Stock Market Analysis
Markets Drift Lower, Energy Prices Rise
U.S. stocks drifted lower as traders and investors square up for the end of month/quarter. Weakness in financials was offset by gains in energy. The US dollar index has plummeted to an 8-month low again, the gold price held over $US1,300 an ounce and copper prices rose. European markets were cool on worries over the financial health of European banks, as civil unrest erupted across Europe over austerity measures. Asian stock markets ended generally higher on upbeat Chinese manufacturing data. The ASX is expected to trade flat to lower today.
The SPI Futures is just below the key resistance level of 4700 the ASX is set to open lower as the SPI Futures flat at 4,673. The key levels for our index today are 4700 and 4600. M&A activity continues to drive specific stocks. The ASX will trade flat to lower today, as traders and investors square up for the end of month/quarter. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.
US Markets
U.S. stocks drifted lower, as weakness in financials was offset by gains in energy on the back of higher oil prices, due to falling inventories. All three major indices have posted strong returns this month and remain on track for the best September since 1939, as the fears of the dreaded “double dip” have abated. The Dow Jones is up 8.1% and the Nasdaq up 12.4% for the month so far. The markets were weighed down by Financials, Materials and Consumer Discretionary sectors all down over 0.7 percent, while the Energy sector was up 1.1 percent. The Dow closed down marginally -0.2% (or -23 points) at 10,835, while in the broader market the S&P 500 index down -0.3% (or -3 points) at 1,145 and the tech-heavy Nasdaq ended down marginally -0.1% (or -3 points) at 2,377.
European Markets
European stocks ended lower. Civil unrest erupted as hundreds of thousands of workers across Europe protested government spending cuts even as France and Portugal work on new austerity budgets and European Commission proposes new fiscal controls to shrink the large deficits. Early data showing a September rise in euro zone economic sentiment failed to boost European equities, as investors choose to concentrate on sovereign debt issues. Irish banks were sold off around 6 percent, as the cost of insuring against default on the Ireland’s debt surged to a record. In London the market ended flat despite a late rally in the miners. In the U.K. the GDP expanded in the quarter to June, but the IMF cuts its 2011 economic growth forecast for the U.K. and said the Bank of England (BoE) needs to be ready to add more stimulus if the economy falters. In Germany stocks dropped led by the banks. In London the FTSE 100 index closed down marginally -0.2% (or -9 points) at 5,569, the German DAX down -0.5% (or -29 points) at 6,247, while in France the CAC was down -0.7% (or -25 points) at 3,737.
Asian Markets
Asian stock markets ended higher. Japanese shares rose after a better-than-expected business sentiment in the BoJ’s quarterly Tankan survey. The survey showed sentiment among the big manufacturers rose for a sixth quarter, this pushed exporters and automakers broadly higher. In China, the gauge of nationwide manufacturing activity the HSBC China Manufacturing Purchasing Managers Index (PMI) rose to a 5-month high reading of 52.9 in September. Chinese miners rallied as the U.S. dollar weakened on expectations that the Fed may introduce more stimulus measures, however property shares were hit again by fears of more policy tightening measures the Chinese government. In China the SSE Composite flat (or -1 points) at 2,611, while in Hong Kong the Hang Seng Index was up 1.2% (or 269 points) at 22,379 and in Japan the Nikkei 225 Index was up 0.7% (or 64 points) at 9,559.
Commodities
The Dollar Index down -0.3% at 78.78 on higher Euro, while the Australian Dollar last traded at 96.59. Commodities were generally higher.
Gold prices are still around record highs. The benchmark crude NYMEX for September delivery was up 2.1% (or $US1.62) to settle at $US77.80. Copper prices rose, Copper for September delivery Copper for September delivery was up 0.7% (or 2.4 cents) at $US3.6480. Gold prices are around record highs, are around key $US1,300 level, with December gold was up marginally 0.2% at $US1,309.00.
Key News International Drivers Today
US – Energy stocks rise on the back of higher oil prices, due to falling inventories.
EU – Civil unrest erupted protesting austerity measures.
CHINA – PMI rose to a 5-month high reading of 52.9 in September. Government stands firm on access to credit.
