* US traders returned from their Independence Day holidays in a sombre mood.
* European stock markets ended lower overnight, as traders had already factored in the ECB move on interest rates.
* Asian markets fell yesterday, as profit-takers stepped in.
* Commodities prices fell, Gold prices are trading around $US1,604 while crude-oil closed around $US86.
The Australian market is expected to ease today, as traders take their lead from overseas, as the coordinated move on interest rates by central banks globally failed to impress. Markets edged lower in Europe and in the US. The Australian dollar remained well above parity.
The SPI Futures is trading around the key support level of 4000, ended dow -0.2% (or -9 points) at 4,122. The key levels for our index today are 4100 to 4160.
See below for ASX listed companies in the news today.
US traders returned from their Independence Day holidays in a sombre mood. US stock markets declined, ending its biggest 3-session winning rally for the year, as traders were disappointed over the European efforts to address worsening eurozone debt crisis and they showed caution ahead of the US monthly employment report.
The three benchmark indexes eased, but the tech-heavy Nasdaq ended flat for the session. Eight of the 10 S&P sectors ended down led by the financials and energy sectors, as borrowing costs for Italy and Spain shot up again and crude-oil prices fell despite a fall in inventories. Retailers gain on back of higher retail sales.
A coordinated move on interest rates by global central banks had already been factored into the markets, as the European Central Bank (ECB) lowered its benchmark lending rate to 0.75%, as expected, the Bank of England kept its key rate unchanged, but increased stimulus measures by boosting the size of its bond-buying program, while the Chinese central bank lowered interest rates for the second time in a month.
Reason for caution. If we look back at the last US monthly jobs report US stocks sold-off sharply down -10%, erasing all of the 2012 gains. Now the S&P500 has rallied 7% from its recent lows due to speculation that there would be a coordinated global central bank action. The action that traders need to see is QE3 i the US and LTRO2 in the EU, the interest rates cuts are already factored into the markets. In economic news weekly jobs data showed that fewer Americans filed jobless claims and hiring beat estimatesas service industries expanded at a slower pace, confirming the Fed’s concern that growth is still not strong enough to reduce unemployment.
All ten company groups that make up the S&P index traded generally lower, with Materials down 0.1%, Energy sector was down -1.3%, Financials sector down -1.5%, Industrials sector was down -0.1%, Health Care down -0.6%, Technology was flat, while Consumer Staples were up 0.3%.
The Dow Jones closed up 0.3% (or -47 points) at 12,897, the S&P 500 index down -0.5% (or -6 points) at 1,367, the Nasdaq ended up 0.1% (or 1 points) at 2,976 and the smaller cap Russell 2000 was down -0.1%.
European stock markets ended lower overnight, as traders had already factored in the ECB move on interest rates. The Stoxx Europe 600 index fell -0.2%, but is still on track for its fifth week of gains.
The European Central Bank (ECB) lowered its benchmark lending rate to 0.75%, as expected, the Bank of England kept its key rate unchanged, but increased stimulus measures by boosting the size of its bond-buying program by another 50 billion pounds, while the Chinese central bank lowered interest rates for the second time in a month. This coordinated global central bank action heightened concerns that the global recession was deepening. The ECB President Mario Draghi warned that risks to the economic outlook remain tilted to the downside.
Traders expressed their disappointment that the ECB stopped short of signaling additional stimulus on top of rate cuts as the flagging eurozone economic growth needs more of a jump start (LTRO2?). The debt markets in Spain and Italy saw borrowing costs spike higher overnight. Across the region the financials led the declines, but energy stocks also sold-off on the back of lower crude-oil prices. Miners and auto stocks provided some support.
In London the FTSE 100 index closed up 0.1% (or 8 points) at 5,692, the German DAX was closed down -0.5% (or -29 points) at 6,535, while in France the CAC was closed down -1.2% (or -38 points) at 3,229, Spain closed down -3.0% and Italy closed down -2.0%. Greece down -2.0%..
Asian markets fell yesterday, as profit-takers stepped in.
The Chinese market continues to underperform, due concerns about their weakening economy, while Hong Kong the market ended higher after a choppy trading session. The selling in China came after reports of dismal growth in June lending figures for the top four banks.
Overnight the Chinese central bank lowered interest rates for the second time in a month, is a reaction to its slowing economy.
In China the SSE Composite closed down -1.2% (or -26 points) at 2,201, while in Hong Kong the Hang Seng Index closed up 0.4% (or 99 points) at 19,809, and in Japan the Nikkei 225 Index was down -0.3% (or -24 points) at 9,080, South Korean KOSPI closed up 0.1% for the session, while the Indian market closed up 0.4%..
The Dollar Index was lower at 81.72 on a higher Euro, while the Australian Dollar last traded higher at 1.0287. Commodities prices traded lower.
For the session the Benchmark crude NYMEX for August delivery was down -1.1% settled at $US86.70. Copper prices are looking for key support level as Copper for August delivery wasdown -1.4% (or -5 cents) at $US3.5343, while August Gold was down -1.1% (or -$US17.00) at $US1,604.80.
ASX News Today
BHP – BHP Mitsubishi Alliance and unions are back at the negotiating table in an effort to end an 18-month dispute over a new industrial agreement for the company’s Bowen Basin mines.
BFG – Bell Financial Group has warned it faces a loss of up to $2 million for the first half of its financial year.
DJS – David Jones faces inquiry over failed bid.
EGP – Crown the Casino operator is seeking regulatory approval to lift its stake in rival Echo Entertainment to 25 percent (from the current 10 percent).
LNC – Linc Energy will cut 60 jobs to ensure a maiden profit and cut cash burn by 50% in 2013.
ORG – Origin says the owners of the Australia Pacific liquefied natural gas project in Queensland have made a final commitment to the $23 billion project.
VAH – Virgin Australia in a first, has carried more domestic passengers than its rival Qantas over the 12 months to the end of May..
ASX – to open lower
US & UK/Europe – lower
Commodities Stock Index down -1.3%
Gold Stocks Index down -0.7%
Oil Stocks Index down -1.3%
US ADRs – Broadly lower!!…
BHP down -0.6%, RIO down -1.6%; AWC down -2.9%
ANZ up 0.4% & NAB up 0.5%
NEM down -1.4%, JHX up 0.1%, NWS down -1.4%
By Michael Hevern
Head of Research
For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.