* US stock markets drift higher to levels not seen since mid last year.
* European stocks closed modestly higher after a choppy session overnight, as the Greek market jumped 2.8%.
* Asian stock markets ended mixed yesterday, the Chinese market giving back some of its 4% gains from the previous session.
* Commodities prices traded mostly higher, as Gold prices rose to around $US1,660 and crude-oil closed up around $US101.
The SPI Futures is trading below the key pivot level of 4180, ending up 0.7% (or 30 points) at 4,222. The key levels for our index today are 4180 to 4280.
Yesterday Australian shares edged higher, as investors focused on reports out of the mining sector, rather than disappointing consumer confidence data and fresh profit downgrades from insurers and retailers.
The World Bank reported that the global economy is on the edge of a new financial crisis, that could be more disastrous than the one that followed the collapse of Lehman Brothers in 2008.
In its half yearly assessment of global economic prospects the World Bank slashed its global growth forecast for 2012 from 3.6 percent to 2.5 percent, while high-income nations are forecast to grow at 1.4 percent, down from 2.7 percent, and the eurozone economy is now forecast to 0.3 percent. US growth is now forecast to expand 2.2 percent in its presidential election year (down from the forecast 2.9 percent), while the Chinese economy is expected to expand 8.4 percent this year (down from last year’s 9.2 percent).
Aussie shares are expected to continue rising today and traders are expected to continue looking for bargains, after positive leads from the US and European markets.
See below for ASX listed companies in the news today.
US Markets
US stock markets drift higher to levels not seen since mid last year.
The Dow Jones Industrial Average registered its biggest one-day gain in more than two weeks. The S&P 500 rose above 1300 for the first time since July, for its sixth gain in seven days and the tech-heavy Nasdaq Composite outperformed up 6.3% this year. The Financials, Technology and Energy sectors have led the markets higher in the session.
Financial stocks led the session’s rise, helped by encouraging news at Goldman Sachs Group and strong housing data. A report from the National Association of Home Builders showed confidence among home builders in January rising to a stronger-than-expected reading of 25 (the highest since June 2007).
Goldman Sachs jumped 6.8% after earnings and revenue slumped, although their profits topped lowered forecasts, and Yahoo rose 3.2% after the company announced co-founder Jerry Yang has resigned from the board.
All ten company groups that make up the S&P index traded higher with Materials up 1.1%, Financials up 1.5%, Energy up 1.6%, Industrials up 0.9%, Technology up 1.5%, while Consumer Staples were up 1.6%.
The Dow Jones closed up 0.8% (or 96 points) at 12,578, the S&P 500 index was up 1.1% (or 14 points) at 1,308, the Nasdaq ended up 1.5% (or 42 points) at 2,770 and the smaller cap Russell 2000 was up 1.8%.
European Markets
European stocks closed modestly higher after a choppy session overnight. The European Stoxx 600 index was up 0.1%.
The Greek market jumped 2.8%, as the Greek government resumed talks with bondholders to discuss a voluntary write-down on the country’s sovereign debt and as the Prime Minister said that he would consider forcing a private sector haircut on the debt if a deal cannot be reached.
Across the region stocks jumped as the International Monetary Fund (IMF) reportedly proposed expanding its lending fund to $US1 trillion. Financials had a strong session on the back of successful bond auctions.
Investor sentiment was boosted by a successful bond auction in Germany, which paid the lowest interest rate on record to sell 2-year treasury notes, while the Portuguese government sold EUR2.5 billion in short-term debt with borrowing costs declining slightly.
In London the FTSE 100 index closed up 0.2% (or 8 points) at 5702, the German DAX was up 0.3% (or 22 points) at 6,355 while in France the CAC was down -0.2% (or -5 points) at 3,264. Spain was down -1.7% and Italy ended up 1.3%.
Asian Markets
Asian stock markets ended mixed yesterday. The Chinese market gave back some of its 4% gains from the previous session, as concerns Beijing may not ease its monetary policy encouraged traders to lock in profits ahead of the week-long Lunar New Year holiday.
In Japan the Nikkei Stock Index ended 1% higher, outperforming in the region, as fears about the global economic outlook abated, despite the gloomy World Bank forecasts. In China traders took profits, after the market surged with its biggest gain since October 2009 in the previous session. Growth-sensitive stocks eased, but energy stocks advanced, as benchmark New York crude-oil futures rose back above $101 a barrel.
In China the SSE Composite was closed down -1.4% (or 32 points) at 2,226, while in Hong Kong the Hang Seng Index was up 0.3% (or 59 points) at 19,687 and in Japan the Nikkei 225 Index closed up 1.0% (or 84 points) at 8,550. The South Korean KOSPI was flat for the session, while the Indian market eased to be flat.
Commodities
The Dollar Index was lower at 80.52 on a higher Euro, while the Australian Dollar last traded higher at 1.0404. Commodities prices traded mostly higher.
For the session the benchmark crude NYMEX for January delivery was up 0.4% (or $US0.36) to settle at $US101.07. Copper prices are seeking a support level as Copper for January delivery was up 0.6% (or 2.1 cents) at $US3.7480. January gold was up 0.3% (or $US4.30) at $US1,660.
ASX News Today
BHP – BHP Billiton is set to break its first-half profit records despite softer iron ore prices, as BHP reported iron ore production for the half year to December 31 of 80.6 million tonnes (Mt), up 23 percent on the same period in 2010.
OZL – OZ Minerals has lifted gold output to 160,007 ounces of gold in the final quarter of 2011 while copper production fell 107,744 tonnes, but it still achieved full-year production in line with guidance.
LYC – Rare earths miner Lynas Corporation reported it has significantly increased the estimated resources at its major Mount Weld project in WA. The mineral resource estimate at Mt Weld is now 23.9 million tonnes, up 37 percent from its previous estimate in September 2010, after an extended drilling program at Mt Weld. Lynas is in the development phase of two rare earths projects, a concentration plant at Mt Weld and the Lynas Advanced Materials Plant (LAMP) in Malaysia.
ORI – NSW Environment Minister Robyn Parker says she is deeply concerned by yet another emissions breach at one of Orica’s plants and wants answers.
SGM – Sims Metals, the metals recyler, reported it has made a move into the Chinese market, outlaying $US137 million for a 18 percent stake in a Hong Kong company, Chiho-Tiande Group, which has operations in both Hong Kong and mainland China.
SFH – Retailer Speciality Fashion Group says its Christmas performance was disappointing, with sales lower than the previous year.
WES – Wesfarmers expects a 74 percent drop in first-half earnings from its insurance division because of a high number of natural disasters.
Market Summary
ASX – to open higher
US & UK/Europe – EU higher
Commodities Stock Index up 1.6%
Gold Stocks Index up 0.5%
Oil Stocks Index up 1.3%
US ADRs – Broadly Higher
BHP up 2.7% & RIO up 2.7%; AWC up 0.9%
ANZ up 1.1% & NAB up 1.1%
NEM down -1.0%, JHX up , NWS up 1.5%
By Michael Hevern
Head of Research
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