Stock Market Analysis
Dismal August Ends; Gold at 2-Year Highs
U.S. markets ended the month down for a third month in four. The Mining and Financial sectors recovered over 0.5%, as gold prices reached 2-month highs and crude oil sells-off on weakening demand. European stocks recovered overnight, but most indices recorded their largest monthly decline in August since May. Asian markets generally had a weak August, except for China which ended the month flat. The ASX will likely recover today on the back a some good economic news yesterday, be prepared to protect your portfolios.
The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.9% (or 41 pts) at 4,428 (down -2.6% for August). The key levels for our index today are 4500 and 4350. 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). Gold stocks set to shine. The market will be digest yesterday’s rosey economic reports from the RBA and the ABS, with the current account deficit contracting to levels not seen in nearly 50 years.
US Markets
U.S. stocks ended flat as the S&P 500 again bounced off the key technical level of 1,040. US consumer confidence rose more than expected in August, while home prices rose in June, though a separate report showed business activity in the US Midwest grew in August a less-than-expected. The Federal Reserve said the outlook for the US economy would have to deteriorate “appreciably” to warrant fresh support from the central bank. The positive data surprises supported the markets early, but the Fed’s comments and declines in technology shares capped overall gains. Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 5 to 4, while on the Nasdaq the ratio was about about even. The S&P 500 fell 4.7 per cent in August, and has been down 3 of the past 4-months, also of concern is that the month saw 5 of the lowest daily trading volumes for the year. For the month, the Dow fell 4.31 per cent while the Nasdaq tumbled 6.24 per cent. The S&P 500 lost 4.75 per cent, posting its worst August since 2001 in terms of per centage declines. The Dow closed up marginally 0.1% (or 5 points) at 10,015, while in the broader market the S&P 500 index up marginally 0.0% (or 0 points) at 1,049 and the tech-heavy Nasdaq ended down -0.3% (or -6 points) at 2,114.
European Markets
European stocks recovered overnight, but most indices recorded their largest monthly decline in August since May. For the month, the FTSE fell 0.8 per cent while the in Germany the markets tumbled 3.4 percent and in France the market declined 4.5 percent. The German market is still out performing but is now trading a key support levels that have been in place for the 6-months now. European market movements will be dictated by sovereign debt issues and the U.S. ISM manufacturing and employment data, plus Chinese PMI manufacturing data. Ireland will be auctioning debt later this week. In London the FTSE 100 index closed up 0.5% (or 24 points) at 5,225, the German DAX up marginally 0.2% (or 13 points) at 5,925, while in France the CAC was up 0.3% (or 10 points) at 3,491.
Asian Markets
Asian markets generally traded lower. Japan led the decliners, falling 3.6 percent to a 16-month closing low, the worst session since June. Declining shares outnumbered advancing ones by 32 to 1. Investors rushed for the exits after the Bank of Japan’s (BoJ) emergency moves the day before failed to impact the yen’s strength. Japanese markets slid 7.5 per cent this month, its worst month since May. Hong Kong stocks traded lower too, with the market down 2.8 percent for the month. China’s stock fell, but are still holding in a trading range,ending August flat. In China the SSE Composite closed down -0.5% (or -14 points) at 2,639, while in Hong Kong the Hang Seng Index was down -1.0% (or -201 points) at 20,536 and in Japan the Nikkei 225 Index was down sharply -3.6% (or -32520 points) at 8,824.
Commodities
The Dollar Index down marginally -0.1% at 83.10 on higher Euro, while the Australian Dollar last traded higher at 89.21. Commodities were generally lower.
Oil prices fell again. The benchmark crude NYMEX for September delivery down sharply -3.7% (or $US-2.78) to settle at $US71.68. Copper prices bounced off monthly lows, Copper for September delivery was down -1.5% (or -5.2 cents) at $US3.3700. Gold prices are above key $US1,200 level, with December gold was up 0.9% at $US1,247.50.
Key News International Drivers Today
US – Economic data tepid. Companies continue to report earnings this week.
EU – End of a bad month.
CHINA – Government stands firm on access to credit.
JAPAN – Markets sell-off heavily as BoJ is rendered impotent.
