after the company raised its forecast for 2010 earnings well above expectations, while Cummins (up 2 percent) also raised its full-year forecast. But steelmakers painted a gloomier outlook, with AK Steel saying it was cutting production capacity to match weak demand. while US Steel (down 6.4 percent) reported a net loss that missed analysts expectations.

The broader S&P 500 is trading just below its 200-day moving average after crossing above it on Monday (as seen on the chart below). Sectors (in order) that dragged the market lower included: Consumer Discretionary Materials, Industrial and Energy, all down over 0.6 percent. The Dow closed up marginally 0.1% (or 12 points) at 10,538, while in the broader market the S&P 500 index down marginally -0.1% (or -1 points) at 1,114 and the tech-heavy Nasdaq ended down -0.4% (or -8 points) at 2,288.

European Markets

European stocks advanced , in response to the ECB Bank “stress tests”. Banks led the markets higher. U.K. stocks held at a 10-month high, Banks and Energy stocks lead the way. Bank shares rose after the Basel Committee on Banking Supervision relaxed some of its proposed capital and liquidity rules. Barclays and Lloyds were up over 7 percent, supporting the bullish sentiment. BP shares were 2.6 percent lower, as they report huge losses ($US17 billion for the quarter) and a new CEO US-born Robert Dudley. They also plan to sell $US30 billion in assets to fund the costs of the Gulf of Mexico oil spill, the stock is down 38 percent since the spill. In London the FTSE 100 index closed up 0.3% (or 15 points) at 5,366, the German DAX up marginally 0.2% (or 13 points) at 6,207.

Asian Markets

Asian markets rose again. The Japanese market rose, led by banks, after the Basel Committee on Banking Supervision eased some rule proposals, easing concerns that banks will have to raise more capital. The market is down 6 percent YTD, however Japan earnings season starts this week, which will act as a catalyst (either way). In China, JPMorgan Asset Management says the China’s yuan-denominated shares are “due for a catch up” in the second half of this year as the nation delays further measures to curb property prices. In China the SSE Composite closed down -0.5% (or -13 points) at 2,575, while in Hong Kong the Hang Seng Index was up 0.6% (or 133 points) at 20,973 and in Japan the Nikkei 225 Index was down marginally -0.1% (or -7 points) at 9,497.

Commodities

The Dollar Index up marginally 0.1% at 82.15 on higher Euro, while the Australian Dollar last traded at 90.21. Commodities were generally lower.

Oil prices eased as the storm threat for oil operations in the Gulf of Mexico evaporated. The benchmark crude NYMEX for September delivery was down -0.5% (or $US0.39) to settle at $US77.11. Copper prices are trading above the key $US3.00 a pound, Copper for September delivery delivery was up marginally 0.0% (or 0.1 cents) at $US3.2055 a pound. Gold was lower, with August gold was down -2.1% at $US1,162.80 an ounce.

Key News International Drivers Today

US – S&P 500 companies continue to report earnings this week.

EU – M&A activity. Bank shares rose after the Basel Committee on Banking Supervision relaxed some of its proposed capital and liquidity rules.

CHINA – Central bank happy with the slowing economy. JP Morgan says equities starting to look attractive.

JAPAN – companies start to report earnings this week.

Markets Overview

Consumers Not so Confident in the US; Negative Lead for ASX

Market	Movement
The Dow Jones Industrial Average	Up Marginally 0.1% (or 12 pts) at 10,538
The S&P 500	Down Marginally -0.1% (or -1 pts) at 1,114
The Nasdaq	Down -0.4% (or -8 pts) at 2,288

The FTSE 100	Up 0.3% (or 15 pts) at 5,366
The German DAX	Up Marginally 0.2% (or 13 pts) at 6,207
SSE Composite (China)	Up 0.8% (or 0 pts) at 38.0

The Dollar Index	Up Marginally 0.07% at 82.15
The Australian Dollar	Last traded at 90.01
The Commodities Index	Down -0.83% at 264.5

Crude Oil Futures	Down -0.5% at $77.11
Gold Futures	Down -2.11% at $1,162.80
Copper Futures	Up Marginally 0.02% at $3.2055
SPI Futures	Up 0.4% (or 19 pts) at 4,490.0


Market	Movement
SSE Composite (China)	Down -0.5% at 2,575
Hang Seng Index (Hong Kong)	Up 0.6% at 20,973
Nikkei 225 Index (Japan)	Down Marginally -0.1% at 9,497

SPI: Above key Level 4400 – SPI up 0.4% at 4,490….

