* US stock markets eased ahead of the long holiday weekend, but ended higher for the week.
* European stock markets finished higher for the week the first weekly gain in a month, as EU leaders announced no news.
* Asian markets weakened again for a fourth consecutive week, due to the eurozone debt crisis and the data showing a slowing China.
* Commodities prices higher, with Gold prices traded around $US1,567 while crude-oil closed around $US91.
The Australian market is expected to remain under pressure today, as traders again had mixed leads from overseas. Markets eased into the close in the European and the US markets, as US buyers checked out for the Memorial Day holiday. The Australia dollar fell 0.9 percent to US97.58 cents overnight, and is near 6-month lows.
The SPI Futures is trading below the key pivot level of 4080, ended up 0.5% (or 15 points) at 4,050. The key levels for our index today are 4050 to 4120.
See below for ASX listed companies in the news today.
Economics News Today
* RBA Governor Glenn Stevens speech in Sydney.
U.S. Markets
US stock markets eased ahead of the long holiday weekend, but ended higher for the week. Traders sentiment was dominated by the unfolding eurozone debt crisis and the troubles with the Spanish banking system, even though there was a better-than-expected reading on US consumer confidence.
The US markets are defying the global doom and gloom, but risk currencies and risk assets prices are pointing to trouble ahead. The US Dollar Index rose 1.3% to 82.4, and is trading at its strongest since September 2010. The index has recorded its fourth consecutive weekly gain, as global invesors buy US Treasuries in a flight to safety, as the net inflows on Friday were more than double the daily average over the past year, according to Bloomberg.
For the week the Dow Jones closed up 0.7%, in the broader markets the S&P 500 index up 1.7%, the Nasdaq ended up 2.1% and the smaller cap Russell 2000 was up 2.6%, however the volatility surprisingly fell with the VIX down -13% for the week.
US markets are closed for Memorial Day tonight, while traders will be looking to the Wednesday’s GDP report and the Non-Farm Payrolls employment report due out Friday for a reading on the ongoing strength of the US economy.
All ten company groups that make up the S&P index traded lower, with Materials down -0.4%, Energy sector was down -0.5%, Financials sector down -0.4%, Industrials sector was down -0.7%, Technology was down -0.2%, while Consumer Staples were down – 0.2%.
The Dow Jones closed down -0.6% (or -75 points) at 12,454, the S&P 500 index down -0.2% (or -3 points) at 1,318, the Nasdaq ended down -0.1% (or -2 points) at 2,837 and the smaller cap Russell 2000 was down -0.1%.
European Markets
European stock markets finished higher for the week the first weekly gain in a month, as leaders announced no new measures to stem the eurozone crisis at last week’s Brussels summit.
The EU summit meeting was held with the backdrop of Greece preparing to hold new elections on June 17 after an anti-bailout party surged to second place in balloting in May, which has fuelled speculation that the Greece may exit the currency bloc.
The Italian Prime Minister Mario Monti said that most of the European leaders support the issue of joint bonds for the euro area, but Germany still needs convincing.
The geopolitical turmoil in Greece has created havoc in global markets and over the weekend Spain came back into focus, as the Standard & Poor Ratings Agency has cut the credit ratings of 5-Spanish banks and the Bankia group said it needed EUR19 billion of government money.
Spain was in focus as the president of Catalonia, one of 17 semi-autonomous Spanish regions, repeated his call for Spanish central government to help regions access funding. This news came on the back of the Bankia Group, the lender Spain nationalised earlier this month, will seek EUR19 billion of state funds, as it set aside provisions for residential mortgages and lending to companies. This bailout for Bankia (BKIA) would exceed the estimates of EUR15 billion of funding requirements by the Economy Minister Luis de Guindos’s estimate just two weeks ago, and the funding will need to come from the equities markets.
German growth is contracting according to a Markit Economics report which showed that the German index based on a survey of purchasing managers in the manufacturing industry declined to 45 this month from 46.2 in April.
For the week the London FTSE 100 index last closed up 1.6%, the German DAX was closed up 1.1%, while in France the CAC was closed up 1.3%, Spain closed up 0.5% and Italy closed up 0.4%.
In London the FTSE 100 index last closed up 0.1% (or 2 points) at 5,351, the German DAX was closed up 0.4% (or 24 points) at 6,339, while in France the CAC was closed up 0.3% (or 9 points) at 3,048, Spain closed up 0.5% and Italy closed up 0.4%.
Asian Markets
Asian markets weakened again for a fourth consecutive week, due to the eurozone debt crisis and the data showing a slowing China.
Across the region investor sentiment has been battered by slumping loan demand and faltering factory output in China, the eurozone debt crisis worsens as European leaders are preessuring Greece to honor commitments to aid packages before the June 17 elections.
