2011 November | Online Stockmarket Trading Update

Archive for November, 2011

You are currently browsing the Online Stockmarket Trading Update blog archives for November, 2011.

Stock Market Analysis: Markets Remain On Edge Due To Global Debt and Growth Concerns

Monday, November 28th, 2011

* US stock markets ended the week lower again, with their worst Thanksgiving week performance since the middle of last century.
* European stock markets snapped thier six-session losing streak, session, as eurozone leaders cannot establish an agreement on how to resolve the European debt crisis.
* Asian markets closed mostly lower Friday. The selling was again broad with energy and banking stocks leading the declines, as ongoing European debt concerns drove sentiment.
* Commodities prices traded lower, as Gold prices lower to $US1,692 and while crude-oil closed around $US97.

The SPI Futures is trading around the key pivot level of 4250, ended down -0.6% (or -25 points) at 4,039. The key levels for our index today are 3950 to 4120.

On Friday the Australian stock market has finished the week’s dismal performance in the red for a sixth day, and finished below the psychological 4000 level, destroying approximately $75 billion off the value of the overall market. As we highlighted a couple of weeks ago the Asian markets are bearing the brunt of the selling over the eurozone debt crisis, but now we are seeing the major European markets and the United States joining in on the selling spree, as the eurozone financial system appears to be grinding to a halt. In Japan the core consumer prices fell for the first time in four months, indicating that the Japanese economy is falling into a deflationary cycle, due to persistently weak domestic demand.

Locally, the housing market is in the news this week, as we approach the so call “Super Saturday”, which is one of the busiest weekends of the year for home auctions. However economist Michael West has put a damper on proceedings, as he is bearish on the Australian housing market and predicts that local house prices could fall by as much as 25 percent based on the latest global house-price indicators in The Economist magazine. The latest global house price indicators are now falling in eight of the sixteen countries surveyed by The Economist (versus five in 2010). Shares in the All Ordinaries (XAO) generally eased again today, closing down -1.4% at 4058, as the S&P/ASX 200 (XJO) closed down -1.5% at 3984.

Aussie traders are expected to trade cautiously today and may be look to pick up some “bargains”, after the mixed leads from the US and European markets, as traders fears over the eurozone debt crisis continued to be the primary focus, after a disappointing comments from Germany about a proposed Euro bond issue, and in the US the “super committee” charged with reducing the US deficit is deadlocked. 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.

Economics News Today
* Nov     Australian PSI
* Nov     TD Securities Monthly Inflation Gauge
* Nov     ANZ Job Ads
* Q3      Business Indicators
* Nov     VFACTS vehicle sales.

U.S. Markets

US stock markets ended the week lower again, with their worst Thanksgiving week performance since the middle of last century.

The Dow Jones closed at 11,293, the S&P 500 index closed 1,161 the Nasdaq closed at 2,474. US stock markets ended the week lower again, with their worst Thanksgiving week performance since the middle of last century. The Dow Jones index finished the week down -4.8% and is down -3% for the year, and it at its lowest level since 7 October.

In the broader markets the the performance was also dismal with the S&P500 losing -7.6% in the past couple of weeks, while the tech-heavy Nasdaq is down -11% in the past week. Trading volumes were thin last week due to the Thanksgiving holiday. Investors have been plagued with debt concerns in Euopre and the US as Washington’s deficit-cutting Super Committee made little progress, triggering a sell-off, and the news out of Europe is getting worse by the day. There is a busy week on the economic front with hiusig figures and the Non-Farm payrolls employment report on Friday.

All the ten company groups that make up the S&P index traded mixed with the Materials were down -0.5%, Energy sector were down -0.7%, Technology sector was down -0.5% , Industrials were down -0.2%, while the Financials sector was up 0.3%, and Consumer Staples were up 0.4%.

The Dow Jones closed down -0.2% (or -26 points) at 11,232, the S&P 500 index closed down -0.2% (or -3 points) at 1,159 the Nasdaq ended down -0.8% (or -19 points) at 2,441.

European Markets

European stock markets snapped their six-session losing streak, but eurozone leaders still cannot establish an agreement on how to resolve the European debt crisis. The Stoxx Europe 600 index rising on Friday, but still dropped -4.6% for the week.

