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Markets Hold On To Gains Ahead of US Unemployment Report

U.S. and European markets continued higher overnight. The early gains resulted from better-than-expected U.S. housing and retail sales reports. Commodities rose again pushing miners higher.  Asian markets generally traded higher after a positive U.S. lead and better-than-expected Chinese Auto sales figures. The ASX is likely to trade higher again today, but expect to see some profit-taking ahead of the weekend.

The SPI Futures is just below the key resistance level of 4600 the ASX is set to open higher again as the SPI Futures closed up 0.7% (or 33 pts) at 4,562. Materials and financial stocks led the market’s broad-based gains yesterday, but the gains were restrained by data showing a lower-than-expected trade balance for July. Australia’s seasonally adjusted balance on trade in goods and services narrowed to a surplus of $1.89 billion in July from a surplus of $3.44 billion in June.  The key levels for our index today are 4600 and 4450. 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). Expect to see some profit-taking.

US Markets

U.S. stocks continued their rise overnight. Reports showing jobless-benefits claims declined, plus an unexpected increase in pending-home sales (up 5.2 percent), along with a better-than-expected rise in August retail sales, supported rises in consumer companies such as Home Depot, Walt Disney and Wal-Mart Stores. Retailers also rose after they reported sales for the key back-to-school buying month of August coming in better-than-expected. The broader gains were led by the Mining, Industrials and Consumer Discretionary sectors which were all up over 1.2 percent. Tech stocks also trading higher on M&A activity.  The much anticipated Non-Farm Payrolls figures will be reported tonight.  The Dow closed up 0.5% (or 51 points) at 10,320, while in the broader market the S&P 500 index up 0.9% (or 10 points) at 1,090 and the tech-heavy Nasdaq ended up 1.1% (or 23 points) at 2,200.

European Markets

European stocks closed higher.The rises were restrained by reports that growth in Europe’s manufacturing industry slowed in August and export demand fell to the lowest levels in seven months.  Most U.K. stocks advanced, extending the benchmark index’s biggest rally in almost two months. However U.K. house prices fell the most in six months in August as increased supply of property gave buyers more bargaining power.  German stocks advanced despite a report showing retail sales in Germany, Europe’s largest economy, unexpectedly fell for a second month in July.  In London the FTSE 100 index closed up marginally 0.1% (or 5 points) at 5,371, the German DAX was flat at 6,084, while in France the CAC was down marginally 0.1% (or 3 points) at 3,631.

Asian Markets

Asian stock markets traded higher.  Japanese markets ended higher for a second straight session, as exporters received a boost from the better-than-expected Chinese and U.S. manufacturing data and automakers in China rallied after a report of strong sales in August.Shares of Chinese automakers jumped after China’s overall automobile sales in August rose 55.7% from the same month last year.  In China the SSE Composite closed up 1.3% (or 33 points) at 2,656, while in Hong Kong the Hang Seng Index was up 1.2% (or 245 points) at 20,869 and in Japan the Nikkei 225 Index was up 1.5% (or 13582 points) at 9,063.

Commodities

The Dollar Index  down marginally -0.2% at 82.38 on higher Euro, while the Australian Dollar last traded higher at 90.55. Commodities were generally higher.

Oil prices jumped above $US74 again. The benchmark crude NYMEX for September delivery was up 1.4% (or $US1.05) to settle at $US74.96. Copper prices rose, Copper for September delivery was up 0.4% (or 1.4 cents) at $US3.4820. Gold prices are around 2-month highs, are above key $US1,250 level, with December gold was up 0.4% at $1,251.00.

Key News International Drivers Today

US – Increased pending-home sales, along with a better-than-expected rise in August retail sales. Companies continue to report earnings this week.

Markets Overview

Markets Hold On To Gains Ahead of US Unemployment Report<

SPI: Above key Level 4400 – SPI up 0.7% at 4,562….

ASX News Today

The SPI Futures is just below the key resistance level of 4600 the ASX is set to open higher again as the SPI Futures closed up 0.7% (or 33 pts) at 4,562. Materials and financial stocks led the market’s broad-based gains yesterday, but the gains were restrained by data showing a lower-than-expected trade balance for July. Australia’s seasonally adjusted balance on trade in goods and services narrowed to a surplus of $1.89 billion in July from a surplus of $3.44 billion in June.  The key levels for our index today are 4600 and 4450. 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). Expect to see some profit-taking.

AMC- Will investment $400 million for an upgraded paper recycling facility in Sydney.

AVX- Avexa is hiring a corporate advisory firm to undertake a review of the biotech firm.

BHP- BHP Billiton has revised its bid for offer to take over Canadian fertiliser producer Potash Corp.

COU- Countplus the Accounting and financial firm has settled a 17th acquisition, and plans to a December listing of spin-off from Count Financial.

CXY- Cougar Energy shares plunged to 3-year lows amidst talk of collapse.

FGL-Fosters Group CFO Angus McKay has resigned to join ports and rail operator Asciano.

JHX – Brokers keep BUY rating despite James Hardie the building materials group, said it’s lostcourt appeal against $US330 million tax charge.

MOS- Mosaic Oil the oil and gas explorer, has received an independent report that supports the takeover offer made by AGL Energy.

MTS- Metcash the grocery and hardware wholesaler, says underlying earnings per share in FY11 is likely to grow 6 to 8 percent.

RIO- Rio Tinto Ltd has officially opened its $US1.5 billion Brockman 4 iron ore mine in WA Pilbara region.

Economic Reports:

Negotiations continue to resolve hung parliament

Companies:
DOM – Dominion Mining Ltd Full year 2010 Preliminary results

Dividends

ALL – Aristocrat Leisure Ltd
FXJ – Fairfax Media Ltd

Market Summary
ASX – to open Higher
US & UK/Europe – hold on to gains
US ADRs –  Broadly Higher!!!…

BHP up 0.1% &

RIO down 0.3%;

AWC up 0.8%

ANZ up 0.8% &

NAB down 0.1%

NEM up 1.8%,

JHX up 0.8%,

NWS up 1.3%

Commodities Stock Index up 1.0%
Gold Stocks Index up 1.9%
Oil Stocks Index up 0.8%

>By Michael Hevern
Head of Research

Tags: Asian Markets, ASX, ASX News, BHP, Commodities, Crude Oil, European Markets, Stock Market Analysis, stockmarket, US Market wrap

This entry was posted on Friday, September 3rd, 2010 at 8:10 am and is filed under Morning Wrap, Stock Market Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.