Stock Market Analysis
US GDP Report Gives Pause; ASX to Trade Lower
U.S. stocks finished lower overnight for a second day, as disappointing revenue from utilities and consumer companies weighed. European markets continued lower. Asian markets bucked the trend to the positive. A weaker US dollar also helped commodity prices, however our markets will likely see further profit-taking today.
The SPI Futures is above the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -0.5% (or -21 pts) at 4,473. Key levels today are 4500 and 4400, with pivot around 4450. Mining and Energy stocks may offer support with improving commodities prices overnight. M&A activity continues to drive specific stocks.
US Markets
The S&P 500 remains only just above the key 1100 level. The Dow clawed back from an initial 100 point selloff. U.S. stocks still finished lower overnight for a second day, as disappointing revenue from utilities and consumer companies overshadowed some other strong earnings reports. The market sentiment was under pressure after disappointing second-quarter revenue and guidance reports hit the utilities, consumer staples and technology sectors. Companies like Akamai Technologies, Nvidia, Symantec, and Colgate disappointed either on their profit margins, earnings or earnings forecasts. However the market is on track to close out the best month since July 2009, with the Dow currently up 7 percent for the month. Oil prices rose overnight on better-than-expected earnings from Exxon Mobil Corp and Southwest Airlines. The Dow closed down -0.3% (or -31 points) at 10,467, while in the broader market the S&P 500 index down -0.4% (or -5 points) at 1,102 and the tech-heavy Nasdaq ended down -0.6% (or -13 points) at 2,252. The sectors weighing most on the indices were utilities and consumer staples sectors, while financials and materials sectors provided some support. The key news out tonight is the U.S.gross domestic product data release.
European Markets
European stocks traded lower, despite a raft of impressive earnings, particularly in the autos and telecommunications sectors. Better-than-expected confidence data helped, with the euro-zone economic sentiment indicator rose to 101.3 from 99, its highest level since March 2008. The Euro traded above $US1.31 for the first time since May, confirming the improving investor sentiment after the successful Bank “stress tests” report. The European markets have also benefited of late from the successful government debt auctions in countries like Spain and Portugal, where much of the sovereign debt concerns were focused. Mitsubishi and Volkswagen AG turned in solid second-quarter performances, crediting healthy sales in China, and Nissan saw its quarterly sales jump 35.3 percent. Telecoms helped the markets with France Telecom rising 5.5%, after it reported a drop in second-quarter earnings and revenue but said trends are improving across markets, and Spanish telecoms company Telefonica gaining 3.2%, after its second-quarter net profit rose 16% as revenue growth in its Latin American business compensated for a weaker domestic market.
In London the FTSE 100 index closed down marginally -0.1% (or -6 points) at 5,314, the German DAX down -0.7% (or -44 points) at 6,135, while in France the CAC was down -0.5% (or 18 points) at 3652.
Asian Markets
Asian markets were mixed. In China the Shanghai Composite Index of equities continued to rise, as the central bank said China’s economic fundamentals are “good”. Industrial metals prices continued to rise on the prospect of improving demand. Japanese stocks fell for the first time in five days, weighed down by Panasonic down 7.7 percent after reporting is will raise capital for acquisition of Sanyo, however shipping lines rose as they raised their full-year profit forecasts. In China the SSE Composite closed up 0.6% (or 14 points) at 2,648, while in Hong Kong the Hang Seng Index was flat (down 3 points) at 21,094 and in Japan the Nikkei 225 Index was down -0.6% (or -57 points) at 9,696.
Commodities
The Dollar Index down -0.6% at 81.65 on higher Euro, while the Australian Dollar last traded higher at 89.08. Commodities were generally higher.
Oil prices rose due to the lower US dollar. The benchmark crude NYMEX for September delivery was higher 1.7% (or $US1.37) to settle at $US78.36. Copper continued to shine rising to an 11-week high on signs growth is sufficient in China and the U.S. to spur demand. Copper prices are trading well above the key $US3.00 a pound, Copper for September delivery delivery was up 1.4% (or 4.4 cents) at $US3.2850 a pound, the highest settlement price since mid-May. Gold rose, with August gold was uo $US8.80 at $US1,171.20 an ounce.
