* U.S. stock markets drifted lower overnight, as investors paused after the 3-day rally.
* European stocks fell overnight, as the sovereign debt worries resurfaced, with Portugal facing a bailout.
* Asian markets traded higher yesterday, led by the Japanese stocks as bargain hunters went shopping.
* Commodities were generally higher, as Gold and Crude oil price again trading higher.
The SPI Futures is trading above the key pivot level of 4650, as the SPI Futures down -0.2% (or -9 pts) at 4,667. The key levels for our index for today 4700 and 4600.
The ASX is set to trade lower today. We had negative leads from overseas markets as Japanese authorities are reportedly making slow progress on closing down damaged nuclear plants. Investors are re-accessing the geopolitical unrest in the unrest in the Middle East and North Africa, as the Japanese nuclear crisis remains under control and the European sovereign debt concerns.
See below for stocks in the news today.
Economics News Today
* AOFM is due to issue $500 million of May 2021 Treasury bonds.
U.S. stock markets drifted lower overnight, as investors paused after the 3-day rally that helped the market regain ground after several weeks of news dominated by unrest in the Middle East and North Africa and the Japanese earthquake.
The Dow Jones has gained gain 3.5% in the past 3-days and has held above 12,000 in light afternoon trading, while the S&P500 stock index stayed below 1300. Leading the declines were industrial and consumer discretionary stocks. Among the biggest Dow Jones decliners included General Electric and Bank of America, off 1%, while Walgreen fell 6.5% after the drugstore operator’s second-quarter earnings disappointed, while telecoms remained positive with Verizon Communications trading 1.3% higher on the prospect of consolidation in the telecommunications industry.
Oil prices remained a concern for investors, as crude-oil futures rose toward $US105 a barrel. The US dollar turned higher against the euro overnight following speculation that Ireland was having trouble paying off its debt, as the sovereign debt worries resurface.
The Dow closed down -0.1% (or -18 points) at 12,018, while in the broader market the S&P 500 index down -0.4% (or -5 points) at 1,293 and the tech-heavy Nasdaq ended down -0.3% (or -8 points) at 2,683.
All the 10 company groups that make up the S&P index Energy traded lower, with under-performers including: Industrials were down -0.8%, Consumer Staples sector was down -0.8%, Financials were down -0.5%, while the Materials and Energy sectors were down -0.2%.
European stocks fell overnight, ending a 3-day winning streak, as the sovereign debt worries resurfaced, with Portugal facing the need for a bailout. The Stoxx Europe 600 index slid -0.2%.
The Portuguese market sold-off 1.5 percent as Portugal’s main opposition party signaled it will not support the government’s call for additional austerity measures. This news heightened expectations the Portugal may need external financial aid in order to meet its obligations, sooner rather than later.
Automobile manufacturers and engineering stocks were sold-off in the region, as these firms are most exposed to global growth.
European finance ministers earlier reached an agreement on the establishment of a new fund that will be able to lend around 500 billion euros ($US710 billion) to troubled euro-zone countries beginning in 2013, as expected. The European Central Bank (ECB) President Jean-Claude Trichet and other policy makers have reinforced their conviction that the impact of the Japanese earthquake and tsunami will not derail the ECB’s widely anticipated rate hike next month.
In London the FTSE 100 index ended lower after inflation came in higher than expected, while the French CAC 40 also closed lower. In Germany the market traded lower, led by retailers, as Metro a major supermarket operator reported a 33% rise in fourth-quarter profit, but also cautioned that unrest in the Middle East and North Africa, the Japanese earthquake and economic problems in parts of Europe could affect its earnings targets.
In London the FTSE 100 index closed down -0.4% (or -23 points) at 5,762, the German DAX was down -0.5% (or -35 points) at 6,780, while in France the CAC was down -0.3% (or -35 points) at 3,892.
Asian markets traded higher yesterday, led by the Japanese stocks as fears eased about an earthquake-damaged nuclear power plant and low valuations offering opportunities to bargain hunters. Markets remain wary of the Libyan crisis impact on crude oil prices.
In Japan the Nikkei Stock Index which fell more than 10% last week, but jumped 4.4%, as investors see Japanese stocks as undervalued after their recent plunge, with Berkshire Hathaway Inc. Chairman Warren Buffett saying the sell-off is a buying opportunity. Leading stock gains in Japan, Tokyo Electric Power Co. (Tepco), the operator of the damaged Fukushima nuclear-power plant, jumped 16% after surging nearly 19% Friday; also Toshiba Corp. climbed 13% amid a broad buyback in consumer-electronics and nuclear power related stocks.
In Hong Kong the Hang Seng Index rose as did the Chinese Shanghai Composite. Refining and petrochemical shares in the region posted broad gains on hopes that the loss of capacity caused by the Japanese earthquake and tsunami would boost demand from facilities that emerged intact. The South Korean Kospi rose 0.5% and the Indian Sensex gained 0.8%.
In China the SSE Composite closed up 0.3% (or 10 points) at 3,056, while in Hong Kong the Hang Seng Index was up 0.7% (or 172 points) at 22,857 and in Japan the Nikkei 225 Index was up 4.4% (or 401 points) at 9,608.
The Dollar Index was lower at 75.48 on a higher Euro, while the Australian Dollar last traded above parity at 101.05. Commodities were generally higher.
For the session the Benchmark crude NYMEX for April delivery was up 1.6% (or $US1.67) to settle at $US104.53. Copper prices around 2-year highs. Copper for April delivery was up 0.6% (or 2.8 cents) at $US4.3025. April gold was up 0.1% (or $US1.30) at $US1,430.40.
ASX Market News
AMP – AMP the wealth manager plans to raise $600 million in 10-year notes to partially fund its takeover of AXA Asia Pacific Holdings.
ASX – ASX says financial jobs would move offshore if the federal government permitted a merger of the ASX with the Singapore Stock Exchange.
BCI – BC Iron said it had applied to the Takeovers Panel in protest at suitor Regent Pacific abruptly walking away from its planned takeover.
CCV – Cash Converters the pawn boker will sell majority ownership in the company as part of a strategic relationship to be formed with US based EZCORP Inc.
MTS – Metcash’s action to allow its takeover of Franklins against the ACCC continues in the Federal Court of NSW.
NHC – New Hope has maintained production levels despite heavy rains and flooding in Queensland and more than tripled 1H11 net profit thanks to the divestment of Arrow Energy.
QAN – Qantas faces strike action as thousands of staff have threatened strike action to prevent the company’s use of cheap outside labour.
RIO – Rio Tinto Group is planning a push into Russian diamond mining in a bid to cash-in on increased demand from China, according to U.K. reports.
TEN – court told that newly appointed Ten chief executive James Warburton took commercially sensitive documents with him when left Seven Media Group.
TPM – TPG Telecom has upgraded guidance and said margins were improving after the telco reported a double-digit lift in 1H11 net profit and revenue.
U308 – Australian uranium stocks continued their volatility with ERA, EXT and PDN mixed.
Local Corporate Reporting
David Jones Ltd (DJS) Interim 2011 Results
SEK – Seek Limited (6.8 cents)
ASX – to open lower
US & UK/Europe – lower
US ADRs – Broadly mixed
Commodities Stock Index down -0.3%
Gold Stocks Index up 0.5%
Oil Stocks Index down -0.01%
By Michael Hevern
Head of Research
Written on 21st March, 7:15am