Posts Tagged ‘BHP’

Stock Market Analysis: Leading Indicators for Mining Stocks Part 2

Friday, July 30th, 2010

Leading Indicators for Mining Stocks – Part 2

This is the second installment of a three-part special on the leading indicators for mining stocks, brought to you by our research department.

As mentioned in our first installment, the stock markets have been difficult in recent times as the bulls and the bears have been wrestling for control. We have identified some leading indicators that will give investors an edge in identifying the potential direction of the specific share price movements.

Mining Stocks

The materials sector has continued to underpin the performance of the broader Australian market. It lead the recovery back in early 2009, but has weighed on the markets as a result of the uncertainties from the proposed Resources Super Profits tax.

Commodity prices can be used as a leading indicator for share price movements. We have reviewed key mining stocks that are highly liquid and respond well to movements in commodities. Please note that the commodity prices are recorded in Aussie dollar terms.

Last week we reviewed BHP and now continue by examining a premium gold stock, Newcrest.

Newcrest Mining Limited (NCM)

Newcrest (NCM) is the highest quality, low cost gold producer in the Australian market, with positive growth and strong exploration upside.

Until the recent proposed merger with Lihir Gold, almost all its value has come organically through exploration. Newcrest is predominantly Australian based, offering low sovereign risk and its trades have much lower multiples than its overseas peers. Newcest is reported to be a perennial takeover target, though the strong performance of current management should deter any would-be acquirers.

The Gold price has pulled back nine percent from its recent all-time highs and is continuing to show weakness, trading below its 50 and 100 day moving averages, last trading at $US1,160.40 an ounce. This week Gold has broken key support levels.

The chart below illustrates how closely correlated Gold and NCM are. The chart shows that back in late 2008 the gold price foreshadowed a recovery in the NCM share price by about six weeks, while in early 2009 the gold price gave a confirmation of turnaround in NCM’s share price, as it did again in late 2009.

Gold is as a leading indicator for Newbrest (NCM) share price movements

Gold is as a leading indicator for Newbrest (NCM) share price movements

The correlation has held tight throughout 2009 to 2010, however in the past quarter the gold price surged ahead, but NCM share price did not follow. This may be because of the volatile Aussie dollar moves and the proposed merger between Newcrest and Lihir. The Gold price is currently under pressure as investors are looking to liquidate their gold positions in order to add risk to their portfolio. This will be a negative for our gold stocks near term. Once the merger with Lihir is bedded down, we would expect the strong correlation between the gold price and Newcrest to resume.

The Trade

Commodity prices can be used as a leading indicator for share price movements, however you need to convert the pricing to Aussie dollar equivalents for the best results. We have reviewed key mining stock(s) that are highly liquid and respond well to movements in commodities. Note that it is important to check the US ADRs for overnight share price movements as well.

Look out for the third installment of this three part special next week, when we take a look at Newcrest Mining Limited (NCM). To make sure you don’t miss out, sign up to receive our weekly newsletter.

By Michael Hevern
Head of Research

You can receive more fundamental information on Newcrest Mining on our website.

The information provided within this blog is general advice only and you should consult the services of a financial professional in order to ascertain whether the information is applicable to your investment strategies and risk profile.

Stock Market Analysis: US and Europe Give Negative Lead for ASX

Thursday, July 29th, 2010

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

Market

Movement

The Dow Jones Industrial Average

Down -0.4% (or -40 pts)  at 10,498

The S&P 500

Down -0.7% (or -8 pts)  at 1,106

The Nasdaq

Down -1.0% (or -24 pts)  at 2,265

The FTSE 100

Down -0.9% (or -46 pts)  at 5,320

The German DAX

Down -0.5% (or -28 pts)  at 6,179

SSE Composite (China)

Up 2.3% (or 58 pts)  at 2,634

The Dollar Index

Down  Marginally -0.06% at 82.13

The Australian Dollar

Last traded lower at 89.08

The Commodities Index

Up 0.64% at 266.2

Crude Oil Futures

Down -0.7% at $76.99

Gold Futures

Up  Marginally 0.21% at $1,160.40

Copper Futures

Up 1.22% at $3.2455

SPI Futures

Down -0.5% (or -23 pts) at 4,485.0

Market

Movement

SSE Composite (China)

