* US markets finished on a lower note on Friday, as concerns about the US financial system were added to the ongoing eurozone geopolitical issues and debt crisis.
* Europe markets recovered from early losses to finish generally higher on Friday, but were down again for a second week, with most markets trading below their 50 day movie averages.
* Asian markets ended mostly lower last week, following negative leads from the US and Europe.
* Commodities prices were lower, with Gold prices traded around $US1,579 while crude-oil closed around $US95.
The Australian market is expected to ease again today. Markets were mixed on Friday ,but finished lower for the week in the European markets and in the US. Traders need to digest the news about JP Morgan’s trading loss and the geopolitical uncertainties in the eurozone.
The SPI Futures is trading below the key pivot level of 4300, ended up 0.1% (or 2 points) at 4,287. The key levels for our index this week are 4180 to 4330.
See below for ASX listed companies in the news today.
US markets finished on a lower note on Friday, as concerns about the US financial system were added to the ongoing eurozone geopolitical issues and debt crisis.
The three major stock indexes closed lower for a second straight week on Friday after a week of choppy trading. The big news of the day was news that JPMorgan Chase, the largest US bank by assets, lost billions of dollar on bad trades raised fresh worries that the financial sector was not on the mend.
The S&P financial index has led the charge in the recent up move in the US markets since last October and has rallied 21.5 percent in the first quarter 2012, but this index fell 1.2% for the session, but is still up 13.6% for the year-to-date (YTD).
After the close of trading, Fitch Ratings cut JPMorgan’s credit rating one notch and cited the bank’s $2 billion trading loss, and Standard & Poor’s revised its outlook of JPMorgan to negative.
Traders should expect more volatility for stocks this week, as investors digest increasingly less certainty about the US economic outlook and concerns over the financial sector, after news from JPMorgan Chase. This could be the trigger that turns the US markets, which have been defying the pullbacks that have occurred in Asia and Europe.
In some good news for the day an index of consumer sentiment rose to its highest in a more than four years, but this contrasts with last week’s jobs report which showed another monthly decline in hiring. Also Facebook is due to list next Friday in one of the hottest IPOs in history $11.8 billion is expected to be raised.
There is a busy week for economic data this week with the mostly closely watched economic indicators being the US Consumer Price Index and retail sales for April, April housing starts and April industrial output and capacity utilisation, plus there will be the release of the minutes from the last Federal Reserve meeting, which investors will look to for more guidance on whether the central bank plans to give additional help to the economy. The final round of corporate earnings reports will be delivered (90% of the S&pPP500 companies have already reported).
All ten company groups that make up the S&P index traded lower, except for Technology, with the Materials down -0.3% , Energy sector was down -0.7%, Financials sector down -1.1%, Industrials sector was down -0.2%, Technology was up 0.1%, while Consumer Staples were up -0.2%.
The Dow Jones closed down -0.3% (or -34 points) at 12,820, the S&P 500 index down -0.3% (or -5 points) at 1,353, the Nasdaq ended flat at 2,934 and the smaller cap Russell 2000 was down -0.2%.
Europe markets recovered from early losses to finish generally higher on Friday, but were down again for a second week, with most markets trading below their 50 day movie averages. The Stoxx Europe 600 index rose 0.3% for the session, but was down 0.4% for the week after having touched its lowest level in the past 4-months.
Across the region financials, miners and energy sectors have been weighed down by sentiment. The eurozone markets has been sold-off this week as a result of the recent elections in Greece and France, and the Spanish debt crisis worsening (resulting in the effective nationalisation of Bankia SA). The problems with the Greek elections has raised the risk of Greece exiting the euro zone, as the population has cast an anti-austerity vote and this has resulted in a hung parliament, as a coalition government has not been able to be formed. Greece may have to face another round of elections to resolve the deadlock.
Investors face an uncertain trading environment this week, as traders move to take risk out of their portfolios near-term, as they deal with the geopolitical eurozone challenges.
In London the FTSE 100 index last closed up 0.6% (or 32 points) at 5,575, the German DAX was closed up 0.9% (or 62 points) at 6,580 while in France the CAC was closed flat at 3,130, Spain closed down -0.7% and Italy closed up 0.3%.
Asian markets ended mostly lower last week, following negative leads from the US and Europe.
In Japan the Nikkei Stock Average has fallen 4 of the past 6 weeks and closed below the 9,000 level. In Hong Kong the market slumped 5.3% for the week, while in China Shanghai Composite backed off the 2450 level finishing down -2.5% for the week.
The Chinese government has cut the reserve ratios for banks 50 basis points. This is the third cut in six months and is designed to pump money into the financial system to support lending given the recent economic data which is confirming the Chinese economic growth is slowing. This will take effect on 18 May. UBS has estimated the last 50 basis point cut added around $US63 billion into the Chinese economy.
Chinese leadership has been making additional moves to boost is weakening economy, including announcing that it will allow the yuan to trade in a wider band, seen as a move to attract foreign capital and the government has also expanded the Qualified Foreign Institutional Investor quota to $80 billion from $30 billion for approved foreign investors to buy mainland-listed Chinese stocks.
China will be the focus in the region this week, but the eurozone debt crisis is likely to dominate markets globally.
In China the SSE Composite closed down -0.6% (or -15 points) at 2,395, while in Hong Kong the Hang Seng Index closed down -1.3% (or -263 points) at 19,964 and in Japan the Nikkei 225 Index was down -0.6% (or -56 points) at 8,953, South Korean KOSPI was down -1.4% for the session, while the Indian market closed down -0.8%.
The Dollar Index was higher at 80.30 on a lower Euro, while the Australian Dollar last traded higher at 1.0024. Commodities prices traded lower.
For the session the Benchmark crude NYMEX for June delivery was down -1.6% settled at $US95.57. Copper prices are backing off key resistance level as Copper for June delivery was down -1.7% (or -4 cents) at $US3.630, while June Gold was down -0.9% (or -$US14.60) at $US1,579.40.
ANZ – ANZ the last bank to trimmed its standard variable home loan and business lending rates has cut rates by 37 basis points.
BHP – BHP says production has ceased at BHP Billiton’s loss-making Norwich Park coal mine in central Queensland from Friday.
ALS – Dulux Group has begun trying to get Alesco Corporation shareholders to accept its $188 million takeover offer.
NAB – National Bank say 1H12 profit is up to a record $2.83 billion as it beats its rivals on customer growth thanks to a low interest rate strategy.
NWS – Newscorp says a soft advertising market means things will remain tough for Rupert Murdoch’s Australian and UK newspapers in the final three months of 2011/12.
RIO – Rio Tinto has flagged cutting some of its multi-billion dollar Australian expansion projects due to soaring costs.
SFH – Speciality Fashion Group, which owns women’s clothing chains Katies, Millers and Crossroads, has added two Cotton On Group representatives to its board.
SGH – Slater & Gordon says it will book a $10 million non-cash writedown after the High Court decided not to grant its client leave to appeal a full Federal Court decision in the Vioxx class action.
ASX – to open lower
US & UK/Europe – US lower & EU higher
Commodities Stock Index down -0.9%
Gold Stocks Index down -1.5%
Oil Stocks Index down -0.7%
US ADRs – Broadly Lower!!…
BHP down -1.9%, RIO down -1.8%; AWC down -3.5%
By Michael Hevern