Stock Market Analysis
Overseas Markets Pause, Financials Sell-off
Overseas markets closed lower overnight, led by financials and miners. In Europe there are concerns that the bank “stress tests” fell short on allowing for government debt implications, and Basel III may require banks to raise EUR105 billion of extra capital under planned Basel rules. The ASX is set to trade lower today as the RBA left rates on hold yesterday and investors assess the implications of the new Minority Labor Government.
The SPI Futures is just below the key resistance level of 4600 the ASX is set to open lower as the SPI Futures closed down -0.6% (or -28 pts) at 4,549. The key levels for our index today are 4600 and 4500. M&A activity continues to drive specific stocks. Gold prices are pushing towards new record highs.
US Markets
U.S. markets gave back the gains of last Friday. Investor sentiment appears to have reverted, after the Dow had its best pre-Labor Day week in two decades last week. However, September is typically the worst month for U.S. equities markets, so we would expect at the very least some consolidation this week. The pullback was broad-based but Financials down over 2.5 percent and Energy and Consumer Discretionary sectors were down over 1.6 percent. Oracle was a standout in a sea of red though, as they announced Mark Hurd, formerly of Hewlett-Packard, will become its co-president and will sit on its board. Oracle shares rose 6% on the news. The shadow of the “flash crash” on 6 May still lingers and the SEC is still trying to avoid a similar situation arising and is considering changes to the trading halts in the face of abnormal market volatility. The Dow closed down -0.7% (or -69 points) at 10,379, while in the broader market the S&P 500 index down -0.8% (or -9 points) at 1,096 and the tech-heavy Nasdaq ended down -1.1% (or -25 points) at 2,209.
European Markets
European stock markets closed lower. The banking and commodities sectors led the falls. Banks sold off as EU regulators met in Basel to finalize new global rules on capital requirements and after reports that the region’s recent stress tests underestimated some lenders holdings of government debt. The Federal Association of German Banks had estimated that Germany’s 10 largest lenders may need as much as EUR105 billion of extra capital under planned Basel rules. In Germany banks could be required to hold a Tier 1 capital level of 9% under new rules dubbed Basel III, potentially rising to 12% in boom years in order to build reserves to pay for a downturn. The EU finance ministers are near agreement on plans for stronger sanctions against countries that violate the EU budget rules and closer scrutiny of total national debt levels, in response to reining back the stimulus monies doled out in the GFC. In the U.K. stocks fell for the first day in 8-sessions, led by banks and miners. In London the FTSE 100 index closed down -0.8% (or -42 points) at 5,397, the German DAX down -1.0% (or -59 points) at 6,096, while in France the CAC was down -1.1% (or -42 points) at 3,643.
Asian Markets
Asian stock markets ended mixed, on low volumes. In Japan exporters ended a 4-day rally on renewed worries about the strength of the yen, while steel makers rose around the region on expectations for higher Chinese steel prices. The BoJ held its policy interest rate unchanged and left open the possibility of additional emergency action to support the economy. Chinese shares ended flat ahead of their report on August trade data later this week. In China the SSE Composite closed down marginally 0.1% (or 2 points) at 2,698, while in Hong Kong the Hang Seng Index was up marginally 0.2% (or 46 points) at 21,402 and in Japan the Nikkei 225 Index was down -0.8% (or -75 points) at 9,226.
Commodities
The Dollar Index up 1.0% at 82.90 on lower Euro, while the Australian Dollar last traded lower at 90.93 . Commodities were generally steady.
Oil prices fell below $US74. The benchmark crude NYMEX for September delivery was down -1.1% (or $US-0.82) to settle at $US73.78. Copper prices lower, Copper for September delivery was down -0.9% (or -3.0 cents) at $US3.4590. Gold prices are around 2-month highs, are around key $US1,250 level, with December gold was up 0.7% at $US1,257.10.
Key News International Drivers Today
US – Consolidation after the best pre-Labor Day week in two decades . Companies continue to report earnings this week.
EU – Banks may need to raise EUR105 billion of extra capital under planned Basel rules.