Up 2.3% at 2,634

Hang Seng Index (Hong Kong)

Up 0.6% at 21,091

Nikkei 225 Index (Japan)

Up 2.7% at 9,753

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

ASX Company News: Downer EDI Secures $2 billion BHP Mining Contract

Thursday, July 29th, 2010

Downer EDI Limited (DOW)  announced that its Mining Division has signed contracts with BHP Billiton Mitsubishi Alliance (BMA) to June 2015 at Goonyella Riverside and Norwich Park Mines in the Bowen Basin, Central Queensland.   The contracts, jointly valued at approximately A$2 billion, are for load and haul of prestrip material and drill and blast services at Goonyella Riverside Mine, and for load and haul of prestrip material at Norwich Park Mine.

The contracts provide better utilisation of equipment and resources across both mine sites and will result in substantially improved productivity and returns for Downer.  New equipment for the contracts totalling approximately A$190 million will be deployed progressively over the coming 12 months and funded primarily through operating cash flow and new finance and operating leases.  Downer has ample funding capacity for the BMA contracts and also the Fortescue Metals Group contract at Christmas Creek for which Downer is preferred bidder. Downer will remain well inside its target leverage range of 25% – 35%. Downer is rated investment grade BBB- (stable outlook) by Fitch Ratings.

www.downeredi.com

http://www.traderdealer.com.au/Fundamentals/dow

Stock Market Analysis: Consumers not so Confident in the US; Negative Lead for ASX

Wednesday, July 28th, 2010

Stock Market Analysis

Consumers not so Confident in the US; Negative Lead for ASX

U.S. stocks took a breather despite further good earnings reports from Dow component DuPont and Cummins. Consumer confidence has hit a five-month low due to the poor employment outlook.  Our market is likely to see some profit taking today, investors should take out some protection.

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.4% (or 19 pts) at 4,490.  Miners, Energy and Consumer Discretionary stocks will likely see profit-taking today. Key levels today are 4550 and 4400, 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 consumer confidence fell in July to its lowest point since February, hurt by concerns about the job market, according to a report from the Conference Board.  DuPont (up 3.6 percent) supported the Dow after the company raised its forecast for 2010 earnings well above expectations, while Cummins (up 2 percent) also raised its full-year forecast. But steelmakers painted a gloomier outlook, with AK Steel saying it was cutting production capacity to match weak demand. while US Steel (down 6.4 percent) reported a net loss that missed analysts expectations.

The broader S&P 500 is trading just below its 200-day moving average after crossing above it on Monday (as seen on the chart below).  Sectors (in order) that dragged the market lower included: Consumer Discretionary Materials,  Industrial and Energy, all down over 0.6 percent.  The Dow closed up marginally 0.1% (or 12 points) at 10,538, while in the broader market the S&P 500 index down marginally -0.1% (or -1 points) at 1,114 and the tech-heavy Nasdaq ended down -0.4% (or -8 points) at 2,288.

European Markets

European stocks advanced , in response to the ECB Bank “stress tests”.  Banks led the markets higher.  U.K. stocks held at a 10-month high,  Banks and Energy stocks lead the way.  Bank shares rose after the Basel Committee on Banking Supervision relaxed some of its proposed capital and liquidity rules.  Barclays and Lloyds were up over 7 percent, supporting the bullish sentiment.  BP shares were 2.6 percent lower, as they report huge losses ($US17 billion for the quarter) and a new CEO US-born Robert Dudley.  They also plan to sell $US30 billion in assets to fund the costs of the Gulf of Mexico oil spill, the stock is down 38 percent since the spill.  In London the FTSE 100 index closed up 0.3% (or 15 points) at 5,366, the German DAX up marginally 0.2% (or 13 points) at 6,207.

Asian Markets

Asian markets rose again.  The Japanese market rose, led by banks, after the Basel Committee on Banking Supervision eased some rule proposals, easing concerns that banks will have to raise more capital.  The market is down 6 percent YTD, however Japan earnings season starts this week, which will act as a catalyst (either way).  In China, JPMorgan Asset Management says the China’s yuan-denominated shares are “due for a catch up” in the second half of this year as the nation delays further measures to curb property prices.  In China the SSE Composite closed down -0.5% (or -13 points) at 2,575, while in Hong Kong the Hang Seng Index was up 0.6% (or 133 points) at 20,973 and in Japan the Nikkei 225 Index was down marginally -0.1% (or -7 points) at 9,497.

