Stock Market Analysis: Giddy Up! – Bulls Charge On!

October 25th, 2011

* US stock markets jumped overnight, as the bulls pushed the market steadily higher throughout the day. U.S. stocks surged to their highest levels since early August.�
* European stocks rose overnight, as investors cheered news that eurozone leaders were making progress toward agreeing measures to resolve the sovereign debt crisis.
* Asian stock markets rose sharply overnight, as data pointed to an improvement in Chinese manufacturing activity.
* Commodities prices traded sharply higher again, as Gold prices rose to $US1,650 and while crude-oil closed up around $US92.
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The SPI Futures is trading around the key pivot level of 4200, ended up 0.8% (or 32 points) at 4,281. The key levels for our index today are 4320 to 4230.

Yesterday, Australian shares surged higher, as investor sentiment was boosted by optimism over the prospect of a eurozone debt crisis resolution, after the weekend’s eurozone summit, and ahead of any announcements due on Wednesday night our time.  Stocks traded even higher in the afternoon after Chinese manufacturing figures showed a moderate pickup in October, which compares to contraction in the past three months. The HSBC Chinese Flash Purchasing Managers’ Index, rose to 51.1 in October (up from final reading of 49.9 in September), surpassing the 50-point level for the first time since July. The index is designed to give an early snapshot of the month’s factory activity. This was the first time since July that the reading came in above 50. This data underscores the resilience of the world’s second largest economy and will ease concerns that China is in for a hard landing and growth is backed by robust domestic demand.  The All Ordinaries (XAO) continued its gains today closing up 2.6% at 4314, the S&P/ASX 200 (XJO) closed up 2.7% at 4255.

Aussie shares are expected to rise again today, following the positive leads from the US and Europe, as investors who showed their optimism that the European Commision’s commitment to the bank rescue plan and the sovereign debt resolution is progressing.  Also Chinese PPI data shows a robust economy. We continue to have a busy week for AGMs and production reports, see below for details.

See below for ASX listed companies in the news today.

U.S. Markets

US stock markets jumped overnight, as the bulls pushed the market steadily higher throughout the day. 
 
The Dow Jones Index and the S&P500 rose around 1%. The Nasdaq Composite over 2% ad is now in positive teritory for the year.  In the broader markets materials and financials stocks led the gains.  
 
Investors pushed stocks prices higher after some M&A activity and a lack of new negative news out of the European weekend summit.  In M&A Oracle rose 2%, and RightNow Technologies surged 19% after the Oracle the business-software company said it would buy the cloud computing firm in a deal valued at $US1.43 billion. Caterpillar shares jumped 4.8% after the maker of construction and mining equipment reported better-than-expected third-quarter earnings and raised its outlook for the year.
 
Commodity prices rose sharply with copper rising to monthly highs and crude-oil surging above $US92 per barrel.
 
All ten company groups that make up the S&P index traded higher  with the Materials were up 2.4%, Energy sector were up 1.3%, Financials sector was up 2.6%, Technology sector was up 1.6% , Industrials were up 1.9%,  while the Consumer Staples were up 1.5%.
The Dow Jones closed up 0.9% (or 105 points) at 11,914, the S&P 500 index closed up 1.3% (or  15 points) at 1,2254, the Nasdaq ended up 2.4% (or 62 points)  at 2,699, and the smaller cap Russell 2000 was up 3.3%.

European Markets

European stocks rose overnight, as investors cheered news that eurozone leaders were making progress toward agreeing measures to resolve the sovereign debt crisis. The European Stoxx 600 index climbed 1.3%. 
 
Across the region miners led gains following data from China showing an expansion in the manufacturing sector in October, but banks also traded higher on hopes of a bank rescue package out of the EU summit.  European Union leaders have reported that thay are making progress and will announce a comprehensive package of measures to tackle the debt crisis Wednesday. The package is expected to center on recapitalising European banks, addressing the Greek debt crisis and boosting the size of the European Financial Stability Facility (EFSF), the eurozone rescue fund. 
 
In London the FTSE 100 index rose 1.1%, whole the German DAX-30 and the French CAC-40 rose over 1.4%.  The Greek market bucked the positive trend, as it plunged -4.5% as Greek banks sold off heavily with a numbr of banks down over -20% on concerns that institutions will have to take a “hair-cut” of over 50% on Greek debt issues.
 
In economic news the preliminary composite purchasing managers index disappointed as the PMI for the euro zone fell to 47.2 in October, which is a second successive monthly contraction of the private-sector economy and the fastest rate of decline since July 2009.
 
