* US stock markets traded higher overnight for a third straight day of gains, as investors continued to preempt a possible QE3 announcement.
* European stock markets ended higher overnight, as investors were buoyed by the positive sentiment from the U.S.
* Asian stock markets declined yesterday as markets faded after early gains.
* Commodities prices traded lower, but gold prices plunged below $US1,1760 and while crude-oil closed above $US85.
The SPI Futures is trading around the key pivot level of 4000, ending up 1.0% (or 43 points) at 4,211. The key levels for our index this week are 4180 to 4300. Overnight global stocks traded higher but European investors stepped in to continue bargain hunting, but Euro banks remained under pressure, though there was evidence of bargain hunting. Investors will be keenly watching the recent lows for any sign of support near-term. Price action in the US continued to preempt the announcement of further quantitative easing on Friday.
Yesterday Australian shares initially traded higher after US markets surged in a move to preempt an announcement of QE3 at the economic summit in Jackson Hole Wyoming on Friday. However we could not hold on to the early gains and finished flat for the session. The All Ordinaries (XAO) was down -0.1% at 4236, and the S&P/ASX 200 (XJO) also closed down -0.1% at 4167.
BHP Billiton has delivered Australia’s largest ever annual profit, generating earnings of $22.5 billion that beat market estimates, as the diversified miner said it sees ”robust demand” for key commodities in the short and medium term in forecasting another strong year. The earnings were almost double the previous year’s, climbing 86% while revenues increased 36%. This will be positive for our market today.
Our market is set to follow Europe and the US cautiously higher today, with mining and financial stocks trading higher overnight, providing a positive lead. Remember options expiry today.
See below for ASX listed companies in the news today.
US Markets
US stock markets traded higher overnight for a third straight day of gains, as investors continued to preempt a possible QE3 announcement by the Federal Reserve Chairman Ben Bernanke at the Jackson Hole ecomomic summit.
The Dow Jones Index has jumped 5% so far this week and traded higher overnight, with only one of the 30 stocks finishing down. In the broader markets the S&P 500 index closed higher, as all 10 sectors rose. Financial and utility stocks led the gains and technology stocks again traded higher.
In economic news orders for factory goods rose 4.0% from the previous month, but orders for nondefense capital goods excluding aircraft, which economists use to gauge business spending on new equipment, dropped by -1.5%.
Investors are likely to be cautious going in to the end of the week. They will be disappointed if Ben Bernanke uses his Friday speech to elaborate on the Fed’s economic outlook rather than break new ground and announce a third round of quantitative easing (or QE3). In commodities the big news was gold which has sold off arond 8% in the past couple of sessions, while crude-oil held above $US85.
All ten company groups that make up the S&P index traded higher: Industrials were up 2.0%, Materials were up 1.4%, the Energy sector was up 0.6%, the Financials sector was up 2.7%, the Technology sector was up 0.9%, while the Consumer Staples sector rose 1.8%.
The Dow Jones closed sharply up 1.3% (or 144 points) at 11,320, the S&P 500 index closed up 1.3% (or 15 points) at 1,177, the Nasdaq ended up 0.9% (or 21 points) at 2,468, and the smaller cap Russell 2000 was up 1.4%.
European Markets
European stock markets ended higher overnight, as investors were buoyed by the positive sentiment from the U.S. as data showed a 4% rise in U.S. durable-goods orders in July. The Stoxx Europe 600 index rose 1.4%.
Financials saw some respite in the selling pressure, as the European Central Bank reported that its weekly offer to lend dollars had not been taken up by any banks. In London the FTSE 100 index rose, led by the mining and energy stocks. In Germany the DAX 30 index rose over 2.7%, despite weak economic data from the Munich-based Ifo Institute’s business-climate index, which fell to 108.7 from 112.9 in July. Also, industrial orders in the euro zone unexpectedly dropped 0.7% in June – both sets of figures were worse than expected.
In London the FTSE 100 index was up 1.5% (or 76 points) at 5,205, the German DAX was up 2.7% (or 149 points) at 5,681, while in France the CAC was up 1.8% (or 55 points) at 3,140.
Asian Markets
Asian stock markets declined yesterday as markets faded after early gains. Investor sentiment was weighed down after a downgrade of Japan’s credit rating to AA3 from AA2 by Moody’s Investors Service, citing sovereign debt issues and the global economic outlook.
In Japan the Nikkei finished lower weighed down by financials and exporters. In China the Shanghai Composite also finished lower, as financials were under pressure after a steep fall in China Life, which dropped nearly 12% after the insurer reported first-half profit fell, and miners suffered as investor tolerance for risk assets eased after Moody’s downgrade of Japan.
In China the SSE Composite was down -0.5% (or -13 points) at 2,541, while in Hong Kong the Hang Seng Index was down -2.1% (or -409 points) at 19,467 and in Japan the Nikkei 225 Index was down -1.1% (or -93 points) at 8,639. The South Korean KOSPI was down -1.2% for the session, while the Indian market was down -1.3%.
