Online Stockmarket Trading Update

US markets rose for a third week, as the S&P500 Index reached a 2-year high, as better than estimated data on retail sales, manufacturing and housing boosted confidence that the economic recovery is still intact.  European markets ended lower Friday, due to concerns over the euro-zone sovereign debt contagion weighing on investor sentiment.  Asian markets rose for a second week, as China refrained from raising interest rates to cool inflation. Commodities prices were positive.

The SPI Futures is above its key weekly pivot level of 4700, closing up 0.2% (or 8 pts) at 4,767.  The key levels for our index this week are 4860 and 4630. M&A activity continues to drive specific stocks.  The ASX is set to open higher, as we had mixed leads from overseas markets.  Look to small and mid cap stocks to outperform as we see some “window-dressing” by fund managers trading into the year’s close. Expect trading volumes to reduce this week.
 

US Markets

US markets rose for a third week. The S&P500 Index rose to a 2-year high, as better than estimated data on retail sales, manufacturing and housing boosted confidence that the economic recovery is still intact. The S&P 500 has risen 13 of the past 16 weeks, rising 84 percent from a low in March 2009 as corporate profits have beaten estimates, the economy improved and as a result of the Federal Reserve’s QE2 where it committed to buy assets to boost growth.  Bellweathers Caterpillar, Kraft and DuPont all advanced at over 2.5 percent to lead the gains on the Dow Jones.  The tech heavy Nasdaq rose thanks to software maker Oracle Corp’s advance of 5.1 percent after it forecast earnings that beat analyst estimates. However the world’s two largest credit card companies, Visa and Mastercard, were sold down over 13% after reports that they may face permanent damage to the fastest-growing part of their business after the Federal Reserve proposed rules that could cut debit-card transaction fees by 84 percent. However sentiment was also helped by comments from the former Fed Chairman Alan Greenspan that the US economy is picking up speed and may grow by 3 to 3.5 percent next year.  The benchmark VIX index for US stock options fell to 16 this week, its lowest since April, which means that investors can insure themselves against stock price falls relatively cheaply near-term.  The outstanding performing sectors were materials up (0.8%) and financials (up 0.6%), while industrials dropped 0.3%. 

The Dow closed down -0.1% (or 7 points) at 11,492, while in the broader market the S&P 500 index was up 0.1% (or 1 point) at 1,244 and the tech-heavy Nasdaq ended up 0.2% (or 6 points) at 2,643.

European Markets

European markets closed down, on continuing concerns over sovereign debt contagion.  EU leaders have agreed to amend the eurozone’s treaties to create a permanent debt-crisis mechanism in 2013 as they struggled to bridge divisions over immediate steps to stabilise bond markets. The markets fell on the spectre of debt ratings downgrades on a number of countries, on fears that some euro-zone nations will default on their debt.  Spain’s credit rating may be cut from Aa1 by Moody’s Investors Service on concern about rising borrowing costs, potential losses in the banking system and deficits in the country’s regions, and Moody’s has also put Greece’s Ba1 bond ratings on review for a possible downgrade. Ireland’s credit rating was cut five levels, after the government last month was forced to ask for external aid.  The UK market fell for a third day, trimming its advance to 1 percent for the week, led by declines in banking stocks, as an agreement among Europe’s leaders to create a crisis management mechanism failed to ease investor concern over eurozone sovereign debt contagion.  Lloyds Banking Group Plc lost 3.6 percent after saying it expects to report an increased impairment charge because of Irish loan losses.  Germany continues to outperform, despite a fall on Friday.

In London the FTSE 100 index closed down -0.2% (or -9 points) at 5,872, the German DAX closed down -0.6% (or 42 points) at 6,893, while in France the CAC was up marginally -0.5% (or -21 points) at 3,888.

Asian Markets

Asian markets rose for a second week, as China refrained from raising interest rates to address inflation issues, as the US reports on consumer confidence, the trade deficit and claims for jobless benefits beat forecasts. In Japan the market rose for its seventh straight weekly advance and its longest winning streak since April.  In Hong Kong the Hang Seng Index declined 1.9 percent for the week, while in the Chinese market the Shanghai Composite Index rose 1.9 percent this week. Steelmakers led gains this week, with a gauge tracking material shares rising 1 percent, the most among the 10 industry groups on the MSCI Asia Pacific index. The MSCI Asia Pacific Index has risen 11 percent this year, and the average PE for the stocks on the gauge is at 14.8 times estimated earnings, versus 23 times at the start of the year. Exporters to the US gained after improving data from the world’s biggest economy boosted confidence the recovery was continuing. 

In China the SSE Composite closed down -0.2% (or -4 points) at 2,894, while in Hong Kong the Hang Seng Index was up 0.2% (or 46 points) at 22,715 and in Japan the Nikkei 225 Index was down marginally 0.1% (or -7 points) at 10,303.

Commodities

Copper remained around record levels again, on continuing concerns that demand will outpace supply into 2011 driving prices higher.  Gold is higher but still below $US1,400 an ounce, and crude oil rose also. The Dollar Index was up 1.0% at 80.36 on the lower Euro, while the Australian Dollar last traded higher at 98.81.  Commodities were generally higher.

The benchmark crude NYMEX for December delivery was up 0.4% (or $US0.32) to settle at $US88.21. Copper prices backed around 2-year highs, with copper for December delivery up 1.1% (or 4.3 cents) at $US4.1640. Gold prices were off all-time highs again, with December gold up 0.6% (or $8.20) at $US1,377.20.

Key International News Drivers Today

Tags: ASX News, BHP, Commodities, Crude Oil, European Markets, stock market, Stock Market Analysis, stockmarket, trading, US Market wrap

This entry was posted on Sunday, December 19th, 2010 at 10:12 pm 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.