Investor sentiment has been under pressure from the deteriorating debt conditions in the the PIIGS economies. The Italian cost of debt remains high as Italy sold EUR8 billion of six-month bills, but at a yield of 6.5%, a eurozone high. The disunity between the German, French and Italian leaders over how to resolve the crisis in the euro zone also weighed on investors. German Chancellor Angela Merkel said that Germany would not support the issuance of eurobonds, while French President Nicolas Sarkozy said the leaders had agreed not to put additional pressure on the European Central Bank. Investor sentiment has been under pressure from the deteriorating debt conditions in the the PIIGS economies. European traders tentatively went shopping for bargains.

In London the FTSE 100 index closed up 0.7% (or 37 points) at 5,165, the German DAX was up 1.2% (or 65 points) at 5,492 while in France the CAC was up 1.2% (or 35 points) at 2,857.

Asian Markets

Asian stock markets closed mostly lower Friday. The selling was again broad with energy and banking stocks leading the declines, as ongoing European debt concerns drove sentiment.

For the week in Hong Kong the Hang Seng was down -4.6%, in Japan markets were down -2.6%,in Korea markets were down -3.3%, while in China the Shanghai Composite retraced over -1.6%. The Chinese market is drifting down towards 2-year lows again.

In China the SSE Composite was closed down -0.7% (or -17 points) at 2,380, while in Hong Kong the Hang Seng Index was down -1.4% (or -245 points) at 17,689 and in Japan the Nikkei 225 Index was closed down -0.1% (or -5 points) at 8,160, South Korean KOSPI was down -1.0% for the session.

Commodities

The Dollar Index was higher at 79.27 on a lower Euro, while the Australian Dollar last traded lower at 98.01. Commodities prices traded lower.

For the session the Benchmark crude NYMEX for December delivery was up 0.6% (or $US0.60) settle at $US7.32. Copper prices are seeking a support level as Copper for December delivery was down -0.3% (or -0.9 cents) at $US3.2740. December gold was down -0.6% (or -$US10.20) at $US1,691.60. .

ASX News Today

BBG – Billabong the surfwear maker and seller says it does not know why its shares dropped -12.5 per cent on the highest trading volume in three months on Thursday.

BXB – Brambles the pallet services provider has acquired Canadian counterpart company Paramount Pallet for $C13 million ($A12.7 million).

DUE – DUET Group the electrical wire and gas pipeline owner, has confirmed it will pay a distribution of 16 cents per stapled security this financial year.

EPW – ERM Power the electricity generator and seller has extended a contract with Woolworths in Victoria by three years for a value of $140 million.

FGL – In the final hurdle for the takeover the Federal Treasurer Wayne Swan has approved SABMiller’s $11.5 billion deal to acquire Foster’s under foreign acquisitions laws, but imposed conditions requiring the company to keep brewing operations in Australia.

FMS – A Russian steel making giant is expected to do a deal with Fortescue Metals Group after a $554 million takeover of Flinders Mines, which operates an iron ore project next to Fortescue’s Solomon development.

IZM – Mining giant Rio Tinto has agreed to take part in Intercept Minerals’ bauxite project on Tiwi Islands.

MYR – Myer has reiterated that sales this fiscal year will be flat and net profit will decline as much as 10 per cent because of the tough retail conditions. Myer chairman Howard McDonald, telling shareholders at its AGM, that while there were no clear short-term indicators of when consumer confidence would return to more normal levels, Myer remains highly leveraged to any upturn, and the recent cut in official interest rates by the RBA should help in the lead up to the critical Christmas trading period.

PRY – Primary Health Care has forecast profit growth of up to 22 percent as it grows its existing general practice, pathology and diagnostic imaging businesses.

SDL – Sundance Resources has requested its shares be placed in a trading halt pending an update on the proposed take-over by Hanlong Mining Group.

WHC – Whitehaven Coal says it will have an additional 2.4 million tonnes per annum (Mtpa) of port capacity at Port Waratah Coal Services in Newcastle from 2015.

WPL – Woodside Petroleum has set a production target for calendar 2012 that is 27 percent higher than 2011, as its Pluto liquified natural gas project comes on stream.

