Online Stockmarket Trading Update

Markets Cautious Over QE2 Expectations

US investors remained cautious, despite employment data in the US and corporate financial results that were better than expected.  Mixed coporate earnings over the past few days have dampened investor sentiment in the stock market, which has undergone a relentlesss rise since early September.  Investors are hanging out for a decision on the scope of the second round of stimulus for the US recovery (QE2), expected to be resolved by the Fed Reserve at next week’s meeting (3rd November). 

Asian markets fell and the Chinese market continues to test key overhead resistance of a down-trend line that has been in place since mid-2009.  European stock markets rose overnight.   The ASX is likely to trade flat and we may see some profit-taking as the day progresses.

The SPI Futures remains below the key resistance level of 4720 and closed down marginally -0.1% (or -6 pts) at 4,676.  The key levels for our index today are 4680 and 4600. M&A activity continues to drive specific stocks.  The ASX is likely to trade flat and we may see some profit-taking as the day progresses.  The shares in ASX will again be in focus as political and regulatory opposition to Singapore Exchange’s $8.3 billion dollar bid mounts, and we can expect another busy day of reporting, (see below for details).

US Markets

US stocks ended flat, with investors staying on the side of caution ahead of the Federal Reserve’s crucial FOMC meeting next week. This was despite a surprisingly large drop in weekly jobless claims, where first-time claims fell by 21,000 to 434,000 last week.  Investors also had to digest plenty of earnings reports this week, that have painted a mixed picture about the ongoing strength and prospects of the US economy. There was encouraging news in results from Eastman Kodak Co and Motorola Inc (where its phone division was profitable for the first time in three years).  But the strong results from those companies were offset by disappointments from 3M Co and Avon Products Inc. Industrial giant 3M also lowered its 2010 targets and gave a bleak view of the US and European economies. 

The sectors that supported the market included Healthcare (up 0.6%), Consumer Discretionary (up 0.5%) and Consumer Staples (up 0.4%). The Dow closed down marginally -0.1% (or -12 points) at 11,114, while in the broader market the S&P 500 index was 0.1% (or 1 points) at 1,184 and the tech-heavy Nasdaq ended up 0.2% (or 4 points) at 2,507.

European Markets

European stock markets rose overnight. Markets rose as economic data showed the euro-zone economic sentiment indicator surprised to the upside, rising to 104.1 versus expectations for a flat reading around 103.2.  However, trading sentiment in Europe this week has generally been driven by news from the US, with investors hanging out for a decision on the scope of the second round of stimulus for the US recovery (QE2), expected to be resolved by the Fed Reserve at next week’s meeting (3rd November).  In London, energy stocks rose after Shell reported strong earnings, BP gained 0.9% and the Fench firm Total SA added 1.2%. 

The FTSE 100 index closed up 0.6% (or 32 points) at 5,678, the German DAX was up 0.4% (or 27 points) at 6,595, and in France the CAC was up 0.5% (or 19 points) at 3,834.

Asian Markets

Asian markets ended mixed.  Global shares prices have been under pressure in the later part of this week, as investors have shifted away from riskier assets on speculation that monetary easing in the United States will not be as substantial as originally thought.  Japan’s Nikkei average drifted lower to its lowest close in 6 weeks as short-covering that emerged after the Bank of Japan’s announcement of details of its asset buying scheme failed to underpin the stocks. Falls in the Chinese market were limited by gains in banks, after several lenders reported better-than-expected results.  Chinese banks led the gains after Bank of China and Agricultural Bank of China reported 3Q net profits rising 30%, with third-quarter earnings exceeding expectations.  Mining stocks fell again, due to lower commodity prices. 

In China the SSE Composite closed down -0.2% (or -4 points) at 2,993, while in Hong Kong the Hang Seng Index was up 0.2% (or 46 points) at 23,211 and in Japan the Nikkei 225 Index was down -0.2% (or -21 points) at 9,366.

Commodities

The Dollar Index was down -1.1% at 77.30 on the higher Euro, while the Australian dollar last traded lower at 97.20.  Commodities were generally higher.

Copper has been in focus this week and closed up overnight, buoyed by renewed dollar weakness, supply threats and better-than-expected US employment data, but gains were constrained by uncertainty over the scope of  monetary easing by the US Federal Reserve.  Mid-week copper prices touched $3.90 per lb, which marked the highest level since July 2008.  Benchmark crude NYMEX for December delivery was up marginally 0.1% (or $US0.05) to settle at $US81.99. Copper prices were down, with Copper for December delivery up 0.3% (or 1.2 cents) at $US3.7845.  Gold prices were lower, with December gold up 1.6% at $US1,343.60.

Key International News Drivers Today

Markets Overview

US ADRs –  Mixed

Tags: ASX, ASX News, BHP, Crude Oil, European Markets, gold price, Stock Market Analysis, stockmarket, trading, US Market wrap

This entry was posted on Friday, October 29th, 2010 at 9:23 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.