US markets ended the week flat. The Dow Jones Index rebounded off the 11000 level. European stocks were mixed, as Ireland says it will accept a bailout deal from the EU and IMF. Asian stock markets ended mixed for the week, with Japan outperforming while Chinese stocks rebounded from their recent heavy losses, after the government announced inflation control measures that proved less stringent than expected. Commodity prices have fallen over the week on the back of the higher US dollar.
The SPI Futures is below its key pivot level of 4725 from last week and the ASX is set to open flat as the SPI Futures closed up marginally 0.1% (or 6 pts) at 4,655 (down -0.7% for week). The key levels for our index this week are 4750 and 4550. M&A activity continues to drive specific stocks. The ASX is set to open flat today, with mixed leads from overseas markets, Queensland Rail National $6.7 billion IPO is set to trade at midday, this will be a focus. Trade with protection, honor your stops or use options o protect your portfolio.
US Markets
US stocks closed higher, ending the week flat. The Irish bailout is nearing acceptance and concerns eased that China’s latest move to curb its runaway inflation could hurt the global economy, was less stringent than first feared. Tech and Financial stocks have been weighing on the markets in the past week. However, Dell the computer maker, surprised investors by reporting strong quarterly profits that beat analysts expectations. Sectors that supported the markets on Friday were Energy up 0.9% and Materials up 0.8%, while Financials lagged, down -0.1%. The OECD trimmed its US growth forecast this year, urging the government to use caution in reducing its deficit to preserve recovery. The Dow closed up marginally 0.2% (or 22 points) at 11,204 (up 0.1% for week), while in the broader market the S&P 500 index up 0.3% (or 3 points) at 1,200 (up 0.1% for week) and the tech-heavy Nasdaq ended up marginally 0.2% (or 4 points) at 2,518 (down -0.1% for week).
European Markets
European stock markets finished mixed for the week. The main focus was Ireland’s bailout but shares with exposure to China were also sold off after China announced anti-inflation measures that could threaten global growth. Weighing on sentiment last week was the uncertain financial future of Ireland, which was where European Union (EU) and International Monetary Fund (IMF) finance experts were negotiating a possible bailout for the debt-ridden economy. Fears of an Ireland default have also abated as discussions with the EU, ECB and IMF are said to have come to an agreement over an Irish Bailout, over a 4 year period. The German market continues to outperform breaking to 30-month highs. In London, the FTSE 100 index closed down -0.6% (or -36 points) at 5,733 (down -1.1% for week), the German DAX up marginally 0.2% (or 11 points) at 6,844 (up 1.6% for week), while in France the CAC was down marginally -0.2% (or -8 points) at 3,878 (up 1.0% for week).
Asian Markets
Asian stock markets ended the week mixed. Japanese stocks rose sharply for the week, finishing at a 5-month high, as the yen’s decline against the euro spurred buying interest, as the Japanese Nikkei had its first close above 10,000 since June. The market has broken through its 200-day moving average resistance for the first time since May and gathering momentum, with gains were led by the banking and export sectors. Chinese stocks rebounded after the government announced inflation control measures that proved less stringent than expected. China’s central bank said it will raise the amount of money that lenders must keep in reserve as the world’s second largest economy attempts to tackle soaring inflation and housing costs. However, it stopped short of raising interest rates which would likely spark worldwide concerns of a global economic slowdown. The Chinese market is still more than 8 percent down from the start of a sudden slump that began early November. Hong Kong shares saw some profit taking. Property developers led the declines, affected by reports of measures to rein in the booming property market, including higher stamp duties on real estate resold a short time after purchase, and tougher lending ratios for taking out mortgages. In China the SSE Composite closed up 0.8% (or 23 points) at 2,889 (down -3.2% for week), while in Hong Kong the Hang Seng Index was down marginally -0.1% (or -32 points) at 23,606 (down -2.5% for week) and in Japan the Nikkei 225 Index was down marginally 0.1% (or 9 points) at 10,022 (up 3.0% for week).
Commodities
The Dollar Index was down marginally 0.1% at 78.504 on flat Euro, while the Australian Dollar last traded lower at 98.72. Commodities were generally lower. US crude oil futures fell for the fifth session in six, completing a second straight week of losses, as China increased bank reserve requirements to fight high inflation. Gold prices fell for a second consecutive week as the metal was caught up in broad-based selling, along with other commodities, by investors needing to liquidate positions amid increasing margin calls. Copper ended down in 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 down -0.5% (or $US-0.44) to settle at $US81.86 (down -3.4% for week) . Copper prices backed-off 2-year highs, Copper for December delivery was up marginally 0.1% (or 0.3 cents) at $US3.8220 (down -1.8% for week) . Gold prices off all-time highs again, with December gold was down marginally -0.1% at $US1,346.10 (down -1.4% for week) .
Key International News Drivers Today
US – Dow Jones Index is testing its key 11000 level. Investor euphoria over GM’s IPO eases.
EU – Investor concerns over sovereign debt problems in the euro zone abates.
CHINA - Government stands firm on access to credit. China is implementing tightening measures.
JAPAN – Market closes above 10,000.