Local Corporate Reporting

Platinum Australia (PLA) Full year 2011 AGM

Regis Resources (RRL) Full year 2011 AGM

Sandfire Resources (SFR) Full year 2011 AGM

Rio Tinto Ltd (RIO) Investor Seminar

Ex-dividend Date

BTT – BT Investment Mgt

Market Summary

ASX – to open flat

US & UK/Europe – US lower, EU higher

Commodities Stock Index down -1.2%
Gold Stocks Index down -1.4%
Oil Stocks Index down -1.1%

US ADRs – Broadly Lower!!…

BHP down -0.9% & RIO down -4.0%; AWC down -5.3%
ANZ down -1.9% & NAB down -1.2%
NEM down -0.7%, JHX down -0.5%, NW S down -0.2%

By Michael Hevern
Head of Research

For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

Tags: Asian Markets, ASX, ASX News, Business News, Commodities, Crude Oil, European Markets, gold price, S&P500, Stock Market Analysis, stockmarket, trading, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

ASX Company News: Monax Mining Enters Joint Venture With Antofagasta Minerals

Monday, November 28th, 2011

Monax Mining Limited (MOX) is pleased to announce it has entered into a strategic alliance with Antofagasta Minerals Adelaide Pty Limited (Antofagasta), a subsidiary of Antofagasta plc, for copper exploration within South Australia, exclusive of Monax’s current portfolio in South Australia. The alliance builds upon the already existing relationship developed on the farmin agreement Monax has with Antofagasta on Monax’s flagship Punt Hill copper-gold project.

South Australia has been the location for three significant copper discoveries in the last 12 years with Prominent Hill, Carrapateena and Hillside all located within the highly prospective Olympic Iron-Oxide Copper-Gold province. Both Monax and Antofagasta plc strongly believe that further exploration of this copper-gold province will result in additional significant discoveries, and it is this belief that underpins this strategic alliance. The significance of this copper province has been highlighted recently by purchase of Carrapateena by OZ Minerals and the agreement between Rio Tinto and Tasman Resources on the Vulcan project.

Under the terms of the Agreement, Antofagasta will provide US$1 million to Monax over two years for target-generation and exploration within South Australia. Properties which are identified as a project of interest become a Designated Project (DP). Once a DP has been formed, Antofagasta will have acquired a 51% interest and Monax a 49% interest in the project. Antofagasta will then have the option to earn an additional 19% of any DP (for a cumulative 70% interest) by spending a further US$4 million within three years. At this stage, Antofagasta will make a cash payment (success fee) to Monax of US$3 million.

The Alliance will target properties containing copper, gold, silver, molybdenum, lead, zinc, nickel and platinum group minerals. Properties identified by Monax under the Alliance that are not jointly pursued will then be available for Monax to pursue on its own. Decisions relating to the Alliance will be made jointly by a Technical Committee comprising two representatives from each company, with Antofagasta holding the casting vote whilst sole funding.

www.monaxmining.com.au

http://www.traderdealer.com.au/fundamentals/mox

Tags: Copper, Joint Venture, Mining Exploration, Monax Mining, MOX
Posted in ASX Company News | No Comments

ASX Company News: World Reach Secures $1 million NEC Contract

Monday, November 28th, 2011

World Reach Limited (WRR) announced that its wholly owned subsidiary Beam Communications Pty Ltd has received orders from NEC Australia in excess of $1M for the supply of Iridium based voice and data transceivers. The transceiver modules will be delivered before the end of the 2011 calendar year.

These modules are being deployed as part of a solution developed by NEC to provide satellite back up for in-vehicle all in one tracking, monitoring and voice communications that integrates various forms of 3G two-way radio and satellite communications for utility management vehicles. Beam has had several orders from NEC over the last 12 months, this one being the most substantial, and values the ongoing relationship in supporting NEC to develop satellite based solution using Beam supplied equipment of strategic importance.

www.worldreach.com.au

http://www.traderdealer.com.au/fundamentals/wrr

Tags: Beam Communications, Satellite phones, Telecommunications, World Reach, WRR
Posted in ASX Company News | No Comments

ASX Company News: Viralytics Granted US Cancer Treatment Patent

Monday, November 28th, 2011

Viralytics Ltd (VLA) is pleased to announce the granting of a notice of allowance by the United States Patent and Trademark Office for issuance of a patent covering a Coxsackie A virus capable of infecting cancer cells substantially in the absence of intercellular adhesion molecule-1 (ICAM-1). Dr Darren Shafren, Viralytics Chief Scientific Officer said “CAVATAK targets and destroys cancerous cells following binding to surface expressed ICAM-1. The generation of this novel Coxsackie A virus, that can infect cancer cells in the absence of ICAM-1 expands the range of cancers that Viralytics panel of oncolytic viruses can potentially target”.

