* US stock markets rose yet again overnight, but trading volumes were below average.
* European stock markets ended generally higher overnight, led by bank and mining stocks.
* Asian stock markets ended higher yesterday, as stocks followed the US lead.
* Commodities prices traded higher, but gold prices sold off below $US1,834 and while crude-oil closed up around $US88.
The SPI Futures is trading around the key pivot level of 4000, ending down -0.3% (or -14 points) at 4,250. The key levels for our index today are 4320 to 4220.
Yesterday Aussie shares failed to follow the lead of their overseas counterparts to finish flat for the session. The All Ordinaries (XAO) was up 0.2% at 4341 today, the S&P/ASX 200 (XJO) closed flat at 4269. In economic news building approvals rose 1% in July, snapping three months of falls. However home building could stay stagnant for the next six months, with these worse than expected approvals figures showing a recovery is some way off. Approvals in June fell 3.5%, their lowest level in two years and that brings the approvals down around 20% in the first six months of the year.
Global stocks drifted higher overnight, in the US and Europe. Investors will be looking out for the GDP, PMI and ISM manufacturing data and US Non-Farm payrolls report this week.
Our market is set to open lower today, with Europe and the US only managing modest gains, with mining and financial stocks trading higher overnight.
See below for ASX listed companies in the news today.
Economics News Today
* July Financial Aggregates, including Private Sector Credit.
US Markets
US stock markets rose yet again overnight, but trading volumes were below average. Trading volumes are expected to remain light for the rest of the week as many market participants are on vacation ahead of the Labor Day weekend.
All three major indices drifted higher to finish the day with only modest gains. The broader markets were led by gains in telecommunication and material stocks, but financials gave back some of their recent gains.
Investors saw comments from the FOMC meeting as suggesting that QE3 is a possibility, but a reading on consumer confidence disappointed. The meeting minutes suggested that in addition to quantitative easing, the Fed also suggested extending the average duration of the central bank’s existing bond portfolio by selling bonds with short maturities and buying those with longer maturities. The next FOMC meeting will be extended to two days.
The ten company groups that make up the S&P index traded generally higher: Industrials were up 0.3%, Materials were up 0.3%, the Energy sector was up 0.4%, Consumer Staples were up 0.2%, the Technology sector was up 0.1%, while the Financials sector was down -0.1%.
The Dow Jones closed up 0.2% (or 20 points) at 11,560, the S&P 500 index closed up 0.3% (or 3 points) at 1,213, the Nasdaq ended up 0.6% (or 14 points) at 2,576, and the smaller cap Russell 2000 was up 0.4%.
European Markets
European stock markets ended generally higher overnight. The Stoxx Europe 600 index rose 1%. Across the region the gains came from the financial and basic resources sectors.
In economic news, the European Commission said its eurozone economic sentiment indicator fell to 98.3 in August from 103.0 in July, below estimates, and its biggest monthly fall since December 2008. Sovereign debt contagion concerns simmer as an Italian bond auction underwhelmed most investors and raised fears that debt contagion may bring about the demise of the third largest economy in the eurozone.
In London the FTSE 100 played catch-up after the market returned from a holiday. Mining and banks stocks performed well with the Royal Bank of Scotland jumping 8% after an upgrade to buy from Deutsche Bank. Barclays PLC and Lloyds Bank were up over 7%, while BHP Billiton and Rio Tinto jumped 4.3%. In Germany the DAX 30 index fell as stocks gave back recent gains.
In London the FTSE 100 index closed up 2.7% (or 139 points) 5,269, the German DAX was down -0.5% (or -26 points) at 5,644, while in France the CAC was up 0.2% (or 5 points) at 3,160.
Asian Markets
Asian stock markets ended higher yesterday, as stocks followed the US lead. Across the region mining and banking shares were among the best performers, as investors displayed more risk appetite.
In Japan the Nikkei Stock Index closed higher as automobile makers, banks and technology stocks rose. In Hong Kong the Hang Seng Index outperformed, but in China the Shanghai Composite lost ground on concerns over the prospect of further tightening measures.
In China the SSE Composite was down -0.4% (or -9 points) at 2,566, while in Hong Kong the Hang Seng Index was up 1.7% (or 339 points) at 20,204 and in Japan the Nikkei 225 Index was up 1.2% (or 102 points) at 8,954. The South Korean KOSPI was up 0.8% for the session, while the Indian market was up 1.6%.
Commodities
The Dollar Index was higher at 73.99 on a lower Euro, while the Australian Dollar last traded higher at 106.75. Commodities prices were higher.
For the session the benchmark crude NYMEX for August delivery was up 1.9% (or $US1.63) to settle at $US87.74. Copper prices are still below key pivot levels as copper for August delivery was up 0.8% (or 3.4 cents) at $US4.1275. August gold was up 2.1% (or $US38.20) at $US1834.30.
ASX News Today
ASL – Ausdrill the mining services company has posted its seventh consecutive record full year net profit, beating its own guidance, after strong commodity prices boosted activity in the sector.
BPT – Beach Energy has booked a substantial full year net loss, due mainly to a large impairment charge on the mothballed Basker Manta Gummy (BMG) gas project offshore Victoria.
CBA – Commonwealth Bank is looking to bulk up its wealth management arm, launching a $373 million bid for Count Financial to acquire the national network of financial planning accountants, subject to approval from Australia’s competition regulator. This unsolicited cash offer of $1.40 per share represents a valuation multiple of 14.6 times Count’s normalised net profit after tax of $25.6 million for the 12 months to June 30. Count Financial closed up 34%.
HVN – Harvey Norman says it remains cautious into fiscal 2012 due to global volatility and weak domestic conditions. The company posted a nine percent increase in full year profit, with net profit after tax increased to $252 million but revenues were down despite a strong increase in customer transactions, highlighting margins are being squeezed through competition. Harvey Norman closed down -1.5%.
KCN – Kingsgate Consolidated, the gold miner, has reported a sharp fall in full year net profit due to lower sales of the precious metal.
MCC – Peabody Energy and ArcelorMittal have sweetened a takeover offer for Macarthur Coal which is the world’s biggest producer of pulverized coal. The bid now stands at $4.9 billion or $16.16 per share (up 3%), and has secured the backing of the Australian miner for the offer, after a rival bidder failed to emerge. Macarthur closed up 0.4%.
RIO – The WA government has rejected a call by mining giant Rio Tinto for it to consider using nuclear energy plants to supply some of the state’s future electricity needs.
RSG – Resolute Mining has swung back to profitability in FY11 and expects gold production to rise in the current year.
TLS – Telstra says the competition watchdog raised “serious concerns” over the telco’s commitment to separate its wholesale and retail businesses, a critical part of its $11 billion deal with NBN Co. ACCC chairman Rod Sims said the main concerns centred on the adequacy of Telstra’s commitment to give its rivals access to its network between now and when the NBN was built. Telstra’s undertaking also failed to meet certain legislative requirements by not including a compliance plan for its commitment to be structurally separated by 2018, but the ACCC said this could be corrected easily.
Local Corporate Reporting
PDN – Paladin Energy Ltd preliminary full year results
Ex-dividend Date
Market Summary
ASX – to open lower
US & UK/Europe – higher
US ADRs – Broadly Lower
BHP down -0.7% & RIO up 0.2%; AWC down -0.4%
ANZ down -0.8% & NAB down
NEM up 1.6%, JHX down -0.3%, NWS down -0.8%
Commodities Stock Index up 0.6%
Gold Stocks Index up 1.5%
Oil Stocks Index up 0.1%
By Michael Hevern
Head of Research
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