* U.S. stocks closed down Friday for a fourth consecutive losing week. Investors remain concerned over a faltering global recession and the struggling European banking system. The VIX (the fear guage) had its highest weekly close in early 2009, reflecting the unease in the investment community.
* European stock markets finished the week lower, with the Stoxx Europe 600 index ending the week down -6% as financial shares led the rout across Europe.
* Asian stock markets ended last week lower as worries about the global economic outlook weighed on sentiment.
* Commodities prices traded higher, but gold prices surged above $US1,852 and crude-oil closed below $US83.
The SPI Futures is trading around the key pivot level of 4000, ending up 0.1% (or 3 points) at 4,072, but the index was down -2.6% for the week. The key levels for our index this week are 4250 to 3850. On Friday night global stocks traded lower again in Europe as investors continued to rush for the exits and Euro banks remained weak. Investors can expect further downside because when markets are faced with uncertainty, they tend to sell first and ask questions later. Markets will be watching the testing of the recent lows for a potential support level near-term.
Australian shares joined overseas markets in a selling spree Friday. Even though the ASX tried to find support after the early session sell-off, it finished on its lows for the day. Aussie shares have lost over $45 billion in today’s trading, as Australian investors joined their overseas counterparts in a rush for the exits, and obviously there were few traders prepared to hold over the weekend. Only the gold sector was spared the rout on Friday, as the selling pressure came from the banks, mining and energy stocks. Investors can expect a nervous week as they try to make sense of the recent volatility and what this means for the market direction near-term.
See below for ASX listed companies in the news today.
U.S. Markets
U.S. stocks closed down Friday for a fourth straight losing week. Investors remain concerned over a faltering global recession and the struggling European banking system. The VIX (the fear guage) had its highest weekly close in early 2009, reflecting the unease in the investment community.
The Dow Jones Index closed down after another volatile session. The Dow Jones is down -4% for the week and is down -15% from its July highs. The S&P 500 stock index closed lower, led lower by technology and financial stocks. All 10 of the S&P 500 sectors closed in negative territory. The tech-heavy Nasdaq Composite closed at fresh lows for the year. The broader indices are now down over -16% since the July highs. Hewlett-Packard plummeted -20% to 6-year lows after proposing a split up of its businesses and was the biggest Dow decline. This also weighed on the technology sector.
Investors remain apprehensive over policy gridlock in Washington, the European sovereign debt crisis and the faltering global economy. The primary issue at the moment is contagion of the European crisis, with fears that the problems surrounding European banks could spill over into the world banking system.
All ten company groups that make up the S&P index traded sharply lower: Industrials were down -1.5%, Materials were down -1.6%, the Energy sector was down -1.8%, the Financials sector was down -2.0%, Technology was down -2.4%, while Consumer Staples were down -1.5%.
The Dow Jones closed sharply down -1.6% (or -173 points) at 10,818, the S&P 500 index closed down -1.5% (or -17 points) at 1,124, the Nasdaq ended down -1.6% (or -39 points) at 2,342, and the smaller cap Russell 2000 was down -5.9%.
European Markets
European stock markets finished the week lower again, as investors continue to rush for the exits, with bank shares remaining under pressure on fears over the euro-zone debt crisis and global growth concerns and the global economic slowdown. The Stoxx Europe 600 index fell 1.6% to end the week down -6% as financial shares led the rout across Europe.
In London the FTSE closed lower with financials leading the way with Lloyds and Royal Bank of Scotland Group down over -4.4%. The index is now trading just above 5,000, down -5.1% for the week and is back at the lows of mid-2010. In Germany shares plummeted to lows not seen since mid 2009, losing -8.6% for the week and down -23% for August, as financials and automakers have been particularly hard hit.
The FTSE 100 index was down -1.0% (or -51 points) at 5,040, the German DAX was down -2.2% (or -123 points) at 5,480, while in France the CAC was down -1.9% (or -59 points) at 3,017.
Asian Markets
Asian stock markets ended last week lower as worries about the global economic outlook weighed on sentiment. Across the region shipbuilders, exporters and financials around the region were among the hardest hit.
In Japan the Nikkei Stock Index had its lowest close since April 2009, as the exporters continued to be battered by the strong yen, but the selling was broad based due to the weak economic outlook.