The scope of the allowed claims of US 10/592,395 covers a bio-selected form of Coxsackievirus A21 which was generated following passage in cells not expressing ICAM-1 but expressing decay accelerating factor (DAF). Decay accelerating factor expression is up-regulated on the surface of many cancerous cells including ovarian, colo-rectal and gastric cancers, making it a target for the newly bio-selected Coxsackievirus A21. The allowed claims also cover specific changes induced on the surface of the Coxsackievirus A21 during the bio-selection process on DAF-expressing cancer cells that are believed to confer the extended scope of cancer cell targeting.

www.viralytics.com

http://www.traderdealer.com.au/fundamentals/vla

Tags: Cancer treatment, Patent Granted, US Patent, Viralytics, VLA
Posted in ASX Company News | No Comments

Weekly Market Wrap: Eurozone Debt Contagion Hits France and Germany

Friday, November 25th, 2011

Traders around the world have been held hostage this week to the unfolding train wreck in the eurozone, as the debt crisis spreads to the big gorillas of the region, France and Germany.

The global focus has been on the eurozone once again, with the Italian and Spanish costs of debt remaining at their highest levels since the inception of the eurozone. Across the region banks have again been sold down and the growth-sensitive resource firms have also been under pressure due to falling commodities prices.

European stock markets extended their losing streaks again overnight, as eurozone leaders cannot come to an agreement on how to resolve the debt crisis. A number of markets have been down for around nine consecutive sessions, which means that a relief may be on the cards sooner rather than later, and technically many stock markets are at their 61.8% retracement levels from their peaks in October, which is often a good level for a potential recovery.

German Chancellor Angela Merkel has dashed hopes that she could be open to the idea of a joint eurozone bonds issue as a means to easing the region’s financial woes, saying that a common interest rate for all eurozone borrowers would send the “wrong signal”. Germany does not want to risk its AAA credit rating and instead wants to see commitment from the PIIGS economies regarding their austerity measures.

The US markets have crashed through their 50 and 200 day moving averages this week, succumbing to the deluge of bad news over the global debt crisis. The news came as the US “super committee”, responsible for reducing the budget deficit by at least $US1.2 trillion over the next 10 years or risk triggering automatic spending cuts, found itself deadlocked. This triggered a selloff as traders worried about a possible credit rating cut being the fallout of the negotiations. However Moody’s Investors Service has since reiterated its triple-A rating on the US and said the committee’s failure to agree would not by itself lead to a rating change. The minutes from the Fed’s FOMC policy meeting boosted also some hopes that the central bank may embark on more stimulus measures. Following that sell-off however the losses continued after the government revised third-quarter growth to 2% from an initial estimate of 2.5%.

Another focus in the US this week has been on “Black Friday”, which sounds ominous but it is really a good thing – it announces the start of the Christmas shopping season. According to Bloomberg 25% of Christmas shopping is done in the week following Black Friday, and the Christmas shopping season accounts for over 40% of the total retail shopping sales for the year, so it is a critical time for retailers, and for Santa Claus.

The US dollar continued its surge this week in a flight to safety, and this has again been weighing on commodities prices. The major metals continued to fall, with gold breaking through the $US1,700 level and is now trading down at $US1,690. Crude oil has continued to fall below the $US100 per barrel and copper has pulled back to $US3.27 per pound.

Asian markets have been bearing the brunt of the selling driven by the eurozone debt crisis, because the eurozone is the major customer for products produced by the Asian economies. Another negative for Asian investor sentiment was the concern of the slowing growth in China after a HSBC report out early this week showed Chinese manufacturers have reported the preliminary “flash” PMI figure dropped to 48 in November (compared with a mildly expansionary 51 previously). A reading below 50 suggests a contraction in the sector.

Asian markets have again sold down heavily in the past week, with Hong Kong down -3.5%, Korea down -2.5% and China has eased -1.5% for the week. Technically these stock markets are at their 61.8% retracement levels from their peaks, which is often a good level for a potential recovery, but traders are still being held hostage by the eurozone crisis.

Our View for the Australian Market

Our market has again succumbed to the negative sentiment from overseas, and continues to trade below its 50 day moving average, which is a negative sign. The line in the sand which we highlighted last week, around the 4150 level which had offered support for the past couple of months, has now been breached and the market will need to overcome this level in the short-term, if we are to get a Santa Claus rally this year. The 4080 level is crucial in the short term. We have continued to see weakness in the banks, and the retail and resource stocks have also succumbed to selling pressure. In the Analyst’s Eye last week we had a timely talk about identifying stocks that have the potential to pullback in the near-term.

