Stock Market Analysis: Markets Down As Traders Hold Out For More QE

May 4th, 2012

* US stock markets fell overnight, as sellers stepped in across the board ahead of the Non-Farms Payroll Report.
* European stock markets ended modestly lower overnight.
* Asian share markets ended mostly lower yesterday, after disappointing manufacturing and employment reports from the US and the eurozone sparked concerns of slowing global economic growth.
* Commodities prices were lower, with Gold prices traded around $US1,637 while crude-oil closed around $US102.
�
The Australian market is expected to sell-off today, particularly our miners, after many stock markets were closed lower overnight. Markets traded lower from the open in the European markets and in the US and were weak in late session trading. Look out for the RBA’s Quarterly Statement due out today, as investors set themselves ahead of next week’s Federal Budget.

The SPI Futures is trading above the key pivot level of 4360, ended down -0.3% (or -12 points) at 4,414. The key levels for our index today are 4360 to 4430.
�
See below for ASX listed companies in the news today.

Economics News Today
* RBA - Quarterly Statement on Monetary Policy.

US Markets

US stock markets fell overnight, as sellers stepped in across the board ahead of the Non-Farms Payroll Report.

Investor mood was dampened by the recent disappointing manufacturing and employment reports, and there was caution ahead of the Non-Farm monthly employment report due out tonight.

The S&P500 closed below the 1400 level for the first time in a week. All 10 sectors in the S&P500 traded in the red for the session with the falls led by the materials and energy sectors on the back of weaker commodity prices, due to concerns overn slowing economic global growth.

In economic news the US non-manufacturing sector data showed expansion slowed more than expected in April, according to the Institute for Supply Management (ISM) with the non-manufacturing purchasing index falling to 53.5 last month (down from 56 in March). Traders took some profits ahead of the Non-Farms Payrolls report, which economists expect the report to show that 168,000 jobs were added last month, with the unemployment rate holding steady at 8.2%.

All ten company groups that make up the S&P index traded lower, with the Materials down -1.1% , Energy sector was down -1.7%, Financials sector down -0.8%, Industrials sector was down -0.8%, Technology was down -0.8%, while Consumer Staples were down -0.8%.

The Dow Jones closed down -0.5% (or -62 points) at 13,206, the S&P 500 index down -0.8% (or -10 points) at 1,391, the Nasdaq ended down -1.2 (or -35 points) at 3,024 and the smaller cap Russell 2000 was down -1.5%.

European Markets

European stock markets ended modestly lower overnight. The Stoxx Europe 600 index closed 0.1% higher, off its session highs.

Across the region stocks initially traded modestly higher, after Spain sold EUR2.52 billion worth of bonds at an auction, slightly above the high end of the $1.5-$2.5 billion targeted range. However sellers stepped in after European Central Bank (ECB) President Mario Draghi said the eurozone outlook is not improving, but did not offer any indication of further monetary easing for the eurozone, saying policy makers felt monetary policy remained “accommodative” given historically low nominal interest rates and negative real interest rates. Banks led the falls across the region but miners weighed heavily as commodities prices declined.

In London the FTSE 100 index last closed up 0.2% (or 8 points) at 5,766, the German DAX was closed down -0.2% (or -16 points) at 6,694 while in France the CAC was closed down -0.2% at 3,223, Spain closed up 0.3% and Italy closed down -0.7%.

Asian Markets

Asian share markets ended mostly lower yesterday, after disappointing manufacturing and employment reports from the US and the eurozone sparked concerns of slowing global economic growth.

In China the market edged higher, but Hong Kong and South Korean markets finished around -0.3% lower, while the Japanese market remains closed for the balance of the week. Across the region cyclical stocks and exporters led the falls due to economic growth concerns and financials also sold-down.

In China the SSE Composite closed up 0.1% (or 2 points) at 2,440, while in Hong Kong the Hang Seng Index closed down -0.3% (or -59 points) at 21,249 and in Japan the Nikkei 225 Index was closed at 9,380, South Korean KOSPI was down -0.2% for the session, while the Indian market closed down -0.8%.

Commodities

The Dollar Index was higher at 79 on a lower Euro, while the Australian Dollar last traded lower at 1.0264. Commodities prices traded lower.For the session the Benchmark crude NYMEX for June delivery was down -2.5% settled at $US102.59. Copper prices are backing off key resistance level as Copper for June delivery was down -1.3% (or -5 cents) at $US3.737, while June gold was down -1.1% (or -$US17.30) at $US1,637.

ASX News Today

AAD – Ardent Leisure Group the owner of some of Australia’s most popular theme parks says lower interest rates can only be good for business.

CBA – Commonwealth Bank of Australia (CBA) has cut its standard variable home loan rate by 40 basis points to 7.01 per cent.

CMJ – James packer is looking to offload his stake in Consolidated Media Holdings, New Corp is the likely buyer.

HVN – Harvey Norman say its pre-tax profit for the first nine months of the financial year is down 25 percent as sales continued to fall in the three months March.

STO – Santos the oil and gas producer Santos says reserving Australia’s natural gas resources for its own use would be counter-productive.

TAH – Tabcorp has generated more revenue in the first three months of the calendar year, partly as a result of greater interest in fixed-odds betting and the animated racing game, Trackside.

TSE – Transfield Services’ public transport joint venture has won an $800 million contract to maintain and operate Sydney’s famous harbour ferry services.

WBC – Westpac Bankis unlikely to pass on the full RBA’a 0.5 percent rate cut despite making a near $3 billion profit in the first half of its fiscal year.

Corporate News

Reporting today:

Leighton Holdings (LEI) Q3 2012 Activities Report

Ex-dividend Date

Australian Pharma (API)

Market Summary

ASX – to open lower
US & UK/Europe – sharply lower

Commodities Stock Index down -2.4%
Gold Stocks Index down -3.5%
Oil Stocks Index down -1.7%

US ADRs – Broadly Lower!!…

BHP down -2.1%, RIO down -3.3%; AWC down -4.2%
ANZ down -% & NAB down -0.6%
NEM down -2.0%, JHX down -0.7%, NWS down -0.9%

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, Ex Dividend, gold price, Nasdaq, Stock Market Analysis, stockmarket, trading, US Market wrap

This entry was posted on Friday, May 4th, 2012 at 9:00 am and is filed under ASX Company News, 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.

Online Stockmarket Trading Update