Markets Overview
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Market
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Movement
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The Dow Jones Industrial
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Up 0.2% (or 22 pts) at 11,204 (up 0.1% week)
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The S&P 500
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Up 0.3% (or 3 pts) at 1,200 (up 0.1% for week)
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The Nasdaq
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Up 0.2% (or 4 pts) at 2,518 (down -0.1% week)
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The FTSE 100
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Down -0.6% (or -36 pts) at 5,733 (down -1.1% for week)
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The German DAX
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Up 0.2% (or 11 pts) at 6,844 (up 1.6% week)
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The Fench CAC
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Down -0.2% (or -8 pts) at 3,878(up 1.0% week)
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The Dollar Index
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Down Marginally 0.1% at 78.504
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The Australian Dollar
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Last traded at 98.72
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The Commodities Index
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Down -1.2% at 298.9
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Crude Oil Futures
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Down -0.5% at $81.86 (down -3.4% for week)
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Gold Futures
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Down -0.1% at $1,346.10 (down -1.4% week)
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Copper Futures
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Up Marginally 0.1% at $3.8220 (down -1.8% for week)
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SPI Futures
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Up Marginally 0.1% (or 6 pts) at 4,655 (down -0.7% for week)
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Market
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Movement
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SSE Composite (China)
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Up 0.8% at 2,889 (down -3.2% for week)
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Hang Seng Index (Hong Kong)
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Down Marginally -0.1% at 23,606 (down -2.5% for week)
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Nikkei 225 Index (Japan)
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Down Marginally 0.1% at 10,022 (up 3.1% for week)
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ASX News Today
The SPI Futures is below its key pivot level of 4725 from last week and the ASX is set to open flat as the SPI Futures closed up marginally 0.1% (or 6 pts) at 4,655 (down -0.7% for week). The key levels for our index this week are 4750 and 4550. M&A activity continues to drive specific stocks. The ASX is set to open flat today, with mixed leads from overseas markets, Queensland Rail National $6.7 billion IPO, set to trade at midday, will be a focus. Trade with protection, honour your stops or use options o protect your portfolio.
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.
AIO- Asciano the ports and rail operator says its corporatisation project has been implemented and it is fully destapled from the Asciano Finance Trust.
AWB- AWB the grain trader takeover through the scheme of arrangement by which the company is sold to Canada’s Agrium Inc is now complete.
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.
BRM- Brockman Resources the iron ore explorer, is urging shareholders to reject an unsolicited all-scrip takeover offer from Hong Kong listed Wah Nam International Ltd.
CGF- Challenger Financial has called on the government to implement the Henry tax review recommendations over retirement products as it reassured shareholders of medium-term growth.
DJS - David Jones the upmarket retailer said its 1Q trading was flat as consumers remain conservative while reaffirming its forecast of 5 to 10 percent annual profit growth.
FMG- Fortescue said it had approved plans to spend $8.51 billion expanding its iron ore production to 155 million tonnes per annum (Mtpa).
ITO- Intoll the toll road operator, said traffic and revenue has increased in the 1Q11 on both its assets, one in Canada and the M7 in Sydney.
KAR- Karoon Gas the gas explorer has cancelled the float of its South American assets due to unfavourable financial market conditions.
MAP- MAp Group says total passenger traffic at Sydney Airport rose 3.7 percent in October compared with the same period last year, with domestic traffic up 4.1 percent and international up 2.9 percent.
MCC- Macarthur Coal the coal miner, is forecasting 1H11 profits strongly up on a year earlier, on the back of demand growth and a tightening market.
NAB- National Bank is facing a shareholder class action provisionally claiming losses of $450 million for the bank’s failure to disclose its exposure to subprime securities during the GFC.
NZO- share price plummets. NZ Oil and Gas is Pike River’s major shareholder.
PRC- Pike River Coal the NZ coal miner is in a trading halt as up to 30 miners are missing after an explosion.
QAN- Qantas says Rolls-Royce had made modifications to the Trent 900 engine without telling the airline or Airbus, which makes the A380 superjumbo.
SGM- Sims Metal the metal and e-waste recycler, will pursue further acquisitions in FY11, after completing two transactions early in the financial year.
SGP- Stockland the property group, has lengthened its debt maturity with the offer of $160 million in medium term notes and the buyback of $70 million in notes due to mature sooner.
SHL- Sonic Healthcare has reaffirmed its FY11 profit guidance of 5 to 15 percent growth as its Australian pathology volumes return to long term trend levels.
TAH- Tabcorp the gaming company, has completed the final stage of its equity raising, with its retail bookbuild oversubscribed.
TLS- the Future Fund Telstra’s major shareholder, opposed all resolutions put to Telstra Corporation Ltd’s AGM.
WOW- Woolworths reaffirmed its previous guidance for net profit to rise between 8 and 11 percent in the FY11.
Economic Reports :
QR National IPO
Companies:
Bow Energy Full year 2010 AGM
Liquified Natural Gas Full year 2010 AGM
RiverCity Motorway Full year 2010 AGM
Ex-Dividends
Count Financial (COU)
Novarise Renew Res (NOE)
Redflex Holdings (RDF)
Supply Network (SNL)
Solco Ltd (SOO)
SP AusNet (SPN)
Market Summary
ASX – to open flat
US & UK/Europe – mixed
US ADRs – Generally Higher
BHP down 0.9% &
RIO down
AWC up 0.2%
ANZ down 1.2% &
NAB down 1.5%
NEM down 0.1%
JHX up 1.0%
NWS down 0.4%
Commodities Stock Index up 0.5%
Gold Stocks Index up 0.7%
Oil Stocks Index up0.4%
By Michael Hevern
Head of Research