The MSCI Asia Pacific Index fell 0.8% to levels not seen since the 2008 GFC global credit crunch, the index is on track for a 10% decline for May, the most since October 2008. In Japan the market has recorded its longest string of weekly loses in nearly 35 years.
Data is showing that Chinese banks may have a loan shortfall which would be the first in seven years, according an exclusive Bloomberg News report, as loan demand is drying up in the face of the eurozone debt crisis which is curtailing exports and as domestic demand for new homes declines. The data shows a decline in lending in April and May means it’s likely the banks’ total new loans for 2012 will be about 7 trillion yuan ($1.1 trillion), less than an estimated government goal of 8 trillion yuan to 8.5 trillion yuan, said one of the officials, declining to be identified because the person isn’t authorized to speak publicly. This data is confirming the slowing Chinese economy and direcly impacts Australia, as China is our largest trading partner.
For the week the Chinese SSE Composite closed down -0.5%, while in Hong Kong the Hang Seng Index closed down -1.3% and in Japan the Nikkei 225 Index was eased -0.4%, and teh ASX 200 fell -0.4% for the week.
In China the SSE Composite closed down -0.7% (or -17 points) at 2,333, while in Hong Kong the Hang Seng Index closed up 0.3% (or 47 points) at 18,713 and in Japan the Nikkei 225 Index was up 0.2% (or 17 points) at 8,580, South Korean KOSPI was up 0.3% for the session, while the Indian market closed down -0.1%.
Commodities
The Dollar Index was higher at 82.50 on a lower Euro, while the Australian Dollar last traded lower at 97.51. Commodities prices traded higher.
For the session the Benchmark crude NYMEX for June delivery was up 0.2% settled at $US90.86. Copper prices are looking for key support level as Copper for July delivery was up 0.6% (or 2.0 cents) at $US3.448, while July Gold was up 0.7% (or $US11.40) at $US1,568.90.
ASX News Today
BHP – BHP faces industrial action as over 3,000 coalminers have started a week-long strike in Queensland’s Bowen Basin as an 18-month dispute over working conditions continues.
CBA – Commonwealth Bank of Australia has cut interest rates on some fixed rate home loans by up to 0.4 percentage points.
CSS – Clean Seas Tuna says a mysterious illness is killing its stock of Yellowtail Kingfish, adding at least $17.5 million to its full year loss.
EHL – Emeco the earthmoving equipment supplier has forecast full year profit growth of up to 41 per cent due to strong demand in Australia, Canada in Indonesia.
EKA – Eureka Energy has shrugged off criticism about its new $50 million debt facility after suitor Aurora Oil & Gas
threatened to withdraw its offer.
FMS – Flinders Mining the iron ore miner shares have plunged by arounf 20% after court delays pushed its proposed $554 million takeover by a Russian steel maker.
HST – Hastie Group the electrical and refrigeration company is under administration and 2000 jobs could be lost, after an employee admitted to falsifying company accounts.
LEI – Leighton Holdings says it will build two large-scale “energy-efficient” data centres in NSW under a $182 million contract with the state government.
MYR – Myer chief executive Bernie Brookes has blamed brand distributors for higher prices in Australian stores.
ORG – Origin says the Australia Pacific LNG JV has secured $US8.5 billion in funding for its massive liquefied natural gas (LNG) project in Queensland.
SDL – Sundance Resources and its Chinese suitor Hanlong Mining have altered a $1.65 billion takeover agreement to ensure the deal is finalised by November.
TLS – Foxtel has completed its $2 billion takeover of regional counterpart Austar, and says pricing and billing procedures will not change for customers of either service.
SGM – Sims Metal Management the metals recycler has warned of a large drop in expected earnings.
WDC – Westfield the shopping centre giant saya it is confident it can attain its EUR1 billion euros in sales target in Milan despite continuing financial crisis in Europe.
Corporate News
Reporting today:
New Hope Corp (NHC) Quarterly Activities Report
OZ Minerals (OZL) Full year 2011 AGM
Perpetual Ltd (PPT) Business briefing re market update
Ex-dividend Date
Infratil Limited (IFZ)
Market Summary
ASX – to open lower
US & UK/Europe – EU Rebounded, US drifts lower
Commodities Stock Index up 0.1%
Gold Stocks Index up 0.5%
Oil Stocks Index down -0.3%
US ADRs – Broadly lower!!…
BHP down -1.6%, RIO down -1.7%; AWC down -0.9%
ANZ down -1.1% & NAB down -1.1%
NEM up 0.4%, JHX down -0.9%, NWS up 0.3%
By Michael Hevern
Head of Research
