Global markets were sold down overnight as investors questioned the financial stability in the euro zone despite approval of a rescue package for Ireland. However US markets managed to end flat after a sharp early sell-off. European stocks ended sharply lower overnight, despite the EUR85 billion Irish bailout package as traders fretted over potential contagion of EU debt issues. Asian stock markets ended mostly higher yesterday, however heightened tensions in the Korean Peninsular continued to weigh on investor sentiment in Asia. Energy and mining stocks were sold down in Europe but in the US trading session these stocks performed well due to recovering commodities prices.
The SPI Futures is around its key pivot level of 4600 and the ASX is set to open flat as the SPI Futures closed up marginally 0.1% (or 5 pts) at 4,624. The key levels for our index today are 4680 and 4580. M&A activity continue to drive specific stocks. The ASX is set to open flat today, with mixed leads from overseas markets. There could be some window dressing today for the last day of trading for November. This week investors need to monitor China regarding further prospective monetary tightening measures and the release of its Chinese PMI data on Wednesday.
US Markets
US stocks recovered from their sharp early sell-off which was caused by concerns about the European debt crisis. US markets ended the session flat. The Dow Jones Index traded below 11,000 for the first time in a week. Investors exercised caution as another busy week for economic data awaits. Consumer confidence data is due out tonight; the Institute for Supply Management’s assessments of the manufacturing and services industries; and the monthly Non-Farm Unemployment report is due out on Friday. Data pointing to upbeat US retail sales from the US National Retail Federation, helped stock prices to recover, with reports of 212 million shoppers visiting stores and websites during the first weekend of the holiday season, up from 195 million last year. Online spending also rose over 14 percent from Thanksgiving day (Thursday) through Saturday. A full report will be released next Thursday. The sectors staging the strongest recovery included: Materials and Financials up 1.1%, and Energy was up 0.8%. The Dow closed down -0.4% (or -40 points) at 11,052, while in the broader market the S&P 500 index down marginally -0.1% (or -2 points) at 1,188 and the tech-heavy Nasdaq ended down -0.4% (or -9 points) at 2,525.
European Markets
European stocks ended sharply lower overnight. Stocks gained initially on the news of the aid package for Ireland, but the EUR85 billion bailout package for Ireland failed to ease fears of contagion in the euro-zone debt crisis with Italy, Spain, Portugal and other nations still to refinance their debt in the coming months. Financial shares experienced particularly heavy selling pressure, Auto stocks were also sold off and even defensive sectors like Telecoms were sold down. In the U.K. Stocks were under pressure as the Treasury reported that the British economy faces a “sluggish” outlook with the recovery likely to be slower than after previous recessions. The Treasury cut its 2011 growth forecast to 2.1 percent (from 2.3 percent) and said the economy will expand 2.6 percent in 2012 instead of 2.8 percent. In London the FTSE 100 index closed down -2.1% (or -118 points) at 5,551, the German DAX down -2.2% (or -151 points) at 6,698, while in France the CAC was down -2.5% (or -92 points) at 3,655.
Asian Markets
Asian stock markets ended mostly higher yesterday. The Japanese market hit a 5-month closing high as the outlook for exporters brightened with the US dollar likely to gain further ground against the yen on the back of stronger US retail sales, EU debt contagion and tensions on the Korean peninsula. Heightened tensions in the Korean Peninsular continued to weigh on investor sentiment in Asia. Chinese investors continue to worry over concerns of further tightening measures. Interest rate sensitive stocks, such as the banks and Chinese property firms dropped again, while energy and mining sectors dropped 1.7 percent, as the Shanghai Exchange now requires higher margin deposits for copper, aluminum, steel, gold and fuel transactions (now 10% deposit is required). In China the SSE Composite closed down marginally -0.2% (or -5 points) at 2,866, while in Hong Kong the Hang Seng Index was up 1.3% (or 289 points) at 23,166 and in Japan the Nikkei 225 Index was up 0.9% (or 86 points) at 10,126.
Commodities
The Dollar Index up 0.6% at 80.81 on lower Euro, while the Australian Dollar last traded lower at 96.32. Commodities were generally higher.
Benchmark crude NYMEX for December delivery was up 2.4% (or $US1.99) to settle at $US85.75. Copper prices backed-off 2-year highs, Copper for December delivery was up 0.3% (or 1.2 cents) at $US3.7630. Gold prices off all-time highs again, with December gold was up 0.4% at $US1,368.30.
Key International News Drivers Today
US - Markets recover from sharp initial sell-off.
