Online Stockmarket Trading Update

US markets ended flat, dragged by energy and financials. The Fed left interest rates alone as expected and said it would keep up its $US600 billion bond-buying program in an effort to pump-prime the jobless recovery.  European markets ended mixed overnight with stock prices buoyed by unexpectedly improving US retail sales data.  ECB President Trichet says European governments should consider extending and broadening the region’s bailout fund.  Asian markets end higher yesterday, as Hong Kong and Japanese markets continued to rise. The Chinese market has broken higher, after China’s decision to hold off on another interest rate rise. Commodities prices were mixed.

The SPI Futures is above its key weekly pivot level of 4700 and closed up marginally 0.1% (or 3 pts) at 4,781.  The key levels for our index today are 4800 and 4730. M&A activity continues to drive specific stocks.

Key themes for investors today include:
* talks over regulatory banking reforms which continue today
* the completion of the sale of NSW state electricity assets (see below)
* the Aussie dollar is back at US dollar parity. 

The ASX is set to open flat, as we had generally subdued leads from overseas markets.  Look to resource and banking stocks to continue to be the focus.

US Markets

US markets ended flat, dragged by energy and financials.  Stocks initially rose and bond prices fell sharply after reports pointed to a stronger economy, and the Federal Reserve said it would continue with its stimulus plan. The yield on the benchmark 10-year Treasury note rose to its highest level since May.  The Fed left interest rates alone as expected, after its one-day meeting and said it would keep up its $US600 billion bond-buying program in an effort to pump-prime the jobless recovery.  Investor sentiment was supported by the US Department of Commerce reporting that retail sales rose for the fifth straight month in November and elsewhere businesses in the US increased their inventories for the 10th consecutive month, and this was seen as a sign of growing confidence in the economic recovery. 

In a survey from the Business Roundtable, CEOs of big US companies reported that 45 percent of executives say they expect their companies to add more workers over the next six months. This is the highest percentage since the survey began in late 2002. 

In the S&P500 index financials and energy were the only sectors to fall (down 0.9% and 0.5% respectively), while healthcare up 0.9%, and industrials and consumer discretionary were up 0.4% for the session.  The Dow closed up 0.4% (or 48 points) at 11,477, while in the broader market the S&P 500 index was up marginally 0.1% (or 1 point) at 1,242 and the tech-heavy Nasdaq ended up marginally 0.1% (or 3 points) at 2,628.

European Markets

European markets ended mixed overnight though stocks were buoyed by unexpectedly improving US retail sales data.  ECB President Trichet says European governments should consider extending and broadening the region’s bailout fund.  In London, the FTSE 100 index rose to its highest level in two and half years, as energy stocks moved higher on rumours that Shell may be looking to make a bid for BP. 

The PIIGS are still in focus, with Spain being forced to pay sharply higher rates at a bond auction, with the yield on 12 and 18-month bills climbing almost 1 percent in the past month. This increased cost of funding is a consequence of Ireland last month having to agree to a bailout from the International Monetary Fund and the European Union, similar to the one granted to Greece in May. 

Italian Prime Minister Silvio Berlusconi has survived a no-confidence vote by just three votes and it appears he no longer has a stable majority.  Also of interest is the International Air Transport Association saying the world’s 5 biggest airlines by market value now come from Asia and Latin America, highlighting the industry’s shift away from the US and Europe to higher-growth countries. 

In Germany investor confidence improved for a second month.  In London the FTSE 100 index closed up 0.5% (or 30 points) at 5,891, the German DAX was flat (or -2 points) at 7,027, while in France the CAC was up 0.3% (or 11 points) at 3,923.

Asian Markets

Asian markets ended higher yesterday.  Hong Kong and Japanese markets continued to rise.  The Chinese market has broken higher, after the government’s decision to hold off on another interest rate rise provided support to investors worried such a move could halt the Chinese strong economic growth.  The Chinese government has chosen to raise the bank reserve requirement ratio by 0.5 of a percentage point to 18.5%, avoiding harsher tightening measures for the time being at least.  A report out of China forecast that the economies of six of its provinces will be as big as those of Russia or Canada by 2020, highlighting the challenges faced by Beijing as it tries to cool its runaway economy. 

The SSE Composite closed up 0.1% (or 4 points) at 2,927, in Hong Kong the Hang Seng Index was up 0.5% (or 114 points) at 23,431 and in Japan the Nikkei 225 Index was up 0.2% (or 23 points) at 10,317.

Commodities

Copper remained around record levels again, on continuing concerns that demand will outpace supply into 2011 driving prices higher.  Gold was higher but still below $US1,400 an ounce, and crude oil rose as well. The Dollar Index was up 0.1% at 79.39 on a lower Euro, and the Australian Dollar last traded at 99.90.  Commodities were generally mixed.

The benchmark crude NYMEX for December delivery was down -0.3% (or $US-0.30) to settle at $US88.31. Copper prices backed off 2-year highs, with copper for December delivery down -0.3% (or -1.1 cents) at $US4.1890. Gold prices are off all-time highs again, with December gold marginally down -0.1% at $US1,396.50.

Key International News Drivers Today

Markets Overview

FMG- Fortescue Metals Group has priced $1.52 billion of unsecured notes in two tranches.

GPT- GPT Group will cut its debt and rearrange its interest rate hedges following the $216 million sell-down of two of its wholesale funds.

GGG- Greenland Minerals and Energy has become the first company to receive a permit to evaluate a project in Greenland that includes uranium. Share surged 26%.

NZO- NZ Oil and Gas reports the receivers of NZ’s Pike River Coal mine say 114 workers will be made redundant.

ORG- The NSW government is expected to confirm Origin Energy and TRUenergy, a subsidiary of Hong Kong based CPL, as the successful bidders for the state’s electricity assets.

RCG- RCG Corporation has varied the terms of its purchase of Shoe Superstore made last year.

RFX- Redflow, the energy storage innovator, gained 18 percent following its debut lising on the ASX.

RIV- Speculation is mounting that an Indian consortium will launch a takeover bid for coal miner Riversdale Mining.

ASX – to open flat
US & UK/Europe – EU mixed, US flat

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

This entry was posted on Wednesday, December 15th, 2010 at 9:13 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.