* U.S. stock markets ended lower breaking a 4-day winning streak. The markets traded lower from the start and comments from the Fed failed to spark.
* European markets closed broadly lower overnight, as economic data shows that the European consumer environment is showing signs of further weakness.
* Asian stock markets finished mostly higher yesterday, as investors bet that Greece will avoid a debt default.
* Commodities prices traded higher. Gold is trading towards record levels again.
The SPI Futures is trading below the key pivot level of 4600, ending down -0.4% (or -16 points) at 4,515. The key levels for our index today are 4550 and 4480. Australian shares are set to trade lower today after negative leads from key markets in the U.S. and Europe.
Investors are likely to be finalising their portfolios for the end-of-year cleanout. Look for miners and banks to be the focus as we run into the end of the month. We also have options expiry today.
Interestingly Australia’s mid-west iron ore miners surged yesterday after QR National said it would be ready to take a stake in the delayed Oakajee port and rail project. Shares in Oakajee developer Murchison Metals and Gindalbie Metals jumped on the news, as they plan to use the project for its longer-term expansion plans. This sector will be in focus today.
See below for ASX listed companies in the news today.
Economics News Today
* Monthly CB Leading Index.
U.S. Markets
U.S. stock markets ended lower breaking a 4-day winning streak. The markets traded lower from the start and comments from the Fed failed to spark any support.
All three major indices closed lower and all ten sectors of the S&P 500 finished lower for the day, with technology and consumer discretionary stocks falling the hardest, while energy and materials stocks also traded lower as crude oil prices jumped 1.3% above $US95 a barrel.
The Fed confirmed their plans to end QE2, the purchase of $600 billion in U.S. Treasurys on 30 June and vowed to keep short-term interest rates near zero. The Fed has also downgraded its assessment of the U.S. economic performance, estimating growth will be down to 2.7%-2.9% (down from previous estimates of 3% in April) and also said that unemployment is likely to remain high from 8.6% to 8.9% (currently running at 9.1%). The chairman also said that the economic headwinds are “stronger and more persistent” than initially forecast and cited problems in the financials and the housing markets, and the spectre of contagion if the Greek debt crisis is not resolved.
The Dow Jones closed down -0.9% (or -80 points) at 12,110, the S&P 500 index closed down -0.7% (or -8 points) at 1,287, the Nasdaq ended down -0.7% (or -18 points) at 2,669, and the smaller cap Russell 2000 was down -0.8%.
All ten company groups that make up the S&P index traded lower: Consumer Staples were down -0.8%, Industrials were down -0.6%, the Technology sector was down -0.7%, Financials were down -0.6%, while the Energy sector was down -0.3% and Materials were down -0.4%.
European Markets
European markets closed broadly lower overnight, as economic data shows that the European consumer environment is showing signs of further weakness. The Stoxx Europe 600 finished down 0.6%, the index has declined 11 of the past 16 sessions now.
The Greek ASE Composite index fell 0.3%, while the Portugese PSI 20 index fell 0.7%. Investors looked past the successful confidence-vote by the Greek government, aware that the resolution of the country’s debt problems are far from complete, as parliament now must pass stringent austerity measures totalling EUR28 billion before Greece gets a EUR12 billion tranche of a financial aid package from the European Union.
In economic data consumers in the 17-nation euro-zone bloc became less confident in June about their prospects, with the EU confidence index falling to -10 from -9.9 in May.
In London the FTSE 100 fell, with banks leading the declines after minutes from the last Bank of England monetary policy meeting proved to be very dovish, pushing rate-hike expectations back even further than expected. In Germany the market ended flat.
In London the FTSE 100 index was down -0.1% (or -2 points) at 5,773, the German DAX was down -0.1% (or -7 points) at 7,278, while in France the CAC was down -0.2% (or -6 points) at 3,877.
Asian Markets
Asian stock markets finished mostly higher yesterday, as investors bet that Greece will avoid a debt default, as the Greek government won a key confidence vote.
In Japan the Nikkei Stock Index surged 1.8%, as financials rallied after the Greek vote, with key financials rising over 2.5% in the session.