Commodities

The Dollar Index up marginally 0.1% at 82.15 on higher Euro, while the Australian Dollar last traded at 90.21.  Commodities were generally lower.

Oil prices eased as the storm threat for oil operations in the Gulf of Mexico evaporated.  The benchmark crude NYMEX for September delivery was down -0.5% (or $US0.39) to settle at $US77.11. Copper prices are trading above the key $US3.00 a pound, Copper for September delivery delivery was up marginally 0.0% (or 0.1 cents) at $US3.2055 a pound.  Gold was lower, with August gold was down -2.1% at $US1,162.80 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 – Central bank happy with the slowing economy.  JP Morgan says equities starting to look attractive.

JAPAN –   companies start to report earnings this week.

Markets Overview

Consumers Not so Confident in the US; Negative Lead for ASX

Market

Movement

The Dow Jones Industrial Average

Up  Marginally 0.1% (or 12 pts)  at 10,538

The S&P 500

Down  Marginally -0.1% (or -1 pts)  at 1,114

The Nasdaq

Down -0.4% (or -8 pts)  at 2,288

The FTSE 100

Up 0.3% (or 15 pts)  at 5,366

The German DAX

Up  Marginally 0.2% (or 13 pts)  at 6,207

SSE Composite (China)

Up 0.8% (or 0 pts)  at 38.0

The Dollar Index

Up  Marginally 0.07% at 82.15

The Australian Dollar

Last traded at 90.01

The Commodities Index

Down -0.83% at 264.5

Crude Oil Futures

Down -0.5% at $77.11

Gold Futures

Down -2.11% at $1,162.80

Copper Futures

Up  Marginally 0.02% at $3.2055

SPI Futures

Up 0.4% (or 19 pts) at 4,490.0

Market

Movement

SSE Composite (China)

Down -0.5% at 2,575

Hang Seng Index (Hong Kong)

Up 0.6% at 20,973

Nikkei 225 Index (Japan)

Down  Marginally -0.1% at 9,497

SPI: Above key Level 4400 – SPI up 0.4% at 4,490….

ASX News Today

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.4% (or 19 pts) at 4,490.  Miners, Energy and Consumer Discretionary stocks will likely see profit-taking today. Time to protect positions.  Key levels today are 4550 and 4400, with pivot around 4500. M&A activity continues to drive specific stocks.

ALZ- Australand the property developer has posted 1H10 net profit up 127 percent, saying it is on track to achieve its full year earnings guidance.

ANZ- ANZ Bank may need to raise $4 to $6 billion to fund acquisitions, including a bid for the Korea Exchange Bank, according to Macquarie Equities.

CEY- Centennial Coal says June quarter production is 14 percent higher than the previous quarter and July 2010 production has started well and declares a final dividend of $0.04/share.

EMX- Energia Minerals the uranium explorer reported its maiden resource estimate for its wholly owned Nyang project in WA. Shares jumped 23%.

IAG- Insurance Australia says it expects to report a drop in annual profit in fiscal 2010 of around 50%, but expects an improved performance in FY11.

MCC- Macarthur Coal Ltd has abandoned a $110 million deal by which it would have bought out CITIC Resources’ interests in a joint venture. Shares fell 3.7%.

NCM- Newcrest has signed a non-binding deal to take at least a 7.1 per cent stake in British firm Sumatra Copper and Gold.

OSH- Oil Search the energy producer reported falling production in its 2Q10 as a result of a processing plant shut down and declining output from its ageing oil fields.

WBC- Westpac says it remains focused on its Australasian business, and is not about to embark on a strategic push into Asia.

WES- Wesfarmers said coal production at its Premier mine near Collie in WA for the June quarter was down 7.6 percent due to lower demand from state electricity generator Verve Energy.

Economic Reports :
CPI – ABS CPI inflation data (forecast is 1% annual 3.4%)
Companies:
ALS – Alesco Corp Ltd – Full year 2010 Preliminary results
RIV – Riversdale Mining Ltd – June Quarterly Report
LGL – Lihir – June Quarterly Report
MCC – Macarthur Coal – June Quarterly Report
WHC – Whitehaven Coal – June Quartely Activities Report
Expect to see our market trade flat to lower today.  Time to protect positions and take profits.

Market Summary

ASX – to open flat, and see profit taking.
US & UK/Europe – lower.

US ADRs –  Mixed!!!…

BHP flat  & RIO up 0.8%; AWC down 2.1%
ANZ up 0.3% & NAB up 0.3%
NEM down 4.0%, JHX up 1.4%, NWS down 1.3%
Commodities Stock Index down 1.3%
Gold Stocks Index down 3.0%
Oil Stocks Index down 0.4%
By Michael Hevern
Head of Research

Stock Market Analysis: US Markets Push Higher, While Europe is Relieved

Tuesday, July 27th, 2010

Stock Market Analysis

US Markets Push Higher, while Europe is Relieved

U.S. stocks rose to two-month highs on FedEx report and home sales, and are now in the green for the year.  This will be positive for our market today.

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.6% (or 26 pts) at 4,502.  Miners and Consumer Staple stocks should lead rises today, while Insurers and retailers are likely to weigh on the market today. Key levels today are 4550 and 4350, with pivot around 4400. M&A activity continues to drive specific stocks.

US Markets

The S&P 500 remains above the key 1100 level, at break-even YTD, while the DOW is up 0.9 percent for the year (YTD) and  the Nasdaq is up 1.2 percent YTD.  FedEx share rose 5.6 percent on better-than-expected results, boosting their quarterly and full year earnings forecasts, and the positive sentiment continued in the Dow Transports (DJTRANS) Index from last week as it gained 2.6 percent overnight.  New homes sales surprised to the upside, jumping 23.6 percent in June, resulting in hte DJ  US Home Construction Index rising 2.9 percent in the session.  The positive sentiment was broad-based with 4 stocks rising for every 1 that fall, on the NYSE.

The Dow closed up 1.0% (or 101 points) at 10,525ECB Bank “stress tests”, , while in the broader market the S&P 500 index up 1.1% (or 12 points) at 1,115 and the tech-heavy Nasdaq ended up 1.2% (or 27 points) at 2,296.

European Markets

European stocks advanced , in response to the ECB Bank “stress tests”.  Banks led the markets higher.  U.K. stocks rose to a 10-month high,  Banks and Energy stocks lead the way.  Barclays rose 4.5 percent and Lloyds up 3.9 percent, supporting the bullish sentiment.  BP shares were 4.9 percent up as traders anticipate a change in top management, with a new CEO.  In London the FTSE 100 index closed up 0.7% (or 39 points) at 5,351, the German DAX up 0.5% (or 28 points) at 6,194, while in France the CAC was up 0.6% (or 29 points) at 3636.

Asian Markets

Asian markets rose again on the back of the EU Bank “stress test” results and U.S. earnings.  The Shanghai Composite finished nearing a three-week high, led by rising commodities prices and the strong U.S. earnings reporting season.  In China the SSE Composite closed up 0.7% (or 17 points) at 2,589, while in Hong Kong the Hang Seng Index was up marginally 0.1% (or 25 points) at 20,840 and in Japan the Nikkei 225 Index was up 0.8% (or 73 points) at 9,504.

Commodities

The US Dollar Index down -0.5% at 82.09 on higher Euro, while the Australian Dollar last traded higher at 90.16.  Commodities were generally higher.

Oil prices eased as the storm threat for oil operations in the Gulf of Mexico evaporated.  The benchmark crude NYMEX for September delivery was down marginally -0.1% (or $US-0.11) to settle at $US78.87. Copper prices are trading above the key $US3.00 a pound, Copper for September delivery delivery was up 1.2% (or 3.8 cents) at $US3.2250 a pound.  Gold was flat, with August gold was $US4.70 lower at $US1,183.10 an ounce.

Key News International Drivers Today

US –  S&P 500 companies continue to report earnings this week.

EU – M&A activity. Bank “stress test” results had no surprises, but there are concerns over results.

CHINA – Commodity prices and Property developers rise, on speculation the government may ease policies.

Markets Overview

US Markets Push Higher, While Europe is Relieved

Market

