Stock Market Analysis
US and Europe Give Negative Lead for ASX
U.S. stocks traded lower, while European markets halted a six-day rally. The U.S. market was lower across the board. Asian markets buck the trend to the positive. 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 -23 pts) at 4,485. Home buyers are likely to be spared an interest rate rise from next Tuesday’s Reserve Bank board meeting. Key levels today are 4550 and 4450, with pivot around 4500. M&A activity continues to drive specific stocks.
US Markets
The S&P 500 remains above the key 1100 level, but traded lower, weighed by Fed’s Beige Book reporting economic conditions though still improving in most of its 12 regional districts, advances were modest, with retail sales posting only small gains, housing and construction still weak; sentiment also weighed by data showing demand for durable goods slid for second month in June. The U.S. Commerce Department’s durable-goods report showed that orders and shipments for nonmilitary capital goods excluding aircraft climbed 0.6 percent in June. Nine of 10 industries sectors in the S&P 500 fell after orders for U.S. durable goods dropped 1 percent in June, due to a falling demand for aircraft, government data showed. The Fed also added to the negative sentiment saying that U.S. economic growth slowed in some areas over the past two months, dragged down by commercial real estate and the expiration of a tax credit for home buyers.
The Dow closed down -0.4% (or -40 points) at 10,498, while in the broader market the S&P 500 index down -0.7% (or -8 points) at 1,106 and the tech-heavy Nasdaq ended down -1.0% (or -24 points) at 2,265.
European Markets
European stocks traded lower. In the U.K. stocks declined the most in more than a week after some disappointing earnings reports. In London the FTSE 100 index closed down -0.9% (or -46 points) at 5,320, the German DAX down -0.5% (or -28 points) at 6,179.
Asian Markets
Asian markets rose again. In China the Shanghai Composite Index of equities jumped to a two-month high as the central bank said China’s economic fundamentals are “good”. Economic data reported by the statistics bureau showed profits of Chinese industrial companies in 24 regions jumped 72 percent to 1.61 trillion yuan ($237.5 billion) in the first half of 2010 from a year earlier. Industrial metals prices rose on the back of this. The Chinese index is up 11 percent from its yearly lows, as the jump in industrial profits and the prospects for increased spending and tourism boosted the domestic economic outlook. Japan is also in focus this week with the reporting season starting off well, sending the index to its biggest gains in 3-weeks. The Yen reached its lowest level against the Euro since May, this helped exporters rise around 5 percent, Banks rise around 3.5 percent after Basel Committee eases capital assessment stance and Property developers rose. In China the SSE Composite closed up 2.3% (or 58 points) at 2,634, while in Hong Kong the Hang Seng Index was up 0.6% (or 118 points) at 21,091 and in Japan the Nikkei 225 Index was up 2.7% (or 256 points) at 9,753.
Commodities
The Dollar Index down marginally -0.1% at 82.13 on higher Euro, while the Australian Dollar last traded lower at 89.08. Commodities were generally higher. The US dollar slipped versus the yen on the back of an unexpected drop in American durable-goods orders further added to evidence the economic recovery is slowing.
Oil prices eased to a 1-week low as government data showed an unexpected gain in U.S. inventories. The benchmark crude NYMEX for September delivery was down -0.7% (or $US-0.51) to settle at $US76.99. 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 1.2% (or 4.0 cents) at $US3.2455 a pound, the highest settlement price since mid-May. Gold rose, with August gold up marginally 0.2% at $US1,160.40 0 an ounce.
Key News International Drivers Today
US – 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 and Europe Give Negative Lead for ASX
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Market
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Movement
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The Dow Jones Industrial Average
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Down -0.4% (or -40 pts) at 10,498
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The S&P 500
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Down -0.7% (or -8 pts) at 1,106
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The Nasdaq
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Down -1.0% (or -24 pts) at 2,265
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The FTSE 100
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Down -0.9% (or -46 pts) at 5,320
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The German DAX
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Down -0.5% (or -28 pts) at 6,179
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SSE Composite (China)
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Up 2.3% (or 58 pts) at 2,634
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The Dollar Index
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Down Marginally -0.06% at 82.13
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The Australian Dollar
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Last traded lower at 89.08
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The Commodities Index
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Up 0.64% at 266.2
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Crude Oil Futures
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Down -0.7% at $76.99
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Gold Futures
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Up Marginally 0.21% at $1,160.40
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Copper Futures
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Up 1.22% at $3.2455
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SPI Futures
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Down -0.5% (or -23 pts) at 4,485.0
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Market
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Movement
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SSE Composite (China)
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Up 2.3% at 2,634
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Hang Seng Index (Hong Kong)
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Up 0.6% at 21,091
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Nikkei 225 Index (Japan)
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Up 2.7% at 9,753
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SPI: Above key Level 4400 – SPI down 0.5% at 4,485….