Commodities
The Dollar Index was lower at 74.03 on a higher Euro, while the Australian Dollar last traded higher at 104.71. Commodities prices were lower.
For the session the benchmark crude NYMEX for August delivery was down -0.4% (or -$US0.31) to settle at $US85.13. Copper prices are still below key pivot level as Copper for August delivery was flat at $US4.0010. August gold was down -5.3% (or -$US99.30) at $US1,759.00.
ASX News Today
AIO – Asciano the railway operator, has returned to a full year profit, boosted by more coal contracts in Queensland and fewer one-off charges. Revenue rose 7.2% and pre-tax profit was up 51.6%, but the CEO said the shareholders in the Australian infrastructure group would be “ill-served by a demerger” of the company’s rail and port assets at the current time. Asciano said it was optimistic about the medium term prospects, but its shares still fell -3.5%.
APA – APA Group the gas transportation company has posted an 8.1% increase in full year profit with revenues up 11.4%, but its shares closed down 1%.
BHP – BHP Billiton has delivered Australia’s largest ever annual profit, generating earnings of $22.5 billion, beating market estimates. The diversified miner said it sees ”robust demand” for key commodities in the short and medium term in forecasting another strong year. The earnings were almost double the previous year’s, climbing 86% while revenues increased 36%. This will be positive for our market today.
DOW – Downer EDI, the engineering company, has reported an annual net loss of $27.8 million following the decision in January to book a large provision relating to a contract to provide 78 new passenger trains for Sydney’s rail network. The Sydney-based company has forecast a return to profit this year, but its shares closed down -1.1%.
GCL – Gloucester Coal Ltd has increased first half profit by 67% as three recent takeovers have given the miner growth opportunities. This increase in profit came despite a reduction in production due to adverse weather, delays in extension projects and a fall in demand from Japanese steel mills because of the earthquake and tsunami.
MCC – Takeover target Macarthur Coal has reported a 95% rise in its full year profit despite a difficult year with reduced production due to record rainfall. Earnings per share jumped 69%, however there are no alternative bids to the Peabody-ArcelorMittal offer as yet, and the stock closed up 1.2% on the session.
PBG – Clothing and bedding manufacturer Pacific Brands Ltd has posted a full year loss of $132 million, due mainly to the impact of non-cash impairment charges announced at the first half result. The company will shed over 100 more jobs, taking the total number of jobs lost since early 2009 to 2,700. Pacific Brand shares jumped 14% on this news.
QAN – Qantas Airways has recorded a 123% rise in full year net profit, with earnings per share up 124%, but the company says the general operating environment remains challenging and extremely volatile, and its shares fell -1.2%.
SBM – St Barbara reported a return to profitability, booking a full year net profit of $68.6 million, and flagging a jump in production this financial year. The company’s main objectives for the FY2011 and FY2012 include continuing to increase margins, lifting gold output by about 30% and increasing exploration activities. SBM shares closed down -3.0%.
WOR – WorleyParsons, the engineering giant, reported full year net profit has risen by 25% to $364 million and said it expects growth in underlying earnings in the year ahead. Investors pushed the share price 10% higher and appear to be focusing on strong earnings momentum, with underlying profit rising 50% in the second half, suggesting good momentum into fiscal 2012.
Local Corporate Reporting
WOW – Woolworths Ltd full year results
AGK – AGL Energy Ltd full year results
IFL – IOOF Ltd full year results
IAG – Insurance Australia Group Ltd full year results
ILU – Iluka Resources Ltd first half results
PPX – PaperlinX Ltd full year results
RHC – Ramsay Health Care Ltd full year results
PNA – PanAust Ltd first half results
CHC – Charter Hall Group full year results
MAP – MAp Group first half results
TOL – Toll Holdings Ltd full year results
VBA – Virgin Blue Holdings Ltd full year results
CWN – Crown Ltd full year results
TSE – Transfield Services Ltd full year results
ROC – Roc Oil first half results
Ex-dividend Date
HII – Hire Intelligence
LCM – Logicamms Limited
MCR – Mincor Resources NL
QBE – QBE Insurance Group
Market Summary
ASX – to open higher
US & UK/Europe – higher
US ADRs – Broadly Mixed
BHP up 0.1% & RIO up 0.1%; AWC down -2.2%
ANZ down -0.2% & NAB down -2.0%
NEM down -1.6%, JHX down -3.9%, NWS up 2.9%
Commodities Stock Index up 0.2%
Gold Stocks Index down -1.5%
Oil Stocks Index up 0.1%
By Michael Hevern
Head of Research
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Tags: Asian Markets, ASX News, Business News, Commodities, Crude Oil, European Markets, gold price, Stock Market Analysis, stockmarket, trading, US Market wrap
