* U.S. stock markets closed lower overnight for third straight session, despite buying in the energy sector.
* European stock markets rebounded modestly overnight. Resources stocks offered support as commodities prices rose.
* Asian stock markets ended modestly higher yesterday, as investors went bargain hunting after a steep falls in global equities this month.
* Commodities prices recovered.
The SPI Futures is trading below the key level of 4800, closing up 0.2% (or 10 pts) at 4,640. The key levels for our index today are 4680 and 4600.
Australian shares are expected to start to recover today as investors look for “bargains” as we run up into the end of the month. Stocks have been battered this month with the index down 4.6% for May and down 7.4% since the April peak.
Expect the miners, energy and mining services companies to see some buying and even the banks are starting to look attractive on a yield basis. However the mining tax is again in focus again this week after the Western Australian government sharply increased the state iron ore royalities from the miners by $2 billion, and the spectre of the carbon tax is also weighing on sentiment.
See below for ASX listed companies in the news today.
Economic News Today
* Westpac-Melbourne Institute Indexes of Economic Activity Leading Index for April
* Q1 Construction Work Done
US Markets
US stock markets closed lower overnight for the third straight session, despite early buying which was led by the miners and the energy sectors as commodities recovered on a weaker US dollar.
US markets have lost 2% in the past few days, with the Dow Jones down six of the past eight sessions, and the S&P 500 had its largest 1-day decline in two months yesterday. These falls are setting up for a possible rally into the end of the month, though we would expect further weakness next month as the FED turns off the QE2 tap.
The Dow Jones finished lower for its lowest close since mid-April. The S&P 500 stock index falls were led by industrial and consumer discretionary stocks, however the energy sector offered support as a Goldman Sachs report boosted crude-oil price forecasts for the rest of the year.
In economic news the Federal Reserve Bank of Richmond said manufacturing activity in the central Atlantic region is contracting this month after seven months of expansion, while the service sector also slowed but remained in expansion. This data follows that of the Philly Fed and New York Fed from last week, both of which showed slowing manufacturing growth. New home sales increased 7.3% in April from a month earlier, more than economists expected, however sales still are down 23% from a year ago.
Commodities recovered overnight helped by a US dollar. The US dollar is running into a key resistance and any pullback will help commodities prices further.
The Dow Jones closed down -0.2% (or -25 points) at 12,356, the S&P 500 index closed down -0.1% (or -1 points) at 1,317, the Nasdaq ended down -0.5% (or -44 points) at 2,746, and the smaller cap Russell 2000 was down -0.5%.
The ten company groups that make up the S&P index had mixed results: the energy sector was up 1.4%, Materials were up 0.5%, the Financials sector was down -0.1%, Industrials were down -0.5%, Consumer Staples were down -0.5%, the Technology sector was down -0.3%.
European Markets
European stock markets rebounded modestly overnight. Resources stocks offered support as commodities prices rose, while airlines across Europe were hit by news of a volcanic eruption in Iceland. The Stoxx Europe 600 index rose 0.2%, recovering a from a 1.7% slump in the previous session.
Investor sentiment was buoyed as Greece, having accepted an international bailout, confirmed it had reached a preliminary agreement with the International Monetary Fund (IMF) and European Union (EU) for a new economic adjustment plan. However the Greece’s main opposition party has rejected the austerity measures.
In the UK the FTSE 100 rose, as the market sets up for some support into month’s end. Glencore International, the commodities trader, gained 2.1% ahead of its expected entry into the FTSE 100.
In Germany the DAX gained led by industrial and technology sectors, as a key German business confidence survey was stronger than expected, the Ifo Institute’s index of German business confidence was unchanged in May at a reading of 114.2 (analysts were expecting a fall to 113.7).
The FTSE 100 index closed up 0.4% (or 23 points) at 5,858, the German DAX was up 0.4% (or 29 points) at 7,150, while in France the CAC was up 0.2% (or 10 points) at 3,917.
Asian Markets
Asian stock markets ended modestly higher yesterday, as investors went “bargain” hunting after a steep falls in global equities this month.
In Japan the Nikkei Index finished higher, as manufacturing companies such as Komatsu climbed and Hitachi Construction Machinery added over 1.1%. Sony Corp. rose 2.7%, despite forecasting a huge loss for the fiscal year ending 31 March and warning that it expected a loss in the current financial year.
In China the Shanghai Composite index fell but finished off its lows, as Chinese stocks extended the previous session’s sharp decline on concerns about an economic slowdown in China.
The SSE Composite was down -0.3% (or -7 points) at 2,767, while in Hong Kong the Hang Seng Index closed moderately higher, up 0.1% (or -20 points) at 22,730 and in Japan the Nikkei 225 Index was up 0.2% (or 16 points) at 9,477. The South Korean KOSPI was up 0.2%, while the Indian market was up 0.1%.
Commodities
The Dollar Index was lower at 75.92 on a lower Euro, while the Australian Dollar last traded flat at 104.75. Commodities prices were higher.
For the session the benchmark crude NYMEX for June delivery was up 1.6% (or $US1.53) to settle at $99.22. Copper for June delivery was 0.6% (or 7.9 cents) at $US4.1085, and June gold was up 0.5% (or $US7.90) at $US1,524.50.
ASX Market News
BXB – Brambles the pallets supplier and documents manager is still targeting an annual operating profit from $US740 and $US780 million, after sales in the nine months to the end of March lifted 5%.
LLC – Lend Lease Group has agreed to sell its half interest in the King of Prussia shopping mall in the US for net proceeds of $US545 million and will use the money to repay debt in the UK.
MAK – Minemakers Ltd the phosphate explorer last week confirmed reports it was in talks with a state-owned Indian enterprise about jointly developing its Northern Territory project.
RIO – Rio Tinto has seen a major investor express disappointment over increased pay packets for the miner’s senior management.
SPL – Starpharma Holdings says a clinical trial has shown that its VivaGel product is effective in the treatment of bacterial vaginosis (BV).
TEL – Telecom NZ says the New Zealand government has signed deals with Telecom and Christchurch City Council-owned Enable Networks to roll out an ultra fast broadband (UFB) network.
Local Corporate Reporting
Treasury Wine Estates (TWE) Q4 2011 Results
Westfield Group (WDC) Full year 2010 AGM
Ex-dividend Date
Marbletrend Group (MBD)
Market Summary
ASX – to open higher
US & UK/Europe – mixed
US ADRs – Broadly Lower
BHP up 1.5% & RIO up 1.5%; AWC up 1.2%
ANZ down -0.1% & NAB up 0.6%
NEM up 1.7%, JHX up 1.3% , NWS down -0.4%
Commodities Stock Index up 1.2%
Gold Stocks Index up 2.2%
Oil Stocks Index up 1.4%
Head of Research
