* U.S. stock markets fell overnight, as the impasse in Washington over the debt ceiling negotiations leaves the U.S. vulnerable to a possible default or a downgrade from their triple-A credit rating.
* European stock markets ended mostly lower overnight. Investors fretted over the global debt issues, as Moody’s Investors Service cut Greece’s debt rating by three notches.
* Asian stock markets ended mostly lower yesterday, with investors taking profits as the U.S. debt situation remains in limbo.
* Commodities prices traded generally lower, but Gold prices reached record levels again, closing above $US1,614.
The SPI Futures is trading below the key pivot level of 4600, ending up 0.5% (or 22 points) at 4,535. The key levels for our index today are 4580 and 4450. Australian shares are set to open modestly higher today but negative leads from key markets in the U.S. and Europe will likely pressure stock prices as the day unfolds. Trading volumes were light yesterday and are likely to remain low today as investors choose caution until the U.S. resolves their debt-ceiling issue.
See below for ASX listed companies in the news today.
Economics News Today
*Â RBA Governor Glenn Stevens speech to the Anika Foundation.
U.S. Markets
U.S. stock markets fell overnight, as the impasse in Washington over the debt ceiling negotiations leaves the U.S. vulnerable to a possible default or a downgrade from their triple-A credit rating. Investors moved to “risk-off” as the negotiations over the debt-ceiling between Republicans and Democrats failed to reach a consensus on Friday and showed no progress over the weekend.
The Dow Jones Index lost ground for its third session in four as the stocks sold-off from the open. In the broader market the S&P 500 stock index and the tech-heavy Nasdaq both fell around 0.6%. Telecommunications and health care stocks were the weakest performers in the S&P 500, while technology continues to outperform but still finished in the red.Â
Stocks made a modest recovery as Republicans and Democrats each pursued separate efforts to raise the debt ceiling. House Republicans were to propose a debt package to cut the deficit by at least $3 trillion, while raising the debt ceiling in a two-step process.Â
In economic news manufacturing activity in the Dallas region contracted at a slower pace in July compared with June. Commodities generally traded lower but gold futures reached a new record settlement at $US1,614 in a flight to safety.
All ten company groups that make up the S&P index traded generally lower:Â the Financials sector was down -0.7%, Technology was down -0.3%, Industrials were down -0.1%, Materials were down -0.3%, while Consumer Staples were down -0.7%, and the Energy sector was down -0.4%.
The Dow Jones closed down -0.7% (or -88 points) at 12,592, the S&P 500 index closed down -0.6% (or 8 points) at 1,337, the Nasdaq ended down -0.6% (or -16 points) at 2,843, and the smaller cap Russell 2000 was down -1.2%.
European Markets
European stock markets ended mostly lower overnight. The Stoxx Europe 600 index closed down 0.3%. Investors fretted over the global debt issues, as Moody’s Investors Service cut Greece’s debt rating by three notches, further into junk territory, indicating that the planned debt swap would constitute a default.Â
Banks across the region came under heavy selling pressure as profit takers stepped in: Italian banks plunged around 8%, while banks in Germany fell 4% in the session. Defensive stocks such as pharmaceuticals and tobacco companies were among the stronger performers as investors switched out of riskier assets.
In London the FTSE 100 index was down -0.2% (or -16 points) at 5,925, the German DAX was up 0.3% (or 18 points) at 7,344, while in France the CAC was down -0.7% (or -29 points) at 3,813.
Asian Markets
Asian stock markets ended mostly lower yesterday, with investors taking profits as the U.S. debt situation remains in limbo as the 2 August deadline looms large.Â
In China the market plunged for its worst 1-day percentage loss since January, as investors were concerned over the slowing economic growth outlook. Railway stocks were hard hit, down over 6% after the high-speed rail system accident over the weekend, while airline stocks rose.Â
In China the SSE Composite was down -3.0% (or -82 points) at 2,689, while in Hong Kong the Hang Seng Index was down -0.7% (or -151 points) at 22,263 and in Japan the Nikkei 225 Index was down -0.8% (or -82 points) at 10,050. The South Korean KOSPI was down -1.0% for the session, while the Indian market was up 0.8%.   Â
Commodities
The Dollar Index was higher at 74.20 on a lower Euro, while the Australian Dollar last traded higher at 108.52. Commodities prices were generally lower.
For the session the benchmark crude NYMEX for July delivery was down -0.8% (or -$US0.78) to settle at $99.09. Copper prices are still below 2-year highs as Copper for July delivery was down -0.1% (or -0.3 cents) at $US4.4030. July gold was up 0.7% (or $US10.70) at $US1,614.50.
ASX News Today
AAC – Australian Agricultural Company Ltd (AACo) the beef producer has maintained its full year earnings guidance on the sale of a cattle breeding property despite booking a 1H11 loss.
AUN – The competition regulator has asked for comments about Foxtel’s proposed takeover of regional pay television provider Austar United Communications Ltd. Shares slumped 16%.
BHP – At BHP Billiton’s Escondida mine in northern Chile, officials contend that a strike by more than 2,300 workers is illegal and have threatened to dismiss the workers.
CEU – ConnectEast Group says its independent directors recommended a takeover proposal from Horizon Roads, an investment vehicle managed by the target’s largest security holder.
DOW – Downer EDI has been awarded a public transport rail maintenance services contract in Western Australia. Â Downer’s share of this contract exceeds $140 million.
GNC – GrainCorp the grains marketer has boosted its malting operations, agreeing to buy maltster GermanMalt GmbH & Co KG for an enterprise value of about $77 million.
MCC – Macarthur Coal’s sales for the June quarter fell 22.5 per cent, due to extended wet weather that started late last year.
ORI – Orica the explosives maker has reaffirmed that profit in fiscal 2011 will be higher than that reported in 2010.
PNA – PanAust says full year copper concentrate production will be at the lower end of the 62,000 to 65,000 tonne guidance range because of the impact of the wet season, but average cost remains around $US1.04/pound.
PMV – Premier Retail expects a 2.4 per cent increase in sales in the 2H11 and says the future is “bright” despite challenging trading conditions.
TCL – Canada Pension Plan Investment Board has divested its stake in toll road owner and operator Transurban Group (TCL) for $903.3 million or $5.23/share.
WBC – Westpac’s subsidiary,the Bank of Melbourne (BoM), has opened 40 branches on Monday in Victoria as part of the bank’s relaunch, and plans to add 85 more.
Local Corporate Reporting
ALS – Alesco Ltd full year results
BPT – Beach Energy Q4 2011 Activities Report
PSA – Petsec Energy Ltd June quarter results
Ex-dividend Date
None
Market Summary
ASX – to open lower
US & UK/Europe – lower
US ADRs – broadly lower
BHPÂ down -0.7% & RIOÂ down -0.6%; AWC down -0.9%
ANZÂ down -2.1% & NABÂ down -0.4%
NEMÂ Â down -0.4%, JHXÂ down -0.9%, NWSÂ down -1.0%
Commodities Stock Index down -0.6%
Gold Stocks Index down -0.7%
Oil Stocks Index down -0.3%Â
By Michael Hevern
Head of Research
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Tags: Asian Markets, ASX News, Business News, Commodities, Crude Oil, European Markets, gold price, S&P500, Stock Market Analysis, stockmarket, US Market wrap
