Stock Market Analysis
Financials Lead Markets Lower
U.S. stocks eased after their surge last Friday with Financials leading the pullback. European markets were cool on worries over the financial health of European banks. Asian stock markets ended higher as they played catchup with Wall Street’s Friday session. Commodities gave back some of their recent gains as the US dollar bounced and the ASX is expected to drift lower today.
The SPI Futures is just below the key resistance level of 4700 and the ASX is set to open lower as the SPI Futures closed down -0.4% (or -18 pts) at 4,686. The key levels for our index today are 4700 and 4600. M&A activity continues to drive specific stocks and the ASX will trade lower today. We are at the end of the dividend period, which has been supporting our market in the past month. 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 eased after their surge last Friday, Financials led the pullback. U.S. stocks faded into the close. Another round of corporate deal making pushed the markets higher early on, however the financial sector dragged the indices lower on the close. Citigroup traded lower as the U.S. Treasury may miss its end of year deadline to sell its shares in the company. The US dollar bounced off its April lows against the euro, as traders bet that any Fed quantitative easing to kickstart slowing growth, will be measured. M&A activity included Wal-Mart and Southwest Airlines announcing acquisition plans. The Dow closed down -0.4% (or -48 points) at 10,812, while in the broader market the S&P 500 index down -0.6% (or -7 points) at 1,142 and the tech-heavy Nasdaq ended down -0.5% (or -11 points) at 2,370.
European Markets
European stock markets ended lower as worries simmered over the financial health of European banks. European markets gave back early gains as investors started to book their gains for the month/quarter. M&A activity included Unilever the consumer products manufacturer saying it will buy U.S. based Alberto Culver Co. for $US3.7 billion in cash. In London the FTSE 100 index closed down -0.5% (or -25 points) at 5,573, the German DAX down -0.3% (or -19 points) at 6,279, while in France the CAC was down -0.4% (or -16 points) at 3,766.
Asian Markets
Asian stock markets ended higher, chasing Wall Street’s Friday performance. Even in Japan the stocks rose with exporters and resource stocks leading the market higher. The bulls stepped in China and Hong Kong markets which both returned from holidays. Resource shares were broadly higher across the region as commodity prices rose. In China, PetroChina rose 1.3%, Chalco gained 2.5% and Jiangxi Copper jumped 5.2%, though property developers in China fell after the government announced its latest measures to curb the nation’s hot property market. In China the SSE Composite closed up 1.4% (or 36 points) at 2,628, while in Hong Kong the Hang Seng Index was up 1.0% (or 221 points) at 22,341 and in Japan the Nikkei 225 Index was up 1.4% (or 13147 points) at 9,603.
Commodities
The Dollar Index is up marginally 0.1% at 79.47 on lower Euro, while the Australian Dollar last traded higher at 95.75. Commodities were generally lower.
Gold prices are still around record highs. The benchmark crude NYMEX for September delivery was down -0.4% at $US76.21. Copper prices lower, Copper for September delivery was down -0.6% at $US3.5915. Gold prices are around record highs, are around key $US1,250 level, with December gold was flat at $US1,296.60.
Key News International Drivers Today
US – Another round of corporate deal making failed to hold markets higher.
EU – A survey of purchasing managers (PMI) pointed to a sharp slowdown in euro-zone growth.
CHINA – Ended higher, chasing Wall Street’s Friday performance. Government stands firm on access to credit.
JAPAN – Ended higher, chasing Wall Street’s Friday performance.
Markets Overview
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Market
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Movement
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The Dow Jones Industrial Average
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Down -0.4% (or -48 pts) at 10,812
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The S&P 500
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Down -0.6% (or -7 pts) at 1,142
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The Nasdaq
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Down -0.5% (or -11 pts) at 2,370
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The FTSE 100
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Down -0.5% (or -25 pts) at 5,573
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The German DAX
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Down -0.3% (or -19 pts) at 6,279
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The Fench CAC
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Down -0.4% (or -16 pts) at 3,766
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The Dollar Index
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Up Marginally 0.10% at 79.47
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The Australian Dollar
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Last traded at 95.75
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The Commodities Index
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Up Marginally 0.18% at 284.1
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Crude Oil Futures
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Down -0.4% at $76.21
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Gold Futures
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Up Marginally 0.05% at $1,296.60
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Copper Futures
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Down -0.55% at $3.5915
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SPI Futures
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Down -0.4% (or -18 pts) at 4,686
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Market
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Movement
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SSE Composite (China)
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Up 1.4% at 2,628
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Hang Seng Index (Hong Kong)
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Up 1.0% at 22,341
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Nikkei 225 Index (Japan)
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Up 1.4% at 9,603
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SPI: Near key Level 4700 – SPI down -0.4% at 4,686
ASX News Today
The SPI Futures is just below the key resistance level of 4700 the ASX and is set to open lower as the SPI Futures closed down -0.4% (or -18 pts) at 4,686. The key levels for our index today are 4700 and 4600. M&A activity continues to drive specific stocks. The ASX will trade lower today. We are at the end of the dividend period, which has been supporting our market in the past month. 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 Banking expansion into China continues with plans to set up a Chinese language centre in support of the Chinese operations there.
CFX- CFS Retail Property Trust has completed its $540 million equity sale enabling its purchase of four Direct Factory Outlet (DFO) centres.
CHC- Charter Hall Group is to acquire a new $75 million Woolworths distribution centre in Tasmania.
CQT- Conquest Mining has gained control of over 50 percent of North Queensland Metals after rival Heemskirk Consolidated allowed its offer to lapse.
CRG- Crane Group the plumbing supplier, will acquire full ownership of home building supplier Hudson Building Supplies Pty Ltd for $31.5 million.
GNS- Gunns is to “transition” its Hinman, Wright & Manser division to Hazell Bros as existing projects are completed.
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.
LNG- Gas companies LNG and Metgasco (MEL) have agreed to jointly study the feasibility of project converting gas to LNG at Gladstone in Queensland.
MMX- Murchinson Metals the junior iron ore miner is in a trading halt pending an announcement from the company. Shares down 10.2%.
NUF- Nufarm the ag chemicals supplier, has secured waivers on its banking covenants in respect to the periods ending 31 Jul’10 and 30 Oct’10.
LEI- Leighton Holdings has won an $800+ million contract from Chevron Australia to deliver the civil and underground works for the Gorgon gas project in WA.
SXE- Southern Cross Electrical Engineering is in talks with Leighton Holdings to provide the underground electrical and instrumentation services for the mining contractor’s Gorgon gas contract in WA. Shares rose 14.6%.
VBA - Virgin Blue says its airport check-in and boarding systems are back online, but delays continue.
WES-Wesfarmers with the Bunnings hardware chain, will increase its investment in NSW by $600+ million in establishing 18 new stores in the next 3-years.
Economic Reports :
Parliament reconvenes
Companies:
Nufarm (NUF) Full year results
AVEXA AGM meeting
Ex-Dividends
Seymour Whyte Ltd (SWL)
Market Summary
ASX – to open Lower US & UK/Europe – Lower
US ADRs – Broadly Lower
BHP down 0.4% &
RIO down 0.4%;
AWC up 0.6%
ANZ up 1.8% &
NAB up 0.6%
NEM down 1.2%,
JHX down,
NWS down 1.2%
Commodities Stock Index down 0.5%
Gold Stocks Index down 0.9% Oil Stocks Index down 0.3%
By Michael Hevern
Head of Research