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 -23 pts) at 4,485. Home buyers are likely to be spared an interest rate rise from next Tuesday’s Reserve Bank board meeting. Key levels today are 4550 and 4450, with pivot around 4500. M&A activity continues to drive specific stocks. Investors will digest the impact of the surprise CPI report from yesterday. The RBA are due to decide on interest rates on Tuesday, and are now expected to leave interest rates on hold, after the closely watched underlying rate of inflation slid to 2.7 per cent, the first time it has been below 3 per cent and within the Reserve’s target band for three years. Also on the jobs front Australia created 45,900 jobs in June, the 11th successive month in which employment has climbed, however almost all of the jobs created in June were in the mining dominated states of Western Australia and Queensland.
ALS- Alesco dissapoints again with another annual net loss of $123.4 million and says it remains cautious about the next 12 months.
ARD- Argent Minerals will undertake a capital raising to fund its $5.3 million purchase of the Bullant underground gold mine in WA.
BSL- BlueScope Steel and Japan’s Nippon Steel Corporation have signed a long-term joint technical collaboration agreement to develop next-generation coated steel products.
CFU- Ceramic Fuels Cells reported that Canberra Institute of Technology (CIT) is to install its gas-to-electricity BlueGen power generating unit.
DOW- Downer the engineering firm said it secured contracts worth $2 billion with a coal mining venture of BHP and Mitsubishi Development. Shares rose 5.9%.
LGL- Lihir the gold producer says June quarterly production is in line with guidance and up six percent on the previous quarter.
MCC- Macarthur Coal says it has achieved a sales record for fiscal 2010 up 15.3 percent, form increased production, improved economic conditions and a sell down of coal stocks, however there was a lagging performance in the June quarter.
NCM- Newcrest planned $9.5 billion Lihir merger is on track.
QR – Queensland Rail the coal and freight rail operator QR National is on track for fourth quarter this year, the biggest float since Telstra’s T1 in 2007.
RIV- Riversdale Mining the Mozambique-focused coal miner says sales have increased by 51 percent, although production dropped in the June quarter due to excessive water and gas in the main mine shaft.
RXM- Rex Minerals says its Hillside project in South Australia could become one of Australia’s largest copper mines. Ongoing drilling success at Hillside could see with drilling has the potential for the project rank behind BHP’s Olympic Dam mine in SA and Xstrata’s Mount Isa operations in Qld. Shares were up 8.7%.
SIP- Sigma the beleaguered drugs maker and distributor has appointed Jeff Sells as CFO.
TLS- Telstra has been fined $18.5 million for illegally blocking broadband competitors from using its local exchanges.
WDC- Westfield the world’s largest shopping center owner will pay a distribution of 32 cents/share for the six months to June 30.
WPL-Woodside workers are being prosecuted over a strike at the Pluto gas project in WA and face fines totaling more than $40 million. Woodside has taken the action over an eight-day strike in January at the $12 billion Pilbara project.
Economic Reports :
AFOM – to auction $500 million of October 2010 Treasury notes.
CTX – MD to address American Chamber of Commerce
Companies:
AUN – Austar Ltd – 1H10 results
OGC – Ocenanagold Ltd – second half results
Expect to see our market trade lower today. Time to protect positions and take profits.
Market Summary
ASX – to open lower
US & UK/Europe – lower
US ADRs – Broadly Lower!!!…
BHP up 0.3% &
RIO flat;
AWC down 1.1%
ANZ down 0.3% &
NAB down 0.5%
NEM down 0.7%,
JHX down 2.7%,
NWS down 1.8%
Commodities Stock Index down 1.0%
Gold Stocks Index up 0.5%
Oil Stocks Index down 0.7%
By Michael Hevern
Head of Research
