Stock Market Analysis
Bargain Hunters Step In After Third Week of Losses
U.S. stocks climbed on Friday as bargains hunters stepped. European markets also rose. Asian markets closed higher on Friday, despite the late week gains in key world markets the week ended down for a third week. Commodity prices were generally higher as investors looked to add risk to their portfolios.
The SPI Futures is below the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.9% (or 41 pts) at 4,389 (flat for week). The key levels for our index today are 4450 and 4350. Miners, Energy and Financial should all follow the U.S. higher today. M&A activity continues to drive specific stocks. Expect to see our market trade higher as the earnings season comes to an end (see below). Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.
US Markets
U.S. stocks rose after a better-than-expected revision of second-quarter economic growth (GDP) to 1.6 percent. The Fed Chairman Ben Bernanke gave a detailed analysis of the U.S. economy saying growth has been “too slow” in the past year and unemployment “too high”, but he did promise the Fed would “do what it takes” to support any faltering in the U.S. economic recovery. The Fed also expects the U.S. economy to continue growing in 2011, as a handoff from fiscal stimulus and inventory restocking to consumer spending and business investment “appears to be under way”. Bellwethers such as DuPont, Alcoa and Caterpillar led the broad gains, up over 3 percent. The sector gains were led by Miners,Energy and Financials all up over 2 percent. However all the key indices ended the week in the red, for a third week, the longest losing streak since early February. The key data this week will be the ISM manufacturing report and U.S. unemployment. The Dow closed up 1.7% (or 165 points) at 10,151 (down -0.6% for week), while in the broader market the S&P 500 index up 1.7% (or 17 points) at 1,065 (down -0.7% for week) and the tech-heavy Nasdaq ended up 1.7% (or 35 points) at 2,154 (down -1.2% for week).
European Markets
European stock markets closed higher, but markets finished down for a third week. The ECB President Jean-Claude Trichet said that governments risk a “lost decade” of weak economic growth if they delay measures to address the surge in public debt that has resulted from the GFC; this view is opposes the U.S. who are looking to increase their stimulus spending. BHP’s hostile $US39 billion bid for Canada’s Potash Corp is still the only one on the table. In London the FTSE 100 index closed up 0.9% (or 46 points) at 5,202 (up 0.1% for week), the German DAX up 0.7% (or 39 points) at 5,951 (down -0.9% for week), while in France the CAC was up 0.9% (or 33 points) at 3,507 (down -0.5% for week).
Asian Markets
Asian stock markets ended higher on Friday, but caution prevailed ahead of Friday’s key U.S. reports. Japan rose on hopes of possible stimulus measures and potential government action to stem the yen’s strength. Energy stocks led gains in China after PetroChina and China Oilfield Services reported strong 1H10 results, but steel prices fell 1.9 percent this week, the first decline in 6-weeks, raising concerns of an economic slowdown. In China the SSE Composite closed up 0.3% (or 7 points) at 2,611 (down -1.2% for week), while in Hong Kong the Hang Seng Index was down marginally -0.1% (or -15 points) at 20,597 (down -1.8% for week) and in Japan the Nikkei 225 Index was up 1.0% (or 183 points) at 8,991 (down -2.1% for week). These markets will be playing catch up today.
Commodities
The Dollar Index flat at 82.74, while the Australian Dollar last traded higher at 89.88. Commodities were generally higher.
Oil prices rose for the week. The benchmark crude NYMEX for September delivery was up 2.5% (or $US1.81) to settle at $US75.57 (up 2.2% for week). Copper prices bounced off monthly lows, Copper for September delivery delivery was up 1.8% (or 5.9 cents) at $US3.3820 (up 2.7% for week). Gold prices are above key $US1,200 level, with December gold was up marginally 0.1% at $US1,235.70 (up 0.7% for week).
Key News International Drivers Today
US – The Fed Chairman, promises to “do what it takes”. GDP better at 1.6%. Companies continue to report earnings this week.
EU – ECB President Jean-Claude Trichet said that governments risk a “lost decade”.
CHINA – Steel prices fall for the first week in the last six. Government stands firm on access to credit.
JAPAN – Japan still below the key 9,000 level. Companies continue to report earnings this week.