Investors in Hong Kong and China remain concerned about the prospect of yet another Chinese interest rate hike, after the Chinese National Development and Reform Commission said it expects consumer inflation to have accelerated in June from May’s 5.5% rise. These markets ended flat, as property developers weighed on sentiment, but in China the banks actually rose on the back of bargain hunting.
In China the SSE Composite was up 0.1% (or 2 points) at 2,649, while in Hong Kong the Hang Seng Index was up 0.1% (or 9 points) at 21,860 and in Japan the Nikkei 225 Index was up 1.8% (or 170 points) at 9,629. The South Korean KOSPI was up 0.8% for the session, while the Indian market was down -0.1%.
Commodities
The Dollar Index was lower at 74.88 on a higher Euro, while the Australian Dollar last traded lower at 105.61. Commodities prices were generally higher.
For the session the benchmark crude NYMEX for June delivery was up 0.3% (or $US0.29) to settle at $94.47. Copper prices are still below 2-year highs as Copper for June delivery was flat (or up 0.1 cents) at $US4.0935. June gold was up 0.5% (or $US6.90) at $US1,551.60.
ASX News Today
AQA – Aquila Resources Ltd has not reached an agreement with Brazilian resource major Vale regarding how coal shipments can be made separately from a jointly owned mine.
BLD – National Bank has increased their stake in Boral to 7.2% (up from 6.1%).
CSL – CSL says the US Food and Drug Administration (FDA) has sent a warning letter to CSL stating that the company’s manufacture process of an influenza vaccine was not up to standard.
CSP – Coalspur Mines has completed the private placement of 6 million shares at $C1.85 per share to Highland Park Group, a strategic investor, raising a further $C11.1 million.
DOW – Downer may have to hold sensitive discussions with parties involved in Sydney’s Waratah train project because it is “in serious risk”, says NSW Treasurer Mike Baird.
FXJ - Fairfax Media Ltd, now NZ’s biggest newspaper proprietor, is to make up to 45 staff redundant by outsourcing their jobs to India, the Engineering, Printing and Manufacturing Union (EPMU) says.
GNC – The ACCC says that it has accepted access arrangements for grains marketer GrainCorp Ltd’s wheat port for October 2011 to September 2014.
MAP – MAp Group says it has received an offer from the Ontario Teachers’ Pension Plan Board (OAPP) to take over the Canadian fund’s stake in Sydney Airport in exchange for its stake in Brussels and Copenhagen Airports.
MMX – Australia’s mid-west iron ore miners surged yesterday after QR National said the company would be ready to take a stake in the delayed Oakajee port and rail project. Shares in Oakajee developer Murchison Metals (MMX) and Gindalbie Metals (GBG) jumped on the news, as they plan to use the project for its longer-term expansion plans.
QAN – Qantas Airways Ltd says underlying profit before tax is expected to be between $500 million and $550 million for the full 2010/11 year, and announced a settlement with engine manufacturer Rolls Royce.
SGP – Stockland the property developer will acquire two residential projects in WA and a shopping centre in Victoria while selling its 50 per cent holding in Perth’s BankWest Tower.
SHV – Select Harvests Ltd the almond orchardist and nuts supplier has agreed to a new $115 million debt facility from the National Bank (NAB).
WHC – Whitehaven now has a new substantial holder as JCP Investments now have a 5% stake.
WPL – Woodside Petroleum Ltd may face another credit rating downgrade, following last week’s $900 million cost blowout and delays to its flagship offshore gas project.
Local Corporate Reporting
Range Resources (RRS) – Full year 2010 AGM
Ex-dividend Date
G8 Education Limited (GEM)
Market Summary
ASX – to open lower
US & UK/Europe – lower
US ADRs – Broadly Mixed
BHP down -1.1% & RIO down -0.5%; AWC up 0.9%
ANZ down -0.7% & NAB down -1.2%
NEM up 1.5%, JHX down , NWS up 0.2%
Commodities Stock Index up 0.1%
Gold Stocks Index up 0.4%
Oil Stocks Index down -0.6%
By Michael Hevern
Head of Research
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Tags: Asian Markets, ASX News, Business News, European Markets, Mining Services, oil, S&P500, Stock Market Analysis, stockmarket, US Market wrap
