* US stock markets fell for a fourth day, on the back of disappointing global manufacturing data and news of inaction by the ECB.
* European stock markets fell sharply on disappointment over the ECB and on earnings disappointments.
* Asian stock markets finished lower as the US Fed and now the ECB disappoint, as China continues to underperform.
* Commodities prices lower, Gold prices are trading around $US1,587, while crude-oil closed up around $US87.
The SPI Futures is trading above the key support level of 4180, ended down -0.7% (or -28 points) at 4200. The key levels for our index today are 4180 to 4220. Expect selling today after the US Fed and the ECB have delayed further stimulus measures.
See below for ASX listed companies in the news today.
Economics News Today
* July Australian PSI
* July VFACTS vehicle sales.
US stock markets fell for a fourth day, on the back of disappointing global manufacturing data and news that the ECB and the Fed will delay any additional monetary easing until at least September.
The three benchmark indexes fell around -1%, as the S&P500 has slid -1.5% in the past week and is setting up for its first decline in four weeks and its biggest drop since the start of June. Falls were broad-based, with the energy, materials and the financial sectors leading the way down.
Traders were still disappointed over the comments from the Fed that it will delay any further stimulus until at late September, saying that the Fed is prepared to up its accommodative stance if conditions deteriorate. Overnight the European Central Bank (ECB) President Mario Draghi failed to live up to his reassures that the ECB would do “whatever it takes” to support the euro, saying tht the ECB is working on the issue but will not take immediate steps to support the economy. The cost of funding in Spain shot up to 7.2%, and in Italy is again approached 7% , the level that is unsustainable in the medium-term.
In economic news following on from the disappointing PMI manufacturing data, orders placed with US factories unexpectedly declined in June and there was the biggest decline in bookings for non-durable goods in over three years, all this data is confirming there is less demand for business equipment and goods. Consumer confidence in the US dropped last week to the lowest level in two months on mounting concern over the state of the economy, a Commerce Department report showed consumer spending stagnated in June as labor market weakness prompted a build up in savings.
The market maker responsible for the mini “flash crash” yesterday, Knight Capital Group shares plunged -63%, after saying losses from a trading breakdown are $US440 million, more than some analysts had estimated, as it explores strategic and financial alternatives. An initial review of the problems by the NYSE exchange revealed that 9 of the Dow Jones Industrial Average, companies lost almost $US1 trillion in combined market value (these firms included: Alcoa, Amex, BofA and AT&T).
This “technical issue will noy be doing anything for investor confidence near-term. Traders will also be digesting the US Non-farm payroll reports tomorrow, and is expected to show payrolls rose by 100,000 workers in July (up from 80,000) and the jobless rate held at 8.2 percent last month. The unemployment rate has exceeded 8 percent of for 42 consecutive months, which is the longest stretch of weak numbers since monthly records began in 1948.
All ten company groups that make up the S&P index traded down, with Materials down -1.2%, Energy sector down -1.7%, Financials sector down -0.8%, Industrials sector was down -0.7%, Health Care down -0.9%, Technology was down -0.7%, while Consumer Staples were down -0.2%.
The Dow Jones closed down -0.7% (or -92 points) at 12,878, the S&P 500 index down -0.7% (or -10points) at 1,365, the Nasdaq ended down -0.4% at 2,909 and the smaller cap Russell 2000 was down -0.4%.
European stock markets fell from a four-month high as the ECB failed to take immediate action and corporate earnings disappointed. The Stoxx Europe 600 Index declined -1.3% and the euro dollar weakened, as Crude-oil slumped -2% on the prospect of slowing global growth.
Overnight the European Central Bank (ECB) President Mario Draghi failed to live up to his reassurances that the ECB would do “whatever it takes” to support the euro, saying that the ECB is working on the issue, but will not take immediate steps to support the economy. The cost of funding in Spain shot up to 7.16%, and in Italy is again approached 6.4% , the level that is unsustainable in the medium-term, and the Spanisha and Italian markets plunged around -5% on the news.
Traders inititaed a global sell-off in a case of “Sell on the news!”, as ECB President Draghi signaled the ECB intends to join forces with governments to buy bonds in sufficient quantities to ease the eurozone debt crisis, while conceding that the German Bundesbank has reservations about the plan. ECB officials are working on the plan and details will be fleshed out in coming weeks, he said after keeping the benchmark interest rate on hold at 0.75 percent. Financial markets and politicians had ratcheted up pressure on the ECB to act after Draghi pledged last week to do “whatever it takes” to save a euro battered for almost three years by spiraling cost of borrowing for the PIIGS countries from Spain and Italy to Greece. The Bundesbank had reiterated last week that it opposes further purchases of sovereign debt by the ECB, as they blur the line between fiscal and monetary policy. This is going to be a long and drawn out resolution to the ongoing crisis.
In London the FTSE 100 index closed down -0.9% (or -50 points) at 5,662, the German DAX was closed down -2.2% (or -148 points) at 6,606, while in France the CAC closed down -2.7% (or -89 points) at 3,232, Spain down -5.2% and Italy closed down -4.6%.
Asian stock markets finished lower as the US Fed and now the ECB disappoint, as China continues to underperform. Expect further selling today.
Most Asian stocks fell across the region, led by the mining and financials, as investors chose caution ahead of the policy announcement by the European Central Bank after the Federal Reserve disappointed by delaying any additional stimulus to the US economy. The Chinese market contines to languish at 2009 lows.
In China the SSE Composite closed down -0.6% (or -12 points) at 2,111, while in Hong Kong the Hang Seng Index closed down 0.7% (or -130 points) at 19,690, and in Japan the Nikkei 225 Index was up 0.1% (or 11 points) at 8,653, South Korean KOSPI closed down -0.6% for the session, while the Indian market closed up 0.2%.
The Dollar Index was higher at 83.33 on a lower Euro, while the Australian Dollar last traded higher at 1.0458. Commodities prices traded sharply lower.
For the session the Benchmark crude NYMEX for August delivery was up 2.0% settled at $US87.13. Copper prices are looking for key support level as Copper for August delivery was down -2.5% at $US3.2905, while August Gold was down -1.0% (or -$US16.30) at $US1,587.40.
ASX News Today
APA – APA the pipeline operator is considering raising $350 million as it presses ahead with its $1.34 billion takeover bid for Hastings Diversified Utilities Fund (HDF).
BHP – BHP Billiton has dismissed suggestions it has already decided to delay its $19 billion Port Hedland harbour expansion for at least two years.
CMJ – The ACCC competition watchdog has cleared the way for Rupert Murdoch’s News Corporation to buy Consolidated Media Holdings.
CWN – Crown casino group is to build a six-star hotel at Sydney’s Barangaroo development under an agreement with the site’s developer.
DLX – DuluxGroup the paintmaker wants takeover target Alesco Corporation stopped from commenting on the DuluxGroup bid unless it (Alesco) has approval from the Takeovers Panel.
DXS – Dexus Property Group has introduced a salary freeze for its senior executives to address shareholder concerns over its pay structure.
FMG – Fortescue Metals Group’s High Court challenge against the federal government’s mining tax has been adjourned for a month.
LEI – Leighton Holdings’ Middle East operation has won a contract to build Qatar’s first rail system as the country prepares for the 2022 FIFA World Cup.
SDL – Sundance Resources the Australian iron ore company says its suitor Hanlong Mining has received provisional approval from Chinese regulators for a takeover.
ASX – to open lower
US & UK/Europe – sharply lower
Commodities Stock Index down -1.5%
Gold Stocks Index down -0.5%
Oil Stocks Index down -1.6%
US ADRs – Broadly lower!!…
BHP down -0.1%, RIO down -2.9%; AWC up 3.9%
ANZ down -0.8% & NAB down -1.1%
NEM down -1.8%, JHX down -1.2%, NWS up 0.5%
By Michael Hevern
Head of Research
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