* US stocks markets recovered overnight.
* European stock markets jumped the most in 4-weeks overnight, on the back of better-than-expected earnings.
* Asian stock markets fell back from their highest levels in eighteen months, except for China which has formed a “golden-cross”.
* Commodities prices were higher, Gold prices are trading around $US1,672, while crude-oil closed around $US97.
The Aussie market is looking to open higher today, as stock prices jumped in the US and in European markets overnight, on the back of better-than-expected corporate earnings. The markets are turning their focus from the US earnings season, across to Europe, where concerns are resurfacing about the debt crisis . Volatility picked up overnight but still affords cheap protection for the market.
The Australian market earnings season continues after Cochlear, Macquarie and Transurban reported yesterday, with two out of three disappointing. The RBA left rates on hold as expected, and economists are now factoring in a 60% chance of an interest rate cut in March. The RBA said inflation remain benign at 2,.25%, employment is expected to ease and the mining investment cycle is topping out and there are concerns where the economic growth will come from in the near-term.
SPI Futures is trading above the key level of 4850, ended up 0.4% (or 20 points) at 4864. The key levels for our index today are 4840 to 4900.
See below for ASX listed companies in the news today.
Dec – Retail Trade
US stocks markets recovered overnight. The markets traded higher from the open, as the “buy on the dip” mentality prevails.
The three benchmark indexes all ended higher over overnight, the S&P500 rebounded from its biggest decline of the year, on the back of M&A adn better-than-expected corporate earnings, while the Dow Jones Index jumped above its key 14,000 level. The S&P500 is up 6% this year and is only 3.4% from all-time highs and the Dow Jones is just 1% from all-time highs. All the S&P500 sectors ended in the green with the gains of over 0.8% across the board, led by the Technology, Consumer-related and Financial sectors all up over -1.1%. The next target on the upside for the S&P500 is now 1525 in the near-term.
Trade sentiment improved despite the Institute for Supply Management index (ISM) of US non-manufacturing businesses, which covers about 90 percent of the economy, fell to 55.2 in January (down from 55.7), which was inline with forecasts. Of the 282 S&P500 companies that have reported 3 in 4 have exceeded earnings expectations, while 66% have beat on sales, with average earnings up 5% (compared to 1% in the previous quarter), according to Bloomberg surveys.
The Dow Jones closed up 0.7% at 13,976, the S&P 500 index up 1.0% at 1,511, the Nasdaq ended up 1.3% at 3,171 and the smaller cap Russell 2000 was up 1.0%.
European stock markets jumped the most in 4-weeks overnight, on the back of better-than-expected earnings and as concerns over political leadership and uncertainty in Spain and Italy and the ongoing eurozone debt crisis eased.
The Europe Stoxx 600 was ended rebounded 0.6% for the session. This index has still risen 2.1 percent this year. The VStoxx Index, a measure of the price of using options to protect against declines in the Index, yesterday surged 26 percent its biggest jump since August 2011.
The three benchmark indexes rose over 0.5% overnight, after a Markit Economics index based on a survey of purchasing managers in the services industry in the eurozone rose to 48.6 in January (up from 47.8). A reading below 50 means that activity contracted. Of the 151 Europe Stoxx 600 companies that have reported just over 2 in 4 have exceeded earnings expectations, while 54% have beat on sales, according to Bloomberg surveys.
In London the FTSE 100 was up 0.6% at 6,282, in Germany the DAX closed up 0.4% at 7,664, while in France the CAC closed up 1.0% at 3,660 and Spain closed up 2.2%.
Asian stock markets fell back from their highest levels in eighteen months, except for China which has formed a “golden-cross”.
The MSCI Asia Pacific Index fell -0.5%. The move is on the back of news that concerns over the eurozone debt crisis are resurfacing. The index is still up nearly 11% from its June lows, led by Japanese stocks on optimism that the new government will take the necessary steps to fight deflation. In Japan the market backed off it 32-month highs, while in Hong Kong the market had its largest fall since November, due to renewed concern about the eurozone debt crisis.
Chinese shares have risen for 7-straight days, led by the consumer-staples and industrials sectors which have lagged YTD. The market has now formed a golden cross where the 50 day is above the 200 moving average, confirming the bullish move since late last year. According to Bloomberg, on the past five occasions in the past two decades that a golden cross has occurred the market has jumped an average of 6.3% in the following month.
In China the SSE Composite up 0.2% at 2,433, while in Hong Kong the Hang Seng Index closed down -2.3% at 23,148 and in Japan the Nikkei 225 Index was down -1.9% at 11,046, South Korean KOSPI closed down -0.8% for the session.
The Dollar Index was at lower 79.52 on a higher Euro, while the Australian Dollar last traded lower at 1.039. Commodities prices traded higher.
For the session the Benchmark crude NYMEX for February delivery was up 0.5% settled at $US96.68. Copper prices are looking for key support level as Copper for February delivery was up 0.1% at $US3.774, while February Gold was down -0.2% (or -$US2.90) at $US1,672.40.
ASX News Today
AGO – Atlas Iron says estimates for its Pilbara iron ore reserves have increased by 21 percent to almost 500 million tonnes over the past seven months.
AIO – Asciano says the NSW coal industry is set to come to a standstill for 48 hours as the dispute between Pacific National Coal and striking rail workers escalated.
COH – Cochlear says an ageing population and the growing awareness of the link between hearing loss and cognitive decline is driving global demand for Cochlear’s bionic ears. Also there is agressive competition from Chinese products.
MQG – Macquarie Group the investment bank forecast its first rise in profit in three years.
NVT – Navitas the international education services provider is is benefiting as Asian students once again flock to study in Australia.
TCL – Transurban’s the toll road operator, says its first-half profit has fallen by 16 percent but the company has increased its payout to securityholders..
Primary Health Care Ltd Interim 2013 Results.
Titan Energy Service.
ASX – to open higher
US & UK/Europe – higher
US ADRs – Broadly higher!!…
By Michael Hevern
D2MX Investment Advisor
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