Markets Overview
Bargain Hunters Step In After 3-Weeks of Losses
|
Market |
Movement |
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The Dow Jones Industrial Average |
Up 1.7% (or 165 pts) at 10,151 (down -0.6% for week) |
|
The S&P 500 |
Up 1.7% (or 17 pts) at 1,065 (down -0.7% for week) |
|
The Nasdaq |
Up 1.7% (or 35 pts) at 2,154 (down -1.2% for week) |
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The FTSE 100 |
Up 0.9% (or 46 pts) at 5,202 (up 0.1% for week) |
|
The German DAX |
Up 0.7% (or 39 pts) at 5,951 (down -0.9% for week) |
|
The Fench CAC |
Up 0.9% (or 33 pts) at 3,507 (down -0.5% for week) |
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The Dollar Index |
Flat at 82.74 |
|
The Australian Dollar |
Last traded at 89.88 |
|
The Commodities Index |
Up 1.22% at 267.3 |
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Crude Oil Futures |
Up 2.5% at $75.57 (up 2.2% for week) |
|
Gold Futures |
Up Marginally 0.11% at $1,235.70 (up 0.7% for week) |
|
Copper Futures |
Up 1.77% at $3.3820 (up 2.7% for week) |
|
SPI Futures |
Up 0.9% (or 41 pts) at 4,389 (flat for week) |
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Market |
Movement |
|
SSE Composite (China) |
Up 0.3% at 2,611 (down -1.2% for week) |
|
Hang Seng Index (HK) |
Flat -0.1% at 20,597 (down -1.8% for week) |
|
Nikkei 225 Index (Japan) |
Up 1.0% at 8,991 (down -2.1% for week) |
SPI: Below key Level 4400 – SPI up 0.9% at 4,389….
ASX News Today
The SPI Futures is below the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.9% (or 41 pts) at 4,389 (flat for week). The key levels for our index today are 4450 and 4350. Miners, Energy and Financial should all follow the U.S. higher today. M&A activity continues to drive specific stocks. Expect to see our market trade higher as the earnings season comes to an end (see below). Investors need to concentrate on those companies that continue to grow their earnings with strong balance sheets.
ABP- Abacus Property Group has recovered to a full year profit as downward revaluations in property values slowed as the effects of the GFC eased.
FXJ- Fairfax Media the newspaper publisher reported a turnaround to full-year profit and is well placed for further growth this year.
IFL- IOOF Holdings quadruples its annual net profit with Revenue up 127% and Profit up 432% and flag 1H11 profitability should climb higher, citing rising equity markets, better fund inflows and merger benefits.
ITO- Intoll Group the Ttoll road owner, has recommended an enhanced takeover bid from Canadian suitor Canada Pension Plan Investment Board.
LGL- Lihir says rising prices have helped miner report 1H10 profit of $US87.1 million, (from a prior loss).
MAQ- Macquarie Telecom Group reported a 141 percent surge in FY10 net profit and says it expects growth to continue this year.
RHC- Ramsay Health Care the private hospital operator, increased FY10 profit by 39.3 percent, driven by a strong Aussie result and continued UK growth.
NCM- A court in Papua New Guinea (PNG) haa given the green light to Lihir’s takeover by Newcrest Mining.
SGM- Sims Metal Management has recovered to a full year profit (from a prior loss), but warned scrap flows remain weak in North America and Europe.
SLM- Salmat the direct marketer posted a 42.5 percent rise in FY10 net profit, and expects market conditions to remain consistent over this year.
STO- Santos reported 1H10 profit almost doubled with NPAT up 94%, with higher prices and lower exploration costs boosting the result.
STO- Santos shares rose on rumours its is in talks with Korea Gas Corp, South Korea’s largest LNG supplier, to supply more than 2-million metric tons of LNG pa.
WOW- Woolworths upgraded to a BUY by Citi.
UGL – United Group the engineering firm, has finalised a $600 million public-private partnership (PPP) with Singapore Sports Council to maintain the Singapore Sports Hub.
VBA- Virgin Blue reported a return to profitability in 2009/10, announced further alliances with international partners and flagged the introduction of Airbus to the domestic fleet.
Economic Reports :
Negotiations to resolve hung parliament
Companies:
IFN – Infigen Energy Full year 2010 Results
IIF – ING Industrial Fund Full year 2010 Results
KCN – Kingsgate Consolidated Ltd Full year 2010 Results
MQA – Macquarie Atlas Roads Interim 2010 Results
SSM – Service Stream Ltd Full year 2010 Results
Dividends
ASX – ASX Ltd Full year 2010 Ex-dividend date
HST – Hastie Group Ltd Full year 2010 Ex-dividend date
FXJ – Fairfax Media Full year 2010 Ex-dividend date
SGH – Slater & Gordon Ltd Full year 2010 Ex-dividend
SUN – Suncorp-Metway Limited Full year 2010 Ex-dividend date
WOR – WorleyParsons Ltd Full year 2010 Ex-dividend date
Market Summary
US & UK/Europe – Higher
US ADRs – Broadly Higher!!!…
BHP up 2.4% &
RIO up 3.6%;
AWC up 7.1%
ANZ up 3.0% &
NAB up3.4%
NEM up 0.9%,
JHX up 1.2%,
NWS up 1.9%
Commodities Stock Index up 2.5%
Gold Stocks Index up 1.6%
Oil Stocks Index up2.5%
By Michael Hevern
Head of Research
Tags: Asian Markets, ASX, ASX News, BHP, Commodities, Crude Oil, Dividend, European Markets, Stock Market Analysis, trading, US Market wrap
