Online Stockmarket Trading Update

US markets fell again overnight, as investors were concerned over the spike in tensions between North Korea and South Korea and the widening probe into insider trading in the US. Treasuries, US dollar and Gold prices all rose as investors moved toward risk aversion. European stocks fell again on fears of contagion. Asian stock markets ended lower as sentiment was driven by tensions on the Korean peninsular and the prospect of further tightening measures from China.  Japan outperformed, while Chinese financials and property stocks dragged on sentiment, as the government may need to announce further inflation control measures. Commodities prices have fallen over the week on the back of the higher US dollar.

The SPI Futures is below its key support level of 4600 and the ASX is set to open lower as the SPI Futures closed down -1.2% (or -54 pts) at 4,551.  The key levels for our index today are 4650 and 4500. M&A activity continues to drive specific stocks. The ASX is set to open lower today, with negative leads from overseas markets. Share price pressure will be across the board.

US Markets

US markets fell again overnight. Investors are concerned over troubles between North Korea and South Korea after an exchange of artillery fire near their disputed sea border. Treasury prices, the dollar and gold all rose as investors sought safety. On the economic front a weak reading on existing home sales for October also dragged stocks lower. The Commerce Department reported that gross domestic product (GDP) expanded at an annual rate of 2.5 percent in the third quarter (up from an estimated 2 percent), did little to improve sentiment, as on the flip side the US Fed minutes showed the central bank cutting its growth expectations for both this year and next. The U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, continued its rise was up 1.3%, Treasury prices rose as did gold prices as investors reduced their exposure to risk in their porfolio.  HP  was the only Dow Jones component that managed to rise,gaining 1.3% after it reported strong fiscal 4Q results and issued a better than expected forecast.  The worst sectors in the markets included: Energy was down -2.0%, Materials was down -1.9% and Financials dragged down -1.6%.  The Dow closed down -1.3% (or -145 points) at 11,034, while in the broader market the S&P 500 index down -1.4% (or -17 points) at 1,181 and the tech-heavy Nasdaq ended down -1.5% (or -37 points) at 2,495.

European Markets

European markets traded lower overnight. Stocks sank as investors sold-off risky assets on the back of concerns contagion, despite the Irish bailout, and the spike in tensions between North and South Korea.  Shares prices fell on concerns that a bailout of Ireland may not be enough to contain a regional debt crisis. Borrowing costs for Portugal and Spain rose, leading Spain to trim the size of a debt sale.  Markets were also hit by Chinese moves to dampen its runaway economy and the FBI raid on three hedge fund firms in the U.S., as part of an extensive insider trading probe.  Markets also fell on the back of political tensions in Dublin, as Irish Prime Minister Brian Cowen’s governing coalition appeared to fall apart.  In London the FTSE 100 index closed down -1.8% (or -100 points) at 5,581, the German DAX down -1.7% (or -117 points) at 6,705, while in France the CAC was down -2.5% (or -95 points) at 3,742.

Asian Markets

Asian markets sold-off yesterday, due to the spike in tensions between North and South Korea. Hong Kong shares fell again, led by property developers and mainland financial firms. All 45 companies constituting the Hang Seng Index ended in the negative, with over a third losing more than 3 percent. In China the Shanghai Composite Index closed down on concerns that the government may adopt more tightening measures to help rein in inflation. Again the Chinese economic planning agency said it would take measures to rein in prices for agricultural products, including releasing additional reserves of grains and edible oils and cutting transportation costs.  This action may well support soft commodities prices into 2011.  Japanese stocks held around the 5-month high, as the yen’s decline against the euro spurred buying interest, as the Japanese Nikkei remains above 10,000 and its  200-day moving average resistance that had held since May with gathering momentum.  In China the SSE Composite closed down -1.9% (or -56 points) at 2,828, while in Hong Kong the Hang Seng Index was down -2.7% (or -628 points) at 22,896 and in Japan the Nikkei 225 Index was up 0.9% (or 93 points) at 10,115.

Commodities

The Dollar Index up 1.3% at 79.70 on lower Euro, while the Australian Dollar last traded lower at 97.22. Commodities were generally lower. US crude oil futures fell for the seventh session in eight, after completing a second straight week of losses, as China increased bank reserve requirements to fight high inflation.  Gold prices recovered, having fallen for a second consecutive week as the metal was caught up in broad-based selling, along with other commodities, by investors’ need to liquidate positions amid increasing margin calls.  Copper ended down the session higher, after having its biggest weekly decline in three months, after further steps by China to slow its excessive growth rate and lingering debt troubles in Ireland stoked investor concerns about demand for industrial metals.