After another struggle between the bulls and the bears this week, the bears remain in control as we have broken below the 50 day moving average. The 200 day moving average, which sits around 4,410 still offers significant resistance for any positive momentum into the end of the year, and we are sitting around the 61.8% retracement level which is often where we see a relief rally.

Investors should be looking to utilise options strategies to pick up stocks that are exhibiting value. Many stocks are now back at their September levels, and you will therefore clearly know if you are trading in the wrong direction. Options can be used to protect your profits and manage your risk in this type of market.

Remain attuned to the news from overseas, particularly from China, Germany and the US regarding their economic growth and debt issues. Monitor the performance of the US dollar for a guide to the future direction of commodities and equities prices.

The S&P/ASX 200 is down -4.2% for the week and is currently trading at 4005 and looks to be setting up to test support again, around the 3950 level near-term. Key levels for the index next week will be 3950 and 4150, with 4080 being the key pivot level. Expect to see volatility to remain elevated as the market participants look for direction in these uncertain times.

By Michael Hevern
MDS Trading Desk

MDS Financial Advisory Services offers general advice on trading options to generate consistent steady income on your investment portfolio. Call 1300 610 024 for further information.

For Buy and Sell recommendations on ASX listed companies register for a free trial of MDS Financial Research.

Tags: ASX, asx 200, Commodities, European Debt, Stock Market Analysis, US markets
Posted in Stock Market Analysis | No Comments

Greece Matters: Greek Debt and its Impact on the Australian Economy

Friday, November 25th, 2011

Why does Greece matter to traders in Australia? Excess in Greece and the resultant debt crisis may seem a long way from the sunny shores of Australia, but it is likely to have far reaching effects for traders, investors and even those that are not interested in the markets at all.

In Greece the people have generally enjoyed a fantastic lifestyle since their entry into the European Union funded by borrowing money very cheaply, in Euros. These words from Diane Francis sum up Greece nicely: “Greece is not a country, it’s a party. Taxes have gone uncollected forever or have been short stopped by corrupt tax collectors. For decades, Greek governments have paid civil servants bonuses for showing up to work on time and 14 months’ pay for Christmas. Retirement has averaged at 53 years of age.”

But Greece’s hangover has hit and it is a doozie. Debt has reached unsustainable levels and as a result interest rates have risen sharply, making it even more difficult for Greece to service their debt. When no one wants to lend to Greece it costs them more to get funds and these costs have risen significantly. At present the Greek bond yield is above 300%, that means the Greeks are paying 300% interest to borrow and by the time you read this it could be even higher. It has been estimated that 90% of Greece’s debt has to be written off for Greece to reach a sustainable level. The recent “haircut” of 50% for private holders of Greek debt amounted to a 20-30% write off.

If the problem was contained to Greece, then the country would default on its loans and life would carry on for the rest of Europe. Unfortunately it’s not that simple, because most countries in Europe face a similar scenario to Greece. Portugal, Italy, Ireland, and Spain collectively with Greece, known as the PIIGs, also face a similar situation. But the effects are not limited to just these countries either and this is where the problem really is. At present Italy’s bond yields have risen above 7%, Belgium’s are over 5%, and France’s are rising towards 4%. Even Germany, normally seen as rock solid, experienced a weak auction this week and their bond yields began to rise from below 2%. Bailouts for the PIIGS occurred when they hit 7%, but the problem is beginning to spread and there is simply not enough money to bail out Italy, the world’s seventh largest economy. Is France next, the world’s fifth largest economy? Where is all the money going to come from?

Debt problems are not unique to Europe, even though the UK has similar problems. Japan is the world leader in sustaining unsustainable debt. And welcome to I.O.U.SA, where the government cannot reach agreement on $1.3 trillion of deficit reduction that is essential to prevent them following the path Greece and the other PIIGS have followed. And who is there to backstop the US?

What does this mean for us here in Australia, following the Australian markets? Well there are some obvious implications that you may be able to see. If Europe, Britain and the US stop buying goods manufactured by China, then that is likely to hit the resources sector hard. There has already been a slowdown in manufacturing in China, seen in data released in the last few days. The Materials sector has been one of the weakest sectors in recent time. The other sector that has been very weak is the banking sector, with all banks interconnected on the global stage. Fortunately Australian banks are well removed from exposure to the European crisis, but European and US banks are not so fortunate. Many of the European banks hold European government debt directly and in the event of a default they will lose large sums of money. In fact so much so that the governments will be forced to bail out the banks or let them fail completely. While US banks do not have a large direct exposure to European government debt, many have sold insurance against default to the European banks, known as credit default swaps (CDS). In the event of a government default both European and US banks are very vulnerable to collapse.

