* US stock markets initially jumped but spent the rest of the day giving back the gains. Stronger US economic data buoyed sentiment, but technology stocks weighed after some poor earnings reports.
* European stock markets ended higher overnight. German politicians approved the European Financial Stability Facility (EFSF) extentsion.
* Asian stock markets finished mixed yesterday, as investors did some end-of-quarter squaring of the books, picking up some bargains from badly beaten down stocks.
* Commodities prices traded flat, as Gold prices held to $US1,615 and while crude-oil closed up around $US83.
The SPI Futures is trading around the key pivot level of 4000, ending up 0.5% (or 21 points) at 4027. The key levels for our index today are 3950 to 4080.
Yesterday Australian investors and fund managers held their nerve again, despite another cautious lead from the US markets where there was another late session sell-down.
The big news last session was the sell-down in commodities across the board, as these highly leveraged positions are being forced to be liquidated, due to the excessive volatility in these markets of late. The falls have been led by copper prices which are seen as the true indicator of the underlying world economic condition. Copper plunged -5.6% overnight, and this comes after a -12% fall last week and a slump of over -22% for September. The Aussie market was consequently led lower by the miners. The All Ordinaries (XAO) was down -0.7% at 4068 yesterday and the S&P/ASX 200 (XJO) closed down -0.8% at 4008.
Aussie stocks are expected to see heavy volumes early after options expiry, but as the day progresses investors will be positioning themselves ahead of the long weekend. Remeber this is the last day of the quarter.
The situation over the EFSF took a step forward overnight as the German politicians voted for the expansion of the EFSF bailout fund. Commitment from the eurozone leaders has been wavering as they finalised the Greek bailout package, acting to address the “heightened downside risks” from sovereign debt and the slowing global economy. Ten of the 17 nations have now voted on the EFSF, and the German news boosted the US and Europe markets as they battle to find some level of tentative support.
See below for ASX listed companies in the news today.
US Markets
US stock markets initially jumped but spent the rest of the day giving back the gains. Stronger US economic data buoyed sentiment, but techcnology stocks weighed after some poor earnings reports.
The Dow Jones Index and the S&P 500 indices managed to finish higher, as the financials and industrials sectors led the gains. However, the tech-heavy Nasdaq finished modestly lower, after Advanced Micro Devices (AMD) was the weakest stock in the broader indices, falling 14% after cutting revenue and gross-margin estimates for the third quarter.
In economic news the Labor Department reported the number of U.S. workers filing new claims for unemployment benefits fell sharply last week. The improvement in the employment may have been driven by seasonal adjustments, and also gross domestic product (GDP), the broadest measure of all the goods and services produced in an economy, grew at an inflation-adjusted annual rate of 1.3% from April to June. Next week will be a busy one for the US with the ISM manufacturing data out on Monday and the Non-Farm Payrolls employment report out on Friday.
Among the S&P index sectors: Industrials were up 1.4%, Materials were up 0.1%, Energy was up 0.9%, the Financials sector was up 2.8%, Consumer Staples were down -0.8%, while the Technology sector was down -0.2%.
The Dow Jones closed up 1.3% (or 143 points) at 11,154, the S&P 500 index closed up 0.81% (or 9 points) at 1,160, the Nasdaq ended down -0.4% (or -11 points) at 2,481, and the smaller cap Russell 2000 was up 1.7%.
European Markets
European stock markets ended higher overnight, as German politicians approved the European Financial Stability Facility (EFSF) extentsion. The Stoxx Europe 600 index closed up 0.7%.
Banks were again in focus across the region and managed to bounce following the German vote and the positive U.S. jobs and GDP data, with the European majors up around 5%.
In London the FTSE 100, which is heavily weighted by the mining sector, lost -0.4% as weakness in key metals prices weighed on the big miners which closed down around -4%. Investors remain concerned over the possibility of an economic hard landing in China. The German DAX-30 and the French CAC-40 rose over 1.1%.
There is a note of caution as the eurozone crisis is far from resolved. Greece still faces the real prospect of a default or a restructuring, and many observers have questioned whether the EFSF has enough resources to prevent contagion if the Greek problems spread to the bond markets of Spain and Italy. The EFSF is starting to clear hurdles, but many policymakers remain firmly against expanding the facility beyond the current EUR440 billion, as German and French leaders fear that this would undermine their triple-A credit rating.
In London the FTSE 100 index closed down -0.4% (or -21 points) at 5,197, the German DAX was up 1.1% (or 61 points) at 5,640, while in France the CAC was up 1.1% (or 32 points) at 3,028.
Asian Markets
Asian stock markets finished mixed yesterday, as investors did some end-of-quarter squaring of the books, picking up some bargains from badly beaten down stocks.
Markets were again volatile and on edge, as traders await the passing of the EFSF in Europe. Miners across the region weighed due to the falling commodities prices.
The Japanese Nikkei Stock Index rose 1%, but the Hong Kong markets were closed owing to the typoon in the region. In China the Shanghai Composite index lost another -1% and is trading at 2-year lows, as traders brace themselves ahead of the China PMI data which is due out tonight (after market close).
Elsewhere the Fitch Ratings Agency has cut the long-term foreign currency ratings of New Zealand, citing the country’s widening debt levels, and challenges following the Christchurch earthquake earlier this year.
In China the SSE Composite was down -1.1% (or -27 points) at 2,365, while in Hong Kong the Hang Seng Index was closed at 18,011 and in Japan the Nikkei 225 Index was up 1.0% (or 86 points) at 8701. The South Korean KOSPI was up 2.7% for the session, while the Indian market was up 1.5%.
Commodities
The Dollar Index was higher at 77.88 on a lower Euro, while the Australian Dollar last traded lower at 97.892. Commodities prices were flat.
For the session the benchmark crude NYMEX for December delivery was up 2.3% (or $US1.86) settle at $US83.07. Copper prices are finding a support level as Copper for December delivery was down -0.1% (or 0.2 cents) at $US3.2355. December gold was down -0.1% (or $US0.50) at $US1,615.60.
ASX News Today
APN – APN News & Media has re-affirmed earnings guidance for the second half of calendar 2011 amid what it says are some encouraging signs in the advertising market.
CSL – CSL the pharmaceutical company, says it has addressed the majority of manufacturing flaws highlighted by the US Food and Drug Administration (FDA), and remaining concerns are currently being resolved.
EGP – Echo Entertainment Group the casino operator has appointed two new directors.
FMG – The High Court has given leave for Fortescue chairman Andrew Forrest to appeal, as he said he was denied natural justice by the Federal Court that found he misled or deceived investors.
GNS – Timber company Gunns says the Tasmanian Environmental Protection Agency’s (EPA) view that work has substantially commenced on Gunns’ pulp mill project at Bell Bay “adds clarity” to the project.
NAB – National Bank insists it remains focussed on growing its UK business after Moody’s downgraded the ratings on NAB’s Clydesdale Bank due to speculation it would be sold off.
NUF – Nufarm the agricultural chemicals supplier is well placed to grow its operating profit in fiscal 2012 as it continues to diversify its product portfolio away from the weedkiller glyphosate.
PDN – Paladin Energy, which owns the producing Langer Heinrich uranium mine in Namibia, has completed a $68.2 million placement of shares with institutional and accredited investors at $1.20/share, or an 8.4% discount.
QAN – Qantas said passenger numbers rose 6.7 percent in August, while yields on domestic and international flying in the financial year to August were also higher. The ACCC has approved Qantas’ proposed alliance with American Airlines on trans-Pacific routes.
WES – Wesfarmers announced is will sell its Premier Coal business to Chinese-owned Yancoal Australia for $296.8 million.
Local Corporate Reporting
Ex-dividend Date
Market Summary
ASX – to open higher
US & UK/Europe – higher
Commodities Stock Index up 0.9%
Gold Stocks Index up 0.8%
Oil Stocks Index up 1.5%
US ADRs – Broadly Higher
BHP up 0.6% & RIO down -0.8%; AWC up 2.9%
ANZ up 0.5% & NAB down -2.5%
NEM up 1.6%, JHX down -4.4%, NWS up 0.4%
By Michael Hevern
Head of Research
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Tags: Asian Markets, ASX News, Business News, Commodities, European Markets, Stock Market Analysis, stockmarket, trading, US Market wrap