In London the FTSE 100 index closed up 1.1% (or 59 points) 5,548, the German DAX was up 1.4% (or 84 points) at 6,055  while in France the CAC was up 1.6% (or 49 points)  at 3,220.

Asian Markets

Asian stock markets rose sharply overnight, on hopes that the European leaders are making progress on a plan to contain the euro-zone debt crisis and as data pointed to an improvement in Chinese manufacturing activity. 

The buyers stepped from the outset, in as EU leaders sais that the European Union summit on the eurozone debt crisis that a broad agreement is taking shape. Asian equity markets were boosted by the news from the European summit developments, and extended their gains after Chinese data suggested the key manufacturing sector has returned to expansion after a recent slowdown.

Preliminary results from a monthly survey of Chinese manufacturing climbed to a five-month high of 51.1 points in October, according to a survey released by HSBC Monday.  Growth-sensitive shares surgd as the resource sector companies were among the best performers, helped by gains in commodity prices. In Japan the Nikkei Stock Index rose 1.9%. In Hong Kong the Hang Seng Index surged 4.1% and in China the Shanghai Composite Index closed 2.3% higher.

In China the SSE Composite was closed up 2.3% (or 53 points) at 2,370, while in Hong Kong the Hang Seng Index was up 4.1% (or 746 points)  at 18,771 and in Japan the Nikkei 225 Index was up 1.9% (or 165 points)  at 8,844, South Korean KOSPI was up 3.3% for the session, while the Indian market was up 0.9%.   

Commodities

The Dollar Index was lower at 76.12 on a higher Euro, while the Australian Dollar last traded lower at 1.0478. Commodities prices were sharply higher again.

For the session the Benchmark crude NYMEX for December delivery was up 4.7% (or $US4.15) settle at $US91.55.  Copper prices are seeking a support level as Copper for December delivery was up 7.1% (or 22.8 cents) at $US3.4030.  December gold was up 1.0% (or $US16.40) at $US1,650.40. 

 
ASX News Today

AIO – Asciano the ports and rail operator, has no debts due until fiscal 2015 after refinancing $1.45 billion in bank facilities.

BMN – Bannerman Resources the Namibia-focused uranium explorer will continue to shop around for alternative corporate deals to the $144 million takeover bid by China’s Hanlong Mining.

 
PXS – Pharmaxis the dDrug developer, has moved closer to securing approval to market its cystic fibrosis drug, bronchitol, in Europe.
ORG – Origin Energy reaffirmed their forecast 30 percent rise in underlying profit this financial year and again defended its coal seam gas operations, and sees 35 percent growth in underlying earnings in the 2011/12 financial year.
 
RIO – Rio Tinto has reported iron ore demand remained robust despite market weakness, and said a fall in prices was accelerating a move to shorter-pricing methods. Rio is speeding up a program to lift output by 50 percent to 333 million tonnes a year by 2015, said its iron business was set to grow substantially over the next five years and industrial production in China remained robust.
TLS – NBN Co chief Mike Quigley says he would be concerned if the competition watchdog and Telstra were unable to agree on structural separation undertakings by December 20.


Local Corporate Reporting
Foster’s Group (FGL)        Full year 2011 AGM
Billabong (BBG)             Full year 2011 AGM
GPT Group (GPT)             Q3 2011 Ex-dividend date
GWA Group Limited (GWA)     Full year 2011 AGM
Lynas Corporation (LYC)     September Activities Report
Mcmillan Shakespeare (MMS)  Full year 2011 AGM
Mirabela Nickel Ltd (MBN)   September Trading statement
Pacific Brands Ltd (PBG)    Full year 2011 AGM
Transurban Group Ltd (TCL)  Full year 2011 AGM
Treasury Wine Estates       Full year 2011 AGM
Resource Generation (RES)   September Quarterly Report
Stockland (SGP)             Full year 2011 AGM
Southern Cross Media (SXL)  Full year 2011 AGM
WorleyParsons Ltd (WOR)     Full year 2011 AGM

Ex-dividend Date

CGO – CPT Global Limited

Market Summary

ASX – to open higher
US & UK/Europe –  higher

Commodities Stock Index  up 2.6%
Gold Stocks Index up 4.2%
Oil Stocks Index  up 0.7% 

US ADRs – Broadly Higher!!…

BHP up 5.8% & RIO up 8.1%; AWC 9.6%
ANZ up 3.% & NAB up 3.4%
NEM  up 1.9%, JHX up 6.7%, NWS up 1.6%

By Michael Hevern
Head of Research

 
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This entry was posted on Tuesday, October 25th, 2011 at 8:52 am and is filed under Morning Wrap, Stock Market Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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