The bad news is that default is inevitable if you study the history of debt. Reinhart and Rogoff have compiled a massive amount of research on debt cycles throughout history, published in their book “This Time is Different” and their findings are interesting. A crisis in the private sector, which we experienced in 2008, is always followed by a crisis in the government sector as governments increase spending to bail out failing institutions and attempt to stimulate the economy. At the same time unemployment jumps and company sales slow, this results in higher costs and lower revenue from taxes. As a result government debt levels rise sharply. There are then only two solutions to the government’s unsustainable debt levels – inflation or default, that’s it. According to history there is no other way out.

Inflation means the government starts printing money to repay their debts, and if they print enough then their debts can be repaid, however this leads to a fall in the value of their currency and rising commodity prices. Some see gold as the ultimate protection against inflation as the government cannot make more of it. The rising gold price is a sign of this behaviour, which was euphemistically called Quantitative Easing in the US and it has also been occurring in the UK.

If inflation gets out of hand then hyperinflation can hit, with prices rising at ridiculous rates. Zimbabwe was the most recent case of this, where 3 eggs cost $100 billion and the price of your meal went up while you ate. Germany has experienced hyperinflation in the past and is very wary of taking this path for the European Union.

The other option is outright default, which Iceland has been brave enough to do. The government simply says we are not paying back the debt. Iceland has prospered since, as its massive debt burden was eliminated. The big problem facing European leaders is that if Greece defaults, it will severely impact other European countries who are holding the debt in its banks. MF Global collapsed after Greece defaulted on 50% of its private debt and fortunately there was no flow on effect from this, though many clients are caught up in the turmoil. The true danger is that one default could trigger a series of defaults and we could end up with a collapse in the global banking system.

There are only two ways out of this: inflation or default. Two choices, and neither of them are good. Politicians will choose the approach they wish to take, but only when forced to. Rising bond yields are a sign that they may be forced into this sooner rather than later.

By Jeff Cartridge
Education Manager

Tags: Australian economy, European Debt, Greek Debt, inflation, piigs economies, us debt
Posted in Stock Market Analysis | No Comments

Stock Market Analysis: Black Friday

Friday, November 25th, 2011

* Overnight the US stock markets were closed for Thanksgiving, and will only open for a half day on Friday.
* European stock markets extended their losing streak for a ninth session, as eurozone leaders cannot establish an agreement on how to resolve the European debt crisis.
* Asian stock markets lacked direction, with the US basically on holiday until next week.
* Commodities prices traded lower, as Gold prices were lower at $US1,690 and crude-oil closed around $US95.

The SPI Futures is trading around the key pivot level of 4250, ending up 0.1% (or 4 points) at 4,052. The key levels for our index today are 4000 to 4120.

Yesterday the selling in the Australian share market abated, as the index attempted to find some support around current levels. It looks like bargain hunters again tentatively stepped in to shares that are starting to trade at the levels last seen in September when the market bounced. The Australian dollar has fallen to its lowest level in seven weeks, and the news from Europe and the US remains pretty bleak with concerns over global growth and the worsening eurozone debt crisis.

News out of China has been fairly grim as well with the disappointing PMI data followed by comments from Jim Chanos of the $US6 billion hedge fund Kynikos Associates Ltd, who said Chinese banks are “extremely fragile” because the lenders do not have enough capital to offset their bad loans, and that these non-performing loans have accumulated from as far back as the late 1990s and early 2000s. He went on to say that Chinese banks have failed to recognise the losses on the bad loans that have carried over from the easy credit days back in 2008.

Shares in the All Ordinaries (XAO) generally eased again yesterday, closing down -0.3% at 4115, as the S&P/ASX 200 (XJO) closed down -0.2% at 4044.

The Aussie market is again expected to continue easing today, after the negative leads from Europe and holidays in the US markets. We continue to have a busy week for AGMs and production reports, see below for details. Note that there should be a flurry of activity on open due to options exercise but volumes will likely be down on the day.

US Markets

US stocks market were closed overnight. Investors have been left to stew over the mixed signals of weighing slower-than-expected domestic economic growth and the worsening euro zone concerns.

Black Friday sound ominous but it is really a good thing – it announces the start of the Christmas shopping season. According to Bloomberg 25% of Christmas shopping is down in the next week and the Christmas shopping season accounts for over 40% of the total retail shopping sales, so it is a critical time for retailers and Santa Claus.