JAPAN – better-than-expected business sentiment.
Markets Overview
|
Market |
Movement |
|
The Dow Jones Industrial Average |
Down Marginally -0.2% (or -23 pts) at 10,835 |
|
The S&P 500 |
Down -0.3% (or -3 pts) at 1,145 |
|
The Nasdaq |
Down Marginally -0.1% (or -3 pts) at 2,377 |
|
|
|
|
The FTSE 100 |
Down Marginally -0.2% (or -9 pts) at 5,569 |
|
The German DAX |
Down -0.5% (or -29 pts) at 6,247 |
|
The Fench CAC |
Down -0.7% (or -25 pts) at 3,737 |
|
|
|
|
The Dollar Index |
Down -0.30% at 78.78 |
|
The Australian Dollar |
Last traded at 96.59 |
|
The Commodities Index |
Up 0.56% at 285.9 |
|
|
|
|
Crude Oil Futures |
Up 2.1% at $77.80 |
|
Gold Futures |
Up Marginally 0.18% at $1,309.00 |
|
Copper Futures |
Up 0.65% at $3.6480 |
|
SPI Futures |
Flat at 4,673 |
|
|
|
|
|
|
|
Market |
Movement |
|
SSE Composite (China) |
Flat at 2,611 |
|
Hang Seng Index (Hong Kong) |
Up 1.2% at 22,379 |
|
Nikkei 225 Index (Japan) |
Up 0.7% at 9,559 |
ASX News Today
The SPI Futures is just below the key resistance level of 4700 the ASX is set to open lower as the SPI Futures flat at 4,673. The key levels for our index today are 4700 and 4600. M&A activity continues to drive specific stocks. The ASX will trade flat to lower today, as traders and investors square up for the end of month/quarter. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.
ANZ – ANZ Bank will need to raise around $1.6 billion through an equity raising if it moves to buy a 57% stake in Korea Exchange Bank.
ASX- ASX Ltd is searching for a new CEO after the current CEO Robert Elstone will not renew his contract.
DJS- David Jones the upmarket retailer has reaffirmed its profit guidance for 2010/11.
KCN- Kingsgate Consolidated the gold miner, says production for the September quarter will be lower than the average for financial 2010 due to maintenance, lower grades and heavy rain.
PRC- Pike River Coal will start in-seam exploration drilling of the Paparoa seam on NZ’s South Island, in the 1H11.
LLC- Lend Lease has reached financial close on a $389.5 million army family housing project in Alaska.
NUF- Nufarm the ag chemicals supplier expects to generate better financial results in 2011 after reporting a loss, with profits down 63 percent (ex abnormals).
OSH- PNG villagers have gone on a rampage, attacking an ExxonMobil gas site. Oil Search is a partner in the project.
QAN – Qantas says yields on international routes are up 12-14% so far in FY11 compared to last year.
SIG- Sigma Pharmaceuticals has revalued its goodwill booking a 780 percent fall in its 1H10 result.
TLS- Telstra can comfortably pay a dividend for the current financial year despite spending $1 billion on a strategy change.
VBA – Virgin Blue customers faced more delays yesterday morning after further problems with the airline’s computer systems.
Economic Reports:
RBA Financial Stability Review
Financial Aggregates, incl Private Sector Credit for August
August Building Approvals
August Private Sector Building Approvals
Residential Building Approvals
Companies:
Commonwealth Property Office Fund (CPA) Full year 2010 AGM
Novogen Ltd (NRT) Full year 2010 Results
Ex-Dividends
PMP Limited(PMP)
Russell High Div (RDV)
WHK Group Limited (WHG)
Market Summary
ASX – to open Lower US & UK/Europe – Lower
US ADRs – Generally Lower!!!
RIO down 2.2%;
AWC down 1.4%
ANZ down 1.1% &
NAB down 1.1%
NEM down 0.5%
JHX up 0.3%
NWS down 2.2%
Commodities Stock Index up 0.4%
Gold Stocks Index down 0.1%
Oil Stocks Index up 0.7%
By Michael Hevern
Head of Research
