* US stock markets continued to rally overnight, but trading volumes were thin. Markets continued to react positively to the economic summit that was held on the weekend.
* European stock markets ended with higher overnight, led by bank and energy stocks.
* Asian stock markets generally rose yesterday.
* Commodities prices traded higher, but gold prices sold off below $US1,790, while crude-oil closed up around $US87.
The SPI Futures is trading around the key pivot level of 4000, ending up 1.5% (or 63 points) at 4,311. The key levels for our index today are 4350 to 4250.
Yesterday Australian shares drifted higher and although volumes were light, the key indices look set to retest recent highs – around 4,320 for the S&P/ASX 200 and around 4400 for the All Ords. The miners, the banks and the REITs all performed well yesterday and that should continue today. The All Ordinaries (XAO) was up 1.5% at 4334 yesterday, and the S&P/ASX 200 (XJO) also closed up 1.5% at 4263.
We have a busy week ahead for overseas economic data. Mid-week we have the US FOMC meeting minutes, Canadian and Swiss GDP and Chinese PMI data, while later in the week we’ll see the UK PMI report, US ISM manufacturing report and US Non-Farms Employment report.
Global stocks traded higher overnight, as US investors pushed stocks higher after hurricane Irene was less severe than feared and consumer spending data surprised. European investors went bargain hunting as concerns over the debt issues in Greece eased. Investors will be looking out for the PMI and ISM manufacturing data and US NonFarms payrolls report this week.
Our market is set to follow Europe and the US higher today, with mining and financial stocks trading higher overnight, providing a positive lead.
See below for ASX listed companies in the news today.
Economics News Today
* July Building Approvals
US stock markets continued to rally overnight, but trading volumes were thin. Markets continued to react positively to the comments for the world economic leaders at the economic summit that was held on the weekend. Investor sentiment was boosted by government data showing that American consumers increased their spending in July by the most in five months.
The Dow Jones Index closed near the highs of the session and is now almost flat for the year. Bank of America surged 8% leading the Dow higher, as the company agreed to sell half its stake in China Construction Bank for a $3.3 billion profit.
In the broader markets the S&P 500 stock index and the tech-heavy Nasdaq Composite jumped 3%. Every sector of the S&P 500 advanced with the financials and industrials leading the way. Insurance stocks surged higher after the damage from hurricane Irene was less than feared.
All ten company groups that make up the S&P index traded sharply higher: Industrials were up 3.1%, Materials were up 3.0%, Energy was up 2.9%, the Financials sector was up 4.2%, Technology was up up 2.5%, and Consumer Staples were up 2.9%.
The Dow Jones closed sharply up 2.3% (or 255 points) at 11,285, the S&P 500 index closed up 2.8% (or 33 points) at 1,210, the Nasdaq ended up 3.3% (or 82 points) at 2,562, and the smaller cap Russell 2000 was up 4.8%.
European stock markets ended with strong gains higher overnight, led by bank and energy stocks. The Stoxx Europe 600 index rose 1.2%. Financial and energy stocks traded higher as the US Fed Chairman Bernanke’s comments fueled an appetite for riskier assets.
The Greek stock market rose 14% for the strongest performance in Europe, after EFG Eurobank Ergasias SA and Alpha Bank SA shares surged 30%, after announcing a friendly merger deal. The merger is seen as a catalyst for a transformation of the Greek banking system, raising hopes that takeovers may help banks weather the sovereign debt crisis.
The extension of the short-selling bans in France, Spain, Italy and Belgium has helped the European markets move higher.
In London the markets were closed for a holiday, while in Germany the DAX was up 2.4% (or 133 points) at 5,670, and in France the CAC was up 2.2% (or 65 points) at 3,154.
Asian stock markets generally rose yesterday. In Japan the Nikkei Stock Index finished the day higher, as technology stocks rose.
In Hong Kong the Hang Seng Index rose, but in China the Shanghai Composite Index bucked the trend and declined 1.4%, as banks sold off after concerns there may be a further round of monetary tightening, as the Chinese government has asked banks to include their margin deposits in the reserves required at the central bank, thereby sucking liquidity from the financial system. Energy stocks supported the market after Sinopec rose 6.7% after it posted first-half results that beat estimates.
In China the SSE Composite was down -1.4% (or -36 points) at 2,576, while in Hong Kong the Hang Seng Index was down -1.4% (or 283 points) at 19,865 and in Japan the Nikkei 225 Index was up 0.6% (or 53 points) at 8,851. The South Korean KOSPI was up 3.0% for the session, while the Indian market was down -1.8%.
The Dollar Index was lower at 73.70 on a higher Euro, while the Australian Dollar last traded higher at 106.61. Commodities prices were higher.
For the session the benchmark crude NYMEX for August delivery was up 2.5% (or $US2.17) to settle at $US87.55. Copper prices are still below key pivot level as Copper for August delivery was down -0.3% (or -1.0 cents) at $US4.08850. August gold was down -0.3% (or -$US5.70) at $US1,786.80.
ASX News Today
AGL – AGL continues to power ahead (up over 10% in a week), after their stellar results last week that showed net profit and earnings per share grew over 55% for the year.
ANZ – ANZ Bank rose after the AFR reported the bank is looking at buying Japan’s Tokyo Star Bank or Aozora Bank, although they did not name their source. At ANZ’s last update the company said it is targeting Asia for growth and expects to get up to 30% of profits from the region by 2017.
AWE – AWE has announced a full year net loss of $117 million, compared to 2010 loss of $29 million.
COU – Count Financial more than doubled its annual profit in FY11 of $52 million (up 113%) as revenue jumped 33% to $174 million, and is well placed to counter industry headwinds. The company is Australia’s biggest independently owned network of 900 financial planning accountants and advisers, with its franchise containing over 350 accounting firms across the country. Its shares closed up 3.9%.
CQO – The Charter Hall Office REIT (CQO) was up 16% after a consortium led by Macquarie Group moved to take that company private through an offer that values the real estate investment trust at 1.74 billion Australian dollars or $3.52/unit, but NTA value is currently $3.76/unit.
GFF – Goodman Fielder, the breads and spreads maker, has said it will not provide guidance on its financial performance for 2012, after reporting a $167 million full year loss.
QRN – QR National reported net profit for the 12 months to June was $349.5 million, up from a loss of $36.8 million in the prior year, but wild weather in Queensland cost the company $187 million. QRN also warned coal haulage volumes remain depressed, putting pressure on shares. BHP Billiton said earlier this month it was interested in looking at building a rival rail line from Queensland’s Bowen Basin to a proposed coal export terminal in Abbot Point.
MQA – Toll road operator Macquarie Atlas Roads, with toll roads in the US, UK, Germany and France, has halved its first half loss to $106.4 million as revenues increased by 4.2%, and expects revenue and earnings to increase in the next 12 months.
Local Corporate Reporting
QRN – QR National Ltd full year results
GFF – Goodman Fielder Ltd full year results
AGG – AngloGold Ashanti
AMC – Amcor Limited
ASX – ASX Limited
BEN – Bendigo and Adelaide
CVC – CVC Limited
DCG – Decmil Group Limited
FWD – Fleetwood Corp
HGG – Henderson Group
MCC – MacArthur Coal
MOC – Mortgage Choice Limited
MRM – Mermaid Marine
ORG – Origin Energy
PBG – Pacific Brands
SDM – Sedgman Limited
ASX – to open higher
US & UK/Europe – higher
US ADRs – Broadly Higher
Commodities Stock Index up 2.7%
Gold Stocks Index up 2.3%
Oil Stocks Index up 2.9%
By Michael Hevern
Head of Research
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