EU – Investors continue to worry over EU debt contagion in the euro zone.
CHINA – Government stands firm on access to credit. China prospect of implementing further tigthening measures.
JAPAN – Market holding above 10,000 at 5-month highs.
Markets Overview
|
Market |
Movement |
|
The Dow Jones Industrial Average |
Down -0.4% (or -40 pts) at 11,052 |
|
The S&P 500 |
Down Marginally -0.1% (or -2 pts) at 1,188 |
|
The Nasdaq |
Down -0.4% (or -9 pts) at 2,525 |
|
|
|
|
The FTSE 100 |
Down -2.1% (or -118 pts) at 5,551 |
|
The German DAX |
Down -2.2% (or -151 pts) at 6,698 |
|
The Fench CAC |
Down -2.5% (or -92 pts) at 3,655 |
|
|
|
|
The Dollar Index |
Up 0.56% at 80.81 |
|
The Australian Dollar |
Last traded at 96.32 |
|
The Commodities Index |
Up 0.6% at 302.9 |
|
|
|
|
Crude Oil Futures |
Up 2.4% at $85.75 |
|
Gold Futures |
Up 0.4% at $1,368.30 |
|
Copper Futures |
Up 0.3% at $3.7630 |
|
SPI Futures |
Up Marginally 0.1% (or 5 pts) at 4,624 |
|
|
|
|
|
|
|
Market |
Movement |
|
SSE Composite (China) |
Down Marginally -0.2% at 2,866 |
|
Hang Seng Index (Hong Kong) |
Up 1.3% at 23,166 |
|
Nikkei 225 Index (Japan) |
Up 0.9% at 10,126 |
ASX News Today
The SPI Futures is around its key pivot level of 4600 and the ASX is set to open flat as the SPI Futures closed up marginally 0.1% (or 5 pts) at 4,624. The key levels for our index today are 4680 and 4580. M&A activity continues to drive specific stocks. The ASX is set to open flat today with mixed leads from overseas markets. This week investors need to monitor China re further prospective monetary tightening measures and the release of its Chinese PMI data on Wednesday.
BOQ- ASIC plans to begin legal action against several domestic banks (BOQ, CBA, MQG) in seeking compensation for investors following the collapse of Storm Financial Ltd.
CBA- CommBank say they will fight the legal action resulting from the Storm Financial collapse.
FRS- FerrAus the iron ore explorer advised shareholders not to accept an unsolicited $230 million takeover bid from Hong Kong listed Wah Nam International Holdings Ltd.
GDO- Gold One International has confirmed production guidance of 120,000 ounces of gold and earnings of $60 million in FY11.
LEI- Leighton has agreed a governance framework with ACS, the Spanish group bidding to take over Leighton’s German parent, Hochtief.
MTS- Metcash welcomes legal action by the ACCC aimed at preventing the grocery and liquor wholesaler from taking over its rival, Franklins.
NAB- National Bank customers are still suffering problems but NAB wants to make sure customers of other banks are not left out of pocket by its computer problems.
SFR- Sandfire Resources has increased its estimated resources fivefold for its DeGrussa copper-gold project in WA.
TLS- Telstra to split as the parliament has finished the year by giving approval for legislation to structurally separate Telstra into wholesale and retail divisions.
Economic Reports :
Balance of Payments for Q3
Building Approvals for October
Financial Aggregates, incl Private Sector Credit for October
International Investment Position for Q3
International Reserves & Foreign Currency Liquidity for October
Companies:
Centennial Coal Ltd (CEY) Full year 2010 AGM
Consolidated Media (CMJ) Full year 2010 AGM
Crown Ltd (CWN) Full year 2010 AGM
Metcash Ltd (MTS) Interim 2011 Results
Goodman Group (GMG) Full year 2010 AGM
SEEK Ltd (SEK) Full year 2010 AGM
White Energy Company (WEC) Full year 2010 AGM
Ex-Dividends
HGL Limited (HGL)
Tower Australia (TAL)
Market Summary
ASX – to open lower
US & UK/Europe – Lower
US ADRs – Broadly Lower
BHP down 2.1% &
RIO down ;
AWC down 3.2%
ANZ down 1.6% &
NAB down 4.4%
NEM down 2.3%,
JHX down 2.9%,
NWS down 0.6%
Commodities Stock Index down 1.2%
Gold Stocks Index down 1.8%
Oil Stocks Index down 1.2%
By Michael Hevern
Head of Research