Key News International Drivers Today
US – U.S.gross domestic product data release. S&P 500 companies continue to report earnings this week.
EU – M&A activity. Bank shares rose after the Basel Committee on Banking Supervision relaxed some of its proposed capital and liquidity rules.
CHINA – Economic fundamentals are “good”. Industrial metals prices rise. JP Morgan says equities starting to look attractive.
JAPAN – companies continue to report earnings this week.
Markets Overview
US GDP Report Gives Pause; ASX to Trade Lower
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Market
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Movement
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The Dow Jones Industrial Average
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Down -0.3% (or -31 pts) at 10,467
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The S&P 500
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Down -0.4% (or -5 pts) at 1,102
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The Nasdaq
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Down -0.6% (or -13 pts) at 2,252
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The FTSE 100
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Down Marginally -0.1% (or -6 pts) at 5,314
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The German DAX
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Down -0.7% (or -44 pts) at 6,135
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SSE Composite (China)
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Up -0.5% (or 14 pts) at 2,648
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The Dollar Index
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Down -0.64% at 81.65
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The Australian Dollar
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Last traded higher at 89.08
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The Commodities Index
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Up 1.52% at 270.2
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Crude Oil Futures
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Up 1.7% at $78.27
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Gold Futures
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Up $8.80 at $1,171.20
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Copper Futures
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Up 1.36% at $3.2850
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SPI Futures
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Down -0.5% (or -21 pts) at 4,473
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Market
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Movement
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SSE Composite (China)
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Up 0.6% at 2,648
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Hang Seng Index (Hong Kong)
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Down Marginally 0.0% at 21,094
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Nikkei 225 Index (Japan)
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Down -0.6% at 9,696
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SPI: Above key Level 4400 – SPI down 0.5% at 4,479….
ASX News Today
The SPI Futures is above the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -0.5% (or -21 pts) at 4,473. Key levels today are 4500 and 4400, with pivot around 4450. Mining and Energy stocks may offer support with improving commodities prices overnight. M&A activity continues to drive specific stocks.
AOE- Arrow Energy says gross sales in FY10 are up strongly, with gas and electricity sales doubling from last year.
AUN- Austar 1H10 profit dropped 42 percent. Net profit was $20.69 million compared with $35.5 million for the same period a year earlier. Revenue lifted 6.3 per cent to $351.86 million.
CNP- Centro Properties says it will refinance and extend the debt of its US business as the restructure of the company continued.
IIF- Industrial property developer Goodman Group has confirmed it is considering taking over management of ING Industrial Fund (IIF).
IIN- iiNet the internet service provider is in a trading halt, pending an announcement by the company about a potential acquisition.
LEI- Leighton has won a five-year contract to provide construction and maintenance services to Queensland’s electricity provider, Ergon Energy.
NUF- NuFarm the embattled agricultural chemicals firm reported the U.S.and Canadian regulators have confirmed a final agreement with Nufarm on measures taken to ensure competition following it’s acquisition of AH Marks Holdings Ltd.
OZL- OZ Minerals the copper miner continues to seek acquisition opportunities and has already made non-binding offers for projects.
RIO- A state-owned Chinese company is buying a stake in a Rio Tinto iron mine in Guinea in West Africa for $1.5 billion.
SBM- St Barbara the WA gold producer said it produced 231,018 ounces in fiscal 2010, meeting annual guidance for 2010 and anticipates growth ahead.
Economic Reports :
AFOM – to auction $500 million of March 2019 Treasury notes
RBA – will report on financial aggregates data for June.
Companies:
AWE – releases quarterly report
ERA – ERA releases full year results
ORG – Origin releases quarterly report
MQG – Macquarie Group Ltd AGM today
PDN – Paladin Energy Ltd releases quarterly report
SGT – Singtel AGM today
Expect to see our market trade lower again today. Time to protect positions and take profits.
Market Summary
ASX – to open lower
US & UK/Europe – lower
US ADRs – Mixed!!!…
Commodities Stock Index up 0.2%
Gold Stocks Index up 0.2%
Oil Stocks Index up 0.6%By Michael Hevern
Head of Research