CHINA – China flat. Government stands firm on access to credit.
JAPAN – Japan exporters ended a 4-day rally.
Markets Overview
Markets Pause, Led By Financials
|
Market |
Movement |
|
The Dow Jones Industrial Average |
Down -0.7% (or -69 pts) at 10,379 |
|
The S&P 500 |
Down -0.8% (or -9 pts) at 1,096 |
|
The Nasdaq |
Down -1.1% (or -25 pts) at 2,209 |
|
|
|
|
The FTSE 100 |
Down -0.8% (or -42 pts) at 5,397 |
|
The German DAX |
Down -1.0% (or -59 pts) at 6,096 |
|
The Fench CAC |
Down -1.1% (or -42 pts) at 3,643 |
|
|
|
|
The Dollar Index |
Up 1.03% at 82.90 |
|
The Australian Dollar |
Last traded at 90.93 |
|
The Commodities Index |
Up 0.38% at 273.8 |
|
|
|
|
Crude Oil Futures |
Down -1.1% at $73.78 |
|
Gold Futures |
Up 0.65% at $1,257.10 |
|
Copper Futures |
Down -0.86% at $3.4590 |
|
SPI Futures |
Down -0.6% (or -28 pts) at 4,549 |
|
|
|
|
|
|
|
Market |
Movement |
|
SSE Composite (China) |
Down Marginally 0.1% at 2,698 |
|
Hang Seng Index (Hong Kong) |
Up Marginally 0.2% at 21,402 |
|
Nikkei 225 Index (Japan) |
Down -0.8% at 9,226 |
SPI: Just Below key Level 4600 – SPI down -0.6% at 4,549…
ASX News Today
The SPI Futures is just below the key resistance level of 4600 the ASX is set to open lower as the SPI Futures closed down -0.6% (or -28 pts) at 4,549. The key levels for our index today are 4600 and 4500. M&A activity continues to drive specific stocks. Gold prices are pushing towards new record highs.
ADU- Adamus Resources shares are suspended pending an announcement regarding financing.
AND- Andean Resources the gold explorer, Eldorado Gold has dropped out of the bidding war.
AWB- AWB the agribusiness,says drought in Russia and weather damage in Europe has helped lift interest for Australian wheat.
CEU- ConnectEast Group says August traffic and revenue on Melbourne’s Eastlink toll road rose by more than 10 percent.
DLS- Drillsearch the oil and gas producer, has increased its interest in four wet gas discoveries in the Cooper Basin, SA.
DMP- Domino the pizza franchise has no intention to purchase Crust Pizza.
MQG- Macquarie Group Ltd shares fell after four brokers cut price targets on the stock following the investment bank’s profit warning. Share down 2.2%.
OGC- OceanaGold CEO Paul Bibby has resigned for personal reasons after less than a year in the role.
QBE- QBE Insurance has been upgrade to BUY by UBS, citing earnings deterioration is set to moderate. Target now $20.00.
SBM- St Barbara is proposing to consolidate its share base, in a bid to attract international institutional investors.
WSA- Western Areas the nickel miner is seeking expansion opportunities in China.
strong>Economic Reports:
Minority Labor Government
Companies:
MML – Medusa Mining Ltd releases full year results.
Dividends
SHL – Sonic Healthcare Full year 2010 Ex-dividend date
Market Summary
ASX – to open Lower
US & UK/Europe – Lower
US ADRs – Broadly Lower!!!…
BHP down 1.5% & RIO down 3.4%; AWC down 2.0%
ANZ down 1.2% & NAB down 0.5%
NEM up 2.0%, JHX up 3.7%, NWS down 2.5%
Commodities Stock Index down 0.8%
Gold Stocks Index up 0.6%
Oil Stocks Index down 2.2%
By Michael Hevern
Head of Research
Tags: Asian Markets, ASX, ASX News, BHP, Commodities, European Markets, gold, Nasdaq, Nikkei, S&P500, Stock Market Analysis, stockmarket, US Market wrap