Benchmark crude NYMEX for December delivery was down -0.4% (or $US-0.30) to settle at $US81.44.  Copper prices backed-off 2-year highs, Copper for December delivery  was down -1.3% (or -4.9 cents) at $US3.6990.  Gold prices off all-time highs again, with December gold was up 1.5% at $US1,375.00.

Key International News Drivers Today

US – Spike in tensions between North and South Korea. FBI raided the offices as part of a widening probe into insider trading.
EU – Investor concerns over sovereign debt problems and contagion in the euro zone.
CHINA - Government stands firm on access to credit. China prospect of implementing further tightening measures.
JAPAN – Market closes above 10,000, still outperforming.

Markets Overview

The SPI Futures is below its key support level of 4600 and the ASX is set to open lower as the SPI Futures closed down -1.2% (or -54 pts) at 4,551. The key levels for our index today are 4650 and 4500. M&A activity continues to drive specific stocks. The ASX is set to open lower today, with negative leads from overseas markets. Share price pressure will be across the board.

AGO- Atlas Iron has started discussions with BHP Billiton about co-operating on iron-ore haulage and port access in Australia’s Pilbara region. This move could open up the region for other small producers.

APN- APN News and Media expects to report FY11 earnings in line with market consensus amid improving advertising conditions.

AXA- All of AXA Asia Pacific Holdings independent directors have decided to support the $14.5 billion takeover bid by AMP and the company’s French parent.

BOW- Bow Energy the gas and oil explorer is on track to deliver commercial gas flows and increased gas reserves by the end of 2011.

CGT- Castlemaine Goldfields will reopen the Ballarat mine it purchased from the former Lihir Gold in central Victoria, with production possibly within a year.

FRS- FerrAus has held talks with a subsidiary of BHP Billiton after BHP has taken the emerging producer to court over failed negotiations for a rail haulage deal.

FXJ- Fairfax Media says combining the company’s metropolitan newspapers and online properties under the one roof will yield $10 million in annual savings.

HVN- Harvey Norman says products bought on overseas websites should be taxed by the Federal government to reduce their advantage over local retailers.

IFL- IOOF Holdings remains on track to lift 1H11 profit as costs continue to fall.

MTS- etcash the grocery and hardware wholesaler will pursue its attempted takeover of Franklins, despite the opposition of the ACCC.

MYR- Myer Holdings has rearranged its management structure to support the next stage of its development of its department store chain.

NVT- Navitas the education provider says a downturn in international student enrolments in Australia is weighing on the company but it still expects to report EPS growth in the FY11.

OST- OneSteel is on track to achieve sales at the upper end of 6 to 6.5 Mt of iron ore in the current financial year.

NEC- An independent expert says takeover target Northern Energy could be worth double the $193 million offered by suitor New Hope.

NWS- News Corporation the global media player, will acquire 90 percent of Wireless Generation, a privately-held Brooklyn, U.S. education technology
company for around $365 million in cash.

NZO- NZ Oil and Gas, Pike River’s major shareholder, resumed trading on Tuesday, after playing down the significance of the collier to its overall portfolio.

QAN- Qantas will stage the return of its Airbus A380 superjumbos to service, avoiding for now long range routes that require full engine thrust.

SGP- Stockland is on track to achieve 7 percent EPS FY11 and the property group’s residential communities unit achieved record first quarter sales.

SIP- Sigma Pharmaceuticals the drug maker, which is set to sell its pharmaceuticals business for $900 million.

TEN – Lachlan Murdoch has finalised the purchase of the half stake from James Packer’s recent purchase.

TGA- Thorn Group upgraded its full year profit guidance due to a greater demand for rented products amid economic uncertainty.

TSM- Thinksmart the computer and office equipment financier, says a new consumer product in the UK is performing well and could significantly boost its business there.

Economic Reports :

Private Capital Expenditure for Quarter

Companies:

Ex-Dividends
N/A

Market Summary
ASX – to open lower
US & UK/Europe – sharply lower
US ADRs –  Broadly Lower

BHP down 3.8% &
RIO down
AWC down 2.2%
ANZ down 2.2% &
NAB down 4.3%
NEM down 0.6%
JHX down 2.4%
NWS down 2.9%

Commodities Stock Index down 1.7%
Gold Stocks Index down 1.5%
Oil Stocks Index down 2.0%

By Michael Hevern
Head of Research

Tags: ASX, ASX News, BHP, Business News, Crude Oil, Dividend, European Markets, Stock Market Analysis, US Market wrap

This entry was posted on Wednesday, November 24th, 2010 at 9:02 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.