Stock Market Analysis
US Markets Push Higher, while Europe is Relieved
U.S. stocks rose to two-month highs on FedEx report and home sales, and are now in the green for the year. This will be positive for our market today.
The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.6% (or 26 pts) at 4,502. Miners and Consumer Staple stocks should lead rises today, while Insurers and retailers are likely to weigh on the market today. Key levels today are 4550 and 4350, with pivot around 4400. M&A activity continues to drive specific stocks.
US Markets
The S&P 500 remains above the key 1100 level, at break-even YTD, while the DOW is up 0.9 percent for the year (YTD) and the Nasdaq is up 1.2 percent YTD. FedEx share rose 5.6 percent on better-than-expected results, boosting their quarterly and full year earnings forecasts, and the positive sentiment continued in the Dow Transports (DJTRANS) Index from last week as it gained 2.6 percent overnight. New homes sales surprised to the upside, jumping 23.6 percent in June, resulting in hte DJ US Home Construction Index rising 2.9 percent in the session. The positive sentiment was broad-based with 4 stocks rising for every 1 that fall, on the NYSE.
The Dow closed up 1.0% (or 101 points) at 10,525ECB Bank “stress tests”, , while in the broader market the S&P 500 index up 1.1% (or 12 points) at 1,115 and the tech-heavy Nasdaq ended up 1.2% (or 27 points) at 2,296.
European Markets
European stocks advanced , in response to the ECB Bank “stress tests”. Banks led the markets higher. U.K. stocks rose to a 10-month high, Banks and Energy stocks lead the way. Barclays rose 4.5 percent and Lloyds up 3.9 percent, supporting the bullish sentiment. BP shares were 4.9 percent up as traders anticipate a change in top management, with a new CEO. In London the FTSE 100 index closed up 0.7% (or 39 points) at 5,351, the German DAX up 0.5% (or 28 points) at 6,194, while in France the CAC was up 0.6% (or 29 points) at 3636.
Asian Markets
Asian markets rose again on the back of the EU Bank “stress test” results and U.S. earnings. The Shanghai Composite finished nearing a three-week high, led by rising commodities prices and the strong U.S. earnings reporting season. In China the SSE Composite closed up 0.7% (or 17 points) at 2,589, while in Hong Kong the Hang Seng Index was up marginally 0.1% (or 25 points) at 20,840 and in Japan the Nikkei 225 Index was up 0.8% (or 73 points) at 9,504.
Commodities
The US Dollar Index down -0.5% at 82.09 on higher Euro, while the Australian Dollar last traded higher at 90.16. Commodities were generally higher.
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 marginally -0.1% (or $US-0.11) to settle at $US78.87. Copper prices are trading above the key $US3.00 a pound, Copper for September delivery delivery was up 1.2% (or 3.8 cents) at $US3.2250 a pound. Gold was flat, with August gold was $US4.70 lower at $US1,183.10 an ounce.
Key News International Drivers Today
US – S&P 500 companies continue to report earnings this week.
EU – M&A activity. Bank “stress test” results had no surprises, but there are concerns over results.
CHINA – Commodity prices and Property developers rise, on speculation the government may ease policies.
Markets Overview
US Markets Push Higher, While Europe is Relieved
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Market
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Movement
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The Dow Jones Industrial Average
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Up 1.0% (or 101 pts) at 10,525
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The S&P 500
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Up 1.1% (or 12 pts) at 1,115
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The Nasdaq
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Up 1.2% (or 27 pts) at 2,296
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The FTSE 100
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Up 0.7% (or 39 pts) at 5,351
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The German DAX
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Up 0.5% (or 28 pts) at 6,194
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SSE Composite (China)
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Up 0.8% (or 0 pts) at 37.7
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The Dollar Index
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Down -0.46% at 82.09
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The Australian Dollar
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Last traded at 90.16
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The Commodities Index
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Up Marginally 0.02% at 266.7
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Crude Oil Futures
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Down Marginally -0.1% at $78.87
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Gold Futures
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Down $US4.72 at $S1,183.10
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Copper Futures
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Up 1.18% at $3.2250
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SPI Futures
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Up 0.6% (or 26 pts) at 4,502.0
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Market
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Movement
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SSE Composite (China)
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Up 0.7% at 2,589
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Hang Seng Index (Hong Kong)
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Up Marginally 0.1% at 20,840
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Nikkei 225 Index (Japan)
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Up 0.8% at 9,504
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SPI: Above key Level 4400 – SPI up 0.6% at 4,4502…
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 0.6% (or 26 pts) at 4,502. Miners and Consumer Staple stocks should lead rises today, while Insurers and retailers are likely to weigh on the market today. Key levels today are 4550 and 4350, with pivot around 4400. M&A activity continues to drive specific stocks.
AFI- The Investment Company (AFI) annual profit fell 11.9 per cent, but says it will
take a patient approach to investing in 2010/11.
BKW- Brickworks has announced two new debt facilities worth $65 and $94 million to further strengthen its balance sheet and financial position.
CXY- The WA miner is planning to trial underground coal gasification (UCG) in the same southern Queensland town where another UCG project was forced to shut down because of a water contamination scare.
GUD- GUD Holdings Ltd, which owns Sunbeam and other consumer brands, reported a record FY10 profit of $46.4 million, and expects moderate sales growth in the FY11 financial.
HVN- Harvey Norman the electrical and whitegoods retailer reported flat sales for the year as consumers cut spending on luxury items; no longer having the benefit of the government stimulus money in the 4Q last year. The 4Q result, with total sales from Australia down 4% and like-for-like sales down 3.4%, disappoints the market.
IAG- IAG the insures says it expects to report a FY10 profit drop of around 50%.
FMG- A mining sector representative body has threatened to relaunch its advertising war against the tax. The Association of Mining and Exploration Companies (AMEC), which represents small-to-mid tier miners, says it could relaunch its ad campaign within days.
LEI- Leighton Asia has secured a $172 million contract to provide mining services at the Martabe Gold Mine in Indonesia’s North Sumatra Province.
MAK- Minemakers shares surged 23% after saying it would offer half of the company in exchange for debt funding for its Wonarah phosphate project in the NT.
QBE- QBE Insurance 1H10 profit is expected to be down 40 percent on the pcp, as net investment income took a hit. The fall is a result of $254.72 million in equity losses, versus $US102 million in the pcp.
ROC- ROC Oil said production was weaker in the June quarter but it remains on target to meet 2010 production guidance.
TSE- Transfield Services Ltd subsidiary, USM, has secured a $95 million one-year contract to deliver maintenance services to more than 4,000 Walmart stores across the U.S.
WES- Wesfarmers Ltd says its 2009/10 retail sales growth was solid, lifting its sales by 4.3 per cent at its Coles supermarket business
Economic Reports :
HIA – Housig Trades Report for June Quarter
NBN – panel discussion today in Melbourne
Companies:
ALZ – 1H10 results
CEY – Quarterly activities
OSH – 2Q production report
Expect to see our market trade higher today. Insurers likely to weigh on the market.
Market Summary
ASX – to open higher
US & UK/Europe – higher.
US ADRs – Broadly higher!!!…
Commodities Stock Index up 0.7%
Gold Stocks Index down 0.9%
Oil Stocks Index up 1.7%
By Michael Hevern
Head of Research