European Markets

European stock markets extended their losing streak for a ninth session, as eurozone leaders cannot establish an agreement on how to resolve the European debt crisis. The Stoxx Europe 600 index ended flat.

European markets started higher after the Ifo Institute reported that its November index of German business confidence rose above expectations to 106.6 (up from 106.4 in October). The yo-yo ride continued for the failed Dexia Bank the Belgian-Franco lender, with its shares surging around 28%, but it still remains down -86% year-to-date as investors continued to deal with speculation that Belgian officials are seeking to renegotiate a bailout deal for the bank.

In Germany the government bond yields rose after German Chancellor Angela Merkel dashed hopes that she is open to the idea of a joint eurozone bonds issue as a means to easing the eurozone’s financial crisis. She said that a common interest rate for all euro-zone borrowers would send the “wrong signal” and that Germany does not want to risk its AAA credit rating, and further that she wants to see commitment from the PIIGS economies regarding their austerity measures. European markets turned lower after Merkel’s comments.

In London the FTSE 100 index closed down -0.2% (or -12 points) at 5,127, the German DAX was down -0.5% (or -30 points) at 5,428 while in France the CAC was down -0.1% (or -1 points) at 2,822. Spain was down -0.2% and Italy ended flat.

Asian Markets

Asian stock markets lacked direction, with the US basically on holiday until next week. In Japan the Nikkei Stock Index played catchup by selling down by around -2% after returning from a public holiday. Asian shares have been under broad selling pressure this week, as investor sentiment has been held hostage to the increasing concerns about the European debt crisis and its potential impact on global economic growth. In China the market finished flat after the People’s Bank of China reported it is relaxing the reserve requirements for more banks. Chinese bank stocks finished higher by around 2.5% on the news while Chinese property developers also rose strongly.

In China the SSE Composite closed up 0.1% (or 3 points) at 2,397, while in Hong Kong the Hang Seng Index was up 0.4% (or 71 points) at 17,864 and in Japan the Nikkei 225 Index was closed down -1.8% (or -149 points) at 8,165. The South Korean KOSPI was up 0.7% for the session, while the Indian market was up 1.0%.

Commodities

The Dollar Index was higher at 79.03 on a lower Euro, while the Australian Dollar last traded lower at 97.30. Commodities prices traded lower.

For the session the benchmark crude NYMEX for December delivery was down 0.9% (or $US0.86) to settle at $US97.03. Copper prices are seeking a support level as Copper for December delivery was down -0.2% (or -0.6 cents) at $US3.2720. December gold was down -0.3% (or -$US5.60) at $US1,690.

ASX News Today

BSL – BlueScope Steel the embattled steelmaker has raised $338 million so far in a $600 million capital raising as it tries to repay some of its debt.

CQO – Charter Hall Office real estate investment trust (REIT) has completed the sale of a third United States asset as it continues its move towards becoming an Australian-focused property owner.

DJS – David Jones has confirmed its forecast of a 15 to 20 percent drop in first-half profit after its 1Q sales fell by 11.2 percent.

GFF – Goodman Fielder says steps taken so far in 2011/12 have arrested the earnings decline experienced in the prior year.

GNC – Graincorp says its annual profit has more than doubled adding that the quality of grain harvested so far this season is higher than last year.

GNS – Gunns is more confident it will be able to build a $2.3 billion pulp mill at Bell Bay in Tasmania, although it still does not have a partner for the project.

MMX – Murchison soarded after MD Greg Martin said Mitsubishi had indicated it would attempt to sell down its 100 percent stakes in both Oakajee and the Jack Hills iron ore mine in Western Australia’s mid-west region, assuming the deal is ratified by Murchison shareholders early next year. MMX has backed a $325 million takeover bid of its key assets by joint venture partner Mitsubishi, which will gain full ownership of the planned $6 billion Oakajee port and rail project.

WBC – Westpac Bank has created two new divisions for its businesses and made several senior executive changes as it adopts a new management structure.

WOR – WorleyParsons the engineering firm has won a $US200 million project management consultancy contract for a refinery in Ecuador.

WOW – Woolworths says it expects retail trading conditions to remain subdued until next financial year as it gears up for expansion under a new leadership team.

