* US stock markets eased overnight, after the FOMC meeting concluded to extend “Operation Twist”.
* European stock markets rose in anticipation of additional easing measures from the Fed.
* Asian stocks markets rose yesterday in anticiaption.
* Commodities prices generally lower, Gold prices are trading around $US1,618 while crude-oil closed up around $US81.
The Australian market is expected to hold on to gains today, as traders take their lead from overseas, as the G-20 meeting concluded and the FOMC Fed meeting extends “Operation Twist”. Markets traded mixed, higher in Europe and easing in the US markets. The Australian dollar remains above parity overnight.
The SPI Futures is trading above the key pivot level of 4080, ended up 0.4% (or 15 points) at 4,144. The key levels for our index today are 4120 to 4180.
See below for ASX listed companies in the news today.
Economics News Today
* Jun RBA Bulletin
* May Foreign Exchange Transactions and Holdings of Official Reserve Assets.
US stock markets eased overnight, after the FOMC meeting concluded to extend “Operation Twist”.
The Fed has committed to extend its Operation Twist program to replace short-term bonds with longer-term debt by $US267 billion through the end of 2012, however some traders were disappointed because they had speculated on a more aggressive QE3 approach.
The Fed has downgraded forecasts US 2012 gross domestic product (GDP) growth was cut to 1.9 percent from 2.4 percent and noted the unemployment will remain stubbornly high for the foreseeable future. US 30-year Treasury bonds rose to 1.65 percent after surging six points, after the Federal Reserve cut estimates for economic growth as Chairman Bernanke said progress in the job market has slowed while access to credit remains “a major issue.”
It is worth reflecting that the previous stimulus measures by the Fed, including two rounds of quantitative easing through asset purchases known as QE1 and QE2, helped the S&P 500 double from its bear-market low in 2009, while US Treasury yields reached the lowest on record amid demand for safety away from the eurozone debt crisis.
In commodities Crude-Oil plunged to an eight-month low, as US inventories hit 22 year highs. Gold prices pulled back as the US dollar rose in the absence of a QE3 announcement. The CRB commodities index closed at its lowest level since 2010.
All ten company groups that make up the S&P index traded mixed, with Materials down -0.6%, Energy sector was down -0.4%, Financials sector up 0.2%, Industrials sector was down -0.5%, Health Care down -0.3%, Technology was up 0.2%, while Consumer Staples were down -0.2%.
The Dow Jones closed down -0.1% (or -12 points) at 12,824, the S&P 500 index down -0.2% (or -2 points) at 1,356, the Nasdaq ended up 0.1% (or 1 points) at 2,930 and the smaller cap Russell 2000 was down -0.3%.
European stock markets rose in anticipation of additional easing measures from the Fed.
The Europe Stoxx 600 index rose to its highest level in over a month, but the index has still fallen -8.3% since its March peak, owing to the worsening eurozone debt crisis. Five stocks for every decliner. Spanish and Italian bonds rallied on speculation European leaders will act to reduce yields.
Across the region equities markets rose in all 17 eurozone countries, with the three majors up over 0.3%. In Greece a new coalition government has been sworn in, ending the politcal limbo that began with the 6 May failed election.
The European leaders at the Group of 20 summit have pledged to take “all necessary policy measures” to defend the euro currency union, as world leaders endorsed a road map for tighter integration to cut borrowing costs and prevent further damage to the global economy. However there were mixed messages, after the French President Hollande said European leaders are exploring ways for the rescue fund to buy debt from countries that have taken fiscal consolidation measures. The German Chancellor Angela Merkel declined to commit to direct sovereign debt purchases through the eurozone bailout fund, highlighting the fact that there is still work to do, to get consensus on this initiative.
The next critical meeting is the summit of European Union leaders in Brussels on 28-29 June.
In London the FTSE 100 index closed up 0.6% (or 36 points) at 5,622, the German DAX was closed up 0.5% (or 29 points) at 6,392, while in France the CAC was closed up 0.3% (or 9 points) at 3,126, Spain closed up 1.5% and Italy closed up 2.1%. Greece up 0.5% up over 22% since the start of June.
Asian stocks markets rose yesterday, with traders anticipating additional economic stimulus from the US Federal Reserve. Japan and Hong Kong markets rose over 1%, but in China Shanghai Composite closed down -0.3%. Expect traders to remain cautious ahead of the EU leaders summit on 28-29 June.
In China the SSE Composite closed down -0.3% (or -8 points) at 2,292, while in Hong Kong the Hang Seng Index closed up 0.5% (or 102 points) at 19,519 and in Japan the Nikkei 225 Index was up 1.1% (or 96 points) at 8,752, South Korean KOSPI closed up 0.6% for the session, while the Indian market closed up 0.2%.
The Dollar Index was higher at 81.45 on a higher Euro, while the Australian Dollar last traded higher at 1.0186. Commodities prices traded lower.
For the session the Benchmark crude NYMEX for June delivery was down -1.3% settled at $US81.80. Copper prices are looking for key support level as Copper for July delivery was down -1.3% (or -4.6 cents) at $US3.3875, while July Gold was down -0.5% (or -$US7.40) at $US1,615.80.
ASX News Today
AMC – NZ’s Commerce Commission says the High Court erred when it dismissed much of its case against Australia’s Visy Board and a former executive last year for alleged cartel behaviour in the country’s packaging market.
AUT – Aurora Oil & Gas has appointed three representatives to takeover target Eureka Energy’s board after increasing its stake to 68 percent.
LYC – Lynas the rare earths miner Lynas has received the support of a Malaysian parliamentary committee for its controversial new processing plant in Malaysia.
MTS- Metcash the grocery wholesaler plans to take its competitive push against the supermarket giants into the hardware sector by taking full control of the Mitre 10 brand.
NWS – News Limited will restructure its newsrooms and shed staff as part of a major restructure at Australia’s biggest newspaper publisher.
CMJ – The ACCC watchdog says it will review News Ltd’s $1.97 billion bid to take full control of James Packer’s Consolidated Media, because of the dominae position it would give Rupert Murdoch in Australia’s pay TV industry.
RIO – Rio Tinto has committed $US3.7 billion ($A3.64 billion) to expanding its massive iron ore operations in Pilbara region, WA.
ASX – to open higher
US & UK/Europe – EU higher
Commodities Stock Index down -0.7%
Gold Stocks Index down -1.2%
Oil Stocks Index down -0.4%
US ADRs – Broadly Mixed!!…
BHP down -0.4%, RIO up 0.7%; AWC down -1.3%
ANZ down -0.7% & NAB up 1.2%
NEM down -0.7%, JHX down -0.8%, NWS up 1.0%
By Michael Hevern
Head of Research