Markets Overview
|
Market |
Movement |
|
The Dow Jones Industrial Average |
Up Marginally 0.1% (or 5 pts) at 10,015 |
|
The S&P 500 |
Up Marginally 0.0% (or 0 pts) at 1,049 |
|
The Nasdaq |
Down -0.3% (or -6 pts) at 2,114 |
|
|
|
|
The FTSE 100 |
Up 0.5% (or 24 pts) at 5,225 |
|
The German DAX |
Up Marginally 0.2% (or 13 pts) at 5,925 |
|
The Fench CAC |
Up 0.3% (or 10 pts) at 3,491 |
|
|
|
|
The Dollar Index |
Down Marginally -0.07% at 83.10 |
|
The Australian Dollar |
Last traded at 89.21 |
|
The Commodities Index |
Down -1.33% at 264.2 |
|
|
|
|
Crude Oil Futures |
Down Sharply -3.7% at $71.68 |
|
Gold Futures |
Up 0.91% at $1,247.50 |
|
Copper Futures |
Down -1.52% at $3.3700 |
|
SPI Futures |
Up 0.9% (or 41 pts) at 4,428 |
|
|
|
|
|
|
|
Market |
Movement |
|
SSE Composite (China) |
Down -0.5% at 2,639 |
|
Hang Seng Index (Hong Kong) |
Down -1.0% at 20,536 |
|
Nikkei 225 Index (Japan) |
Down Sharply -3.6% at 8,824 |
Dismal August Ends; Gold at 2-Year Highs
SPI: Above key Level 4400 – SPI up 0.9% at 4,428….
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 0.9% (or 41 pts) at 4,428 (down -2.6% for August). The key levels for our index today are 4500 and 4350. 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). Gold stocks set to shine. The market will be digest yesterday’s rosey economic reports from the RBA and the ABS.
BHP- Japanese steelmakers have agreed with BHP to a seven percent cut in coking coal prices for the three-month period ending 31 Dec’10.
CBA- CommBank has overtaken Bank Ltd (NAB) as the country’s biggest business lender, as its market leading satisfaction levels pay dividends.
CNP- Centro Properties Group posted a $653 million annual loss as it continues to address debt issues.
GRR- Grange Resources the magnetite producer, full year profit was hit hard by the GFC down 50.4%, with revenues down 35.7%, but a move to index pricing is improving its fortunes.
MAP- MAp Group will be down-weighted on the MSCI standard index.
MRE- Minara Resources reported swing to 1H10 profit (of $30 million) on lower volumes, but says nickel and cobalt prices remain volatile.
NCM- Newcrest Mining outperformed the broader ASX shares ahead of an up-weighting of Newcrest in the MSCI standard index. Shares jumped 3.4%.
PSA- Petsec Energy says restrictions on drilling in the Gulf of Mexico and a shut-in at its largest field have hit its operations, causing an earnings drop, with 1H10 loss now $34 million.
QAN- Qantas says passenger numbers rose 9.1 per cent in July.
RCY- Rivercity Motorway the operator of Brisbane’s Clem 7 toll road, faces serious financial concerns after writing down the value of the cross-city tunnel by over $1.5 billion.
SXL- Southern Cross Media recorded an FY10 $82.7 million loss and is cautiously optimistic about this year.
UNS- Unilife Medical Solutions the medical device maker, reported surge in losses with FY10 loss of $33 million, due to a drop in revenue and costs associated with the company’s move to the U.S.
Economic Reports:
Quarterly GDP (forecast is 0.9%)
AIG Manufacturing Index
July Building Approvals
July Retail Trade
2Q International Investment Position
2Q Balance of Payments Jul International Reserves & Foreign Currency Liquidity
Negotiations to resolve hung parliament
Companies:
IIF – ING Industrial Fund Full year 2010 Results
PDN – Paladin Energy Ltd Full year 2010 Preliminary results
Dividends
APN – APN News & Media
BDG – Bendigo Mining Ltd
CTX – Caltex Australia
FWD – Fleetwood Corp
PPT – Perpetual Limited
STO – Santos Ltd
OZL – OZ Minerals
IFL – IOOF Holdings Ltd
TTS – Tatts Group Ltd
AMC – Amcor Limited
Market Summary
ASX – to open Higher
US & UK/Europe – Mixed
US ADRs – Mixed!!!…
BHP up 1.3% &
RIO up 2.3%;
AWC down 0.7%
ANZ up 0.2% &
NAB up 0.2%
NEM up 2.3%,
JHX up 0.2%,
NWS up 1.2%
Commodities Stock Index up 0.4%
Gold Stocks Index up 0.9%
Oil Stocks Index down 0.2%
By Michael Hevern
Head of Research
Tags: Asian Markets, ASX, ASX News, BHP, Crude Oil, European Markets, gold price, Nikkei, S&P500, Stock Market Analysis, stockmarket, trading, US Market wrap