Local Corporate Reporting

Duet Group (DUE) Full year 2011 AGM

FKP Property Group (FKP) Full year 2011 AGM

Gryphon Minerals (GRY) Full year 2011 AGM

Myer Holdings Ltd (MYR) Full year 2011 AGM

Primary Health Care (PRY) Full year 2011 AGM

Perseus Mining (PRU) Full year 2011 AGM

Sundance Resources (SDL) Full year 2011 AGM

Sims Metal Management (SGM) Q1 2012 Activities Report

Ex-dividend Date

RHG – RHG Limited

Market Summary

ASX – to open flat

US & UK/Europe – US closed, while EU ended lower

By Michael Hevern
Head of Research

For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

Tags: Asian Markets, ASX, ASX News, Business News, Commodities, Crude Oil, European Markets, gold price, Stock Market Analysis, stockmarket, trading, US Market wrap
Posted in Morning Wrap, Stock Market Analysis | No Comments

ASX Company News: Worley Parsons Secures $12 billion Project Management Contract

Friday, November 25th, 2011

WorleyParsons (WOR) is pleased to announce the award of a contract for the project management consultancy of the Refinería del Pacífico refining and petrochemical complex, a project with an approximate total installed cost of US$12 billion. The complex is located in the province of Manabí, Ecuador and is a joint venture between PetroEcuador and PDVSA Ecuador S. A.

The refinery will have a crude processing capacity of 300,000 barrels per day. During phase I of the project, WorleyParsons will provide an integrated project management team (IPMT) located in Houston, Texas. The IPMT will be responsible for providing oversight of the front end engineering and design of the project and will assist the client in the selection of engineering, procurement and construction (EPC) contractors. In phase II the IPMT will provide oversight of the EPC contractors and will be responsible for construction management of early activities at the Manabí site. The project is presently scheduled to be completed by December 2015. The estimated reimbursable contract value to WorleyParsons for Phases I and II is anticipated to be in excess of US$200 million.

WorleyParsons’ CEO, Mr John Grill, said, “I am extremely pleased that WorleyParsons has secured this award, providing us with the opportunity for continued growth in Latin America and in refining and petrochemicals.”

www.worleyparsons.com

http://www.traderdealer.com.au/fundamentals/wor

Tags: Engineering Services, Oil and Gas, Refinery, WOR, Worley Parsons
Posted in ASX Company News | No Comments

ASX Company News: Mobilarm To Supply WA Fire Services

Friday, November 25th, 2011

Global marine safety equipment provider, Mobilarm Limited (MBO) today announced that the Company has secured a contract with the Fire and Emergency Services Authority of Western Australia (FESA) to supply 218 Crewsafe V100 Maritime Survivor Locating Devices. As part of their safety strategy to protect their marine volunteers, FESA will supply each of their 36 Volunteer Marine Rescue (VMR) groups in Western Australia with Crewsafe V100 units for use during patrols, rescue operations and training exercises. FESA awarded Mobilarm the supply contract following a tender process, and can exercise an option to extend over four 1-year periods from the contract commencement date of 1 December, 2011.

Mobilarm’s Chief Executive Officer, Lindsay Lyon, commented: “Mobilarm is pleased to have secured the contract to supply our leading emergency locating devices to FESA following a successful bid for the contract. The contract reflects the growing demand for the unique value provided by Mobilarm’s Crewsafe devices in the local market. The use of the Crewsafe V100 in Western Australia VMR operations sets a precedent for safety for all VMR groups nationally. Mobilarm is gaining good momentum in key market segments in Australia, the USA and in Europe. This important contract win with FESA follows the first order for our Crewsafe V200 submarine escape and rescue device from the Royal Netherlands Navy. The increase in global orders and strong sales pipeline will position Mobilarm to continue growing its revenue base in FY2012, and with record revenues already recorded in the first Quarter, the Company has a strong foundation for growth.”

Headquartered in Perth, Western Australia, Mobilarm (ASX: MBO) is the world’s largest company in the rapidly growing man overboard safety category with worldwide distribution of Crewsafe and Sea Marshall Maritime Survivor Locating Devices and associated marine safety equipment. The Company’s solutions enable operators in the offshore oil and gas, defence and commercial marine industries to remove risk from the workplace, where Occupational Health & Safety, regulatory compliance and Director’s Liability are the major drivers for improved employee safety and Duty of Care. Mobilarm owns patent pending technology that protects and saves lives in the marine workplace and enables every maritime vessel to become a marine Search and Rescue asset.

www.mobilarm.com

http://www.traderdealer.com.au/fundamentals/mbo

Tags: Marine Safety, MBO, Mobilarm, Safety Equipment
Posted in ASX Company News | No Comments

Online Stockmarket Trading Update

Archive for November, 2011