Morning Market Wrap
China sparks recovery as the ASX looks to finish a positive week strongly. Look to Miners, Energy and Banks for action.
The SPI Futures is above the key level of 4400 the ASX is set to open sharply higher as the SPI closed up 65 points (or 1.5%) at 4,447. Volatility shrinks from the highs of 48 last week to close at 29 overnight, indicating investors are stepping in to the market. Key levels for the SPI today are 4300 and 4550.
US stocks were a sea of green overnight, as China officially confirmed its support for the buying of Euro bonds, describing reports that they were considering dumping its holdings of euro debt as “baseless”. Most actives included: BP up 7%; Apple up 3.8%; Google up 3.2%and Financials were strong with the Bank of America up 4.6%; Citi up 4.2% and Goldmans up 3.3%.
The Dow Jones Industrial Average saw buying from the open, up 284.5 points or 2.9% rising strongly above the key 10,000 level at 10,259. In the broader market the Standard & Poor’s 500 closed up 3.3 per cent, at 1,103. The Nasdaq composite closed up 3.7 per cent, at 2,277. Economic reports helped investor sentiment, with the OECD raising global growth forecasts to 4.75% and April Durable Manufactured orders beating expectations.
European stock markets closed higher, many closing around key support levels, Germany’s Angela Merkel confirmed yesterday that they would be pushing for a strong Euro and China’s news that they will not be dumping their Euro bond holdings. However the euro recovered to around $US1.235, off its 4 year lows.
In the U.K. the FTSE 100 index ended up 157 points, or up 3.1 percent, at 5,937 points, and across in the German DAX 30 ended up 179 points, or up 3.1 percent, at 5,937 points and in France the CAC 40 ended up 3.4 percent, at 3,525.
Oil prices bounced sharply overnight up 4.7%. It had its biggest one day gain since 30 Sep’09. New York Light sweet crude for delivery in July, settled up $US3.04 to settle at $US74.55 a barrel.
Gold for June delivery fell $US1.50 to settle at $US1212 an ounce. Silver for July delivery rose 16.2 US cents to settle at $US18.468 an ounce. July copper settled up 7.80 US cents at $US3.1585 a pound.
Locally Ken Henry spoke to the Senate yesterday, giving a considered approach to the case for supporting the proposed new resources rent tax and rebuking much of the opposition from the big miners.
Our markets are expected to trade sharply higher today. Miners, energy and banking stocks are likely to see buying.
The SPI Futures is below key level of 4400 the ASX is set to open lower as the SPI closed down 6 points at 4,294; U.S. late selloff. Volatility continues, key levels today are 4200 and 4450.
U.S. Markets Surge!
SP500: up 3.3% at 1,103 Miners & Financials Lead Surge
DOW up 2.9% at 10,259
Bounces strongly Above 10,000
NASDAQ: up 3.7% at 2,277
Dollar Index: Lower as Euro Finds SUpport
A$ up 84.95 (strongly off 10-month Lows)
FTSE: up 3.1% at 5,195 – Miners Recover
DAX up 3.1% – Europe Recovers on Chinese saying it will not sell its Euro Bond Holdings
Germany Pushing for Strong Euro
CHINA: up 1.2% at 2,655 – Finding Suport?
HSI up 1.2%
Oil: up % 4.7% ($74.88)
Recovers from – oil spill in Gulf of Mexico is “Top Killed”
Gold: down 0.2% at ($1,21)
SPI: Above Key 4400 ASX
SPI up 1.5% at 4,447
The SPI Futures is above the key level of 4400 the ASX is set to open sharply higher as the SPI closed up 65 points (or 1.5%) at 4,447. Volatility contracts form highs of 48 last week to close at 29 overnight, indicating investors are stepping back in to the market. Key levels for the SPI today are 4300 and 4550.
AUD – bounces strongly off 10 months lows as China eases investor concerns.
AAX – Ausenco plummeted 18 percent after reporting 1H net loss of $9-$13 million
BXB – is bullish about the Australian economy and the company’s outlook in the U.K. and U.S. was not as bad previously thought.
JHX – FY10 net loss $102.9 million, but they expect to deliver good returns in current market conditions.
LEI – extends 3-year $229m contract by the mine’s owner BHP Mitsui Coal (BMC), at South Walker Creek in Qld.
GNC – 1H10 net profit rises 63 percent and says there may be further opportunities to expand its malt business. Shares up 8.1%
LLC – has confirmed its earnings guidance and says it’s well placed for growth. Shares up 1.6%.
MAP – reports the recovery of passenger traffic at its portfolio of airports is well established and near term growth prospects are strong.
NUF – JPMorgan upgrades to Neutral (from oveweight) but cuts target to $6.13 (from $7.10), saying NUF is trading at discount to global peers, at level
where risks around it appropriately priced
TAL – 1H10 Net Profit up 5% ad expects FY results inline. Shares down 9.7%.
Locally Ken Henry spoke to the senate yesterday, giving a considered approach to the case for supporting the proposed new resources rent tax and rebuking much of the opposition stories from the big miners.
Market volatility will continue near term, but investors will take heart form China’s support of Europe.
We the suggest trading strategy is to accumulate.
ASX – to open sharply higher
US & UK/Europe – US and Europe Surge Higher
US ADRs – Broadly Higher!!!…
BHP up 7.7% & RIO up 9.2%; AWC up 12.1%
ANZ up 8.1% & NAB up 6.5%
NEM up 3.3%, JHX up 3.9%, NWS up 4.3%
Commodities Stock Index up 4.3%
Gold Stocks Index up 2.6%
Oil Stocks Index up 5.1%
By Michael Hevern
Head of Research