ASX News Today

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.4% (or 19 pts) at 4,490. Miners, Energy and Consumer Discretionary stocks will likely see profit-taking today. Time to protect positions. Key levels today are 4550 and 4400, with pivot around 4500. M&A activity continues to drive specific stocks.

ALZ- Australand the property developer has posted 1H10 net profit up 127 percent, saying it is on track to achieve its full year earnings guidance.

ANZ- ANZ Bank may need to raise $4 to $6 billion to fund acquisitions, including a bid for the Korea Exchange Bank, according to Macquarie Equities.

CEY- Centennial Coal says June quarter production is 14 percent higher than the previous quarter and July 2010 production has started well and declares a final dividend of $0.04/share.

EMX- Energia Minerals the uranium explorer reported its maiden resource estimate for its wholly owned Nyang project in WA. Shares jumped 23%.

IAG- Insurance Australia says it expects to report a drop in annual profit in fiscal 2010 of around 50%, but expects an improved performance in FY11.

MCC- Macarthur Coal Ltd has abandoned a $110 million deal by which it would have bought out CITIC Resources’ interests in a joint venture. Shares fell 3.7%.

NCM- Newcrest has signed a non-binding deal to take at least a 7.1 per cent stake in British firm Sumatra Copper and Gold.

OSH- Oil Search the energy producer reported falling production in its 2Q10 as a result of a processing plant shut down and declining output from its ageing oil fields.

WBC- Westpac says it remains focused on its Australasian business, and is not about to embark on a strategic push into Asia.

WES- Wesfarmers said coal production at its Premier mine near Collie in WA for the June quarter was down 7.6 percent due to lower demand from state electricity generator Verve Energy.

Economic Reports :

CPI – ABS CPI inflation data (forecast is 1% annual 3.4%)

Companies:

ALS – Alesco Corp Ltd – Full year 2010 Preliminary results
RIV – Riversdale Mining Ltd – June Quarterly Report
LGL – Lihir – June Quarterly Report

MCC – Macarthur Coal – June Quarterly Report
WHC – Whitehaven Coal – June Quartely Activities Report

Expect to see our market trade flat to lower today. Time to protect positions and take profits.

Market Summary

ASX – to open flat, and see profit taking.
US & UK/Europe – lower.

US ADRs – Mixed!!!…

BHP flat & RIO up 0.8%; AWC down 2.1%
ANZ up 0.3% & NAB up 0.3%
NEM down 4.0%, JHX up 1.4%, NWS down 1.3%

Commodities Stock Index down 1.3%
Gold Stocks Index down 3.0%
Oil Stocks Index down 0.4%

By Michael Hevern
Head of Research

Tags: Asian Markets, ASX, ASX News, BHP, European Markets, mining, Nikkei, S&P500, spi, Stock Market Analysis, stockmarket, trading, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

Archive for July, 2010

Stock Market Analysis

US GDP Report Gives Pause; ASX to Trade Lower

US Markets

European Markets

Asian Markets

Commodities

Key News International Drivers Today

US GDP Report Gives Pause; ASX to Trade Lower

ASX News Today

Stock Market Analysis

US and Europe Give Negative Lead for ASX

US Markets

European Markets

Asian Markets

Commodities

Key News International Drivers Today

US and Europe Give Negative Lead for ASX

ASX News Today

Stock Market Analysis

Consumers not so Confident in the US; Negative Lead for ASX

US Markets

European Markets

Asian Markets

Commodities

Consumers Not so Confident in the US; Negative Lead for ASX

ASX News Today

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