In Hong Kong the Hang Seng Index fell over -3% with its August losses standing at -14%. In China the Shanghai Composite fell -2.3% for the week and had its lowest close since July 2010, as financials and energy stocks traded lower.
Among the worst performers was the South Korean market which plunged -6.2%, due concerns about global growth. In Seoul program trading was briefly suspended in a bid to arrest the decline of the Kospi, but the index is now down -18% for August and is by far the worst performer in the major regional indexes.
In China the SSE Composite was down -1.0% (or -25 points) at 2,534, while in Hong Kong the Hang Seng Index was down -3.1% (or -661 points) at 19,400 and in Japan the Nikkei 225 Index was down -2.5% (or -225 points) at 8,719. The South Korean KOSPI was down -6.2% for the session, while the Indian market was down -2.0%.
Commodities
The Dollar Index was lower at 74.00 on a higher Euro, while the Australian Dollar last traded higher at 103.98. Commodities prices were higher.
For the session the benchmark crude NYMEX for August delivery was down -0.2% (or -$US0.12) settle at $US82.71. Copper prices are still below key pivot level as Copper for August delivery was up 0.5% (or 1.8 cents) at $US3.9750. August gold was up 1.7% (or $US30.00) at $US1,852.60.
ASX News Today
ANZ – ANZ Bank increased underlying profit for the nine months to June by 16.1% to $4.2 billion. ANZ remains committed to its strategy of focusing on Asia and keeping more cash in reserve. ANZ shares joined their peers in selling down -4.5%. Commonwealth Bank traded down -2.9%, National Bank closed down -3.3%, Westpac Bank was down -3.6% and Macquarie Group plunged -5.8%.
AGO – Atlas Iron reported it has increased its iron ore reserves in the North Pilbara region of Western Australia by 50% to 79.3 million tonnes.
BBG – Billabong, the surfwear retailer, has handed down disappointing results, reporting an annual profit of $119 million, which is an 18.4% fall. The company has also withdrawn earlier guidance on growth in earnings per share in the current year, commenting that the annual profit would be hit by a higher tax charge and the ongoing headwinds of the Aussie dollar and a weak retail environment. Billabong shares closed down -26.1%.
CCC – Continental Coal Ltd will shares be consolidated 1 for 10. The record date will be 1 Sep 2011.
FMG – The Fortescue Metals Group, one of the world’s largest exporters of iron ore, said its full-year net profit jumped 76% as the price of the steelmaking commodity strengthened. Net profit rose to US$1.02 billion in the year to June 30, while sales revenue increased 69%. The company said it maintained steady production ahead of the commissioning of a new facility in the Pilbara, but its share price plunged -5.0% on the day.
QBE – QBE Insurance Group increased first half net profit to $US673 million, up 53% as investment income more than made up for the surge in natural disaster related claims. Also gross written premium, a crucial KPI for the insurance industry, increased 30% to $8.94 billion. Despite this result QBE closed down -5.6%.
STO – Santos reported strong first half results with underlying net profit of $236 million, up 13% and above the market consensus, production costs fell 6%, while net operating cash flow rose 27%. Santos ended down -5.2%.
TLS – Telstra Corp goes ex-dividend on today.
Local Corporate Reporting
NCM – Newcrest Mining Ltd full year results
LEI – Leighton Holdings Ltd full year results
ANN – Ansell Ltd full year results
IIN – iiNet Ltd full year results
UGL – UGL Ltd full year results
Ex-dividend Date
Greencross Limited (GXL)
Mount Gibson Iron (MGX)
STW Communications (SGN)
Telstra Corporation (TLS)
UGL Limited (UGL)
Woodside Petroleum (WPL)
Market Summary
ASX – to open lower
US & UK/Europe – sharply lower
US ADRs – Broadly Lower
BHP down -1.7% & RIOdown -2.8%; AWC -1.7%
ANZ down -2.7% & NAB down -1.4%
NEM up 2.8%, JHX down -2.7%, NWS down -3.1%
Commodities Stock Index down -1.1%
Gold Stocks Index up 1.8%
Oil Stocks Index down -14%
By Michael Hevern
Head of Research
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