* US stock markets finished marginaly higher Friday, extending the week’s staggering gains, as investors cheered the plans from European leaders to address the region’s debt crisis
* European stock markets climbed higher for a fifth week, to notch up their longest run of gains in over 18 months. The Stoxx Europe 600 index jumped 4.2% for the week, and is up 10% for October, while the Stoxx Europe 600 Bank index jumped 9.1% for the week.
* Asian stock markets rallied, after European leaders announced a deal for private holders of Greek bonds to take a 50% writedown on the debt.
* Commodities prices traded generally higher again, as Gold prices rose to $US1,738 and while crude-oil closed up around $US94.
The SPI Futures is trading around the key pivot level of 4330, ended up 0.3% (or 13 points) at 4,362. The key levels for our index this week are 4280 to 4450.
Friday, Australian shares fell steadily after the opening higher as prices eased after their spectacular run yesterday, following the news from the EU summit regarding the “comprehensive” bailout plan for the eurozone, as European leaders negotiated a debt deal for the region. The Aussie share market has surged around 5% for its best weekly gain in over 2-years. We did see some short-term profit taking today though.
However HSBC economist Paul Bloxham says it will be a close call on Melbourne Cup Day, as the Reserve Bank board decides on interest rates as we head into the Christmas shopping season. This view in contrast with the enthusiasm show by Credit Suisse earlier this week, who said there is now a 100 percent market expectation of a 25 basis-point cut, with a 6 percent chance of a 50 basis-point rate, as our CPI came in line with expectations at +0.6% q/q and +3.5% y/y.
The EU leaders have come out with their “comprehensive” plan to address the eurozone crisis. Private investors have agreed to accept losses of 50 percent on their Greek bonds. Under the deal the Greek losses for investors will be about EUR100 billion and Greek debt will fall to 120 percent of GDP by 2020. At the EU summit in Brussels, European leaders have agreed to force banks to raise EUR106 billion ($142 billion) by June, to ensure that they can weather the expected losses on Greek debt “haircut”. EU leaders said they will boosting the size of the eurozone (EFSF) bailout fund to around $US1.4 trillion. Shares in the All Ordinaries (XAO) generally eased today, closing up 0.2% at 4411, the S&P/ASX 200 (XJO) closed up 0.1% at 4353.
Aussie shares are expected to continue higher today, following the sharply positive leads from the US and Europe last week, as investors cheered the announcemnet of the details of the European Commision’s commitment to the bank rescue plan and the sovereign debt resolution. Chi-X will being its exchange operatiosn today, offering trading in 6 key stocks. We continue to have a busy week for AGMs and production reports, see below for details. The RBA meeting tomorrow and are expected to cut interest rates. There is a rotation out of defensive stocks into stocks that are likely to participate in a Christmas rally.
See below for ASX listed companies in the news today.
Economics News Today
* October TD Securities Monthly Inflation Gauge
* September Financial Aggregates, incl Private Sector Credit
* September International Reserves & Foreign Currency.
U.S. Markets
European Markets
Asian Markets
Asian stock markets rose Friday, extending on from their surge from the previous session, after European leaders had announced their latest plans to contain the eurozone sovereign-debt crisis.
Across the region the buying was broad-based, due to proposed measures announced at European summit, particularly growth-sensitive energy and materials sectors and the banks recovered strongly too.
In Japan the Nikkei Stock Average rose 1.4%, In Hong Kong the Hang Seng Index and in China the Shanghai Composite Indicies climbed another 1.6%. For the week Asian equities put in a strong performance, with the Hang Seng Index adding11%, and in China the Shanghai Composite jumped 6.7%, the Japanese Nikkei Average rose 4.3%, the Kospi climbed 5.0%, while in Australia the ASX 200 advancing 5.1%.
Commodities
For the session the Benchmark crude NYMEX for December delivery was down -0.4% (or $US0.41) settle at $US93.55. Copper prices are seeking a support level as Copper for December delivery was up 0.4% (or 1.4 cents) at $US3.7120. December gold was down -0.1% (or -$US0.50) at $US1,743.10.
ASX – ASX shares held up despite the debacle of the computer crash on one of the busiest trading days of the year.
FXJ – Fairfax Media says it will hold onto its metropolitan radio assets due to a lack of acceptable takeover offers.
MQG – Macquarie Group’s first half profit fell by 24 percent as the investment bank forecast that its full year result was likely to be lower than fiscal 2011 if market conditions remained unchanged.
MQG – Macquarie Group have announced a rare return of capital to shareholders, outlining plans for a buyback up to 10 percent of its shares. The company will spend some of it $3.5 billion of excess cash, approximately $880 million in the exercise, as chief executive Nicholas Moore bets on a recovery on global markets.The buyback will be partially funded by a hybrid shares issuance and like most banks, will need to get the nod from the bank regulator.
QAN - Qantas says the industrial action taken by the licensed engineers, pilots and Transport Workers unions has cost the airline $68 million to date.
STO – Santos has agreed to sell its entire working interest in the Evans Shoal gas field in the Bonaparte Basin offshore northern Australia for up to $US350 million ($A327 million).
WHC – Whitehaven Coal says first quarter coal production rose by 24 percent and sales were up by 17 percent.
CLX – CTI Logistics
ASX – to open modestly higher
US & UK/Europe – eased
Commodities Stock Index up 1.5%
Gold Stocks Index up 1.8%
Oil Stocks Index up 0.5%
US ADRs – Broadly Lower!!…
BHP down -0.7% & RIO up %; AWC down -2.2%
ANZ down -0.6% & NAB down -0.6%
NEM up 3.7%, JHX down -0.4%, NWS down -0.1%
By Michael Hevern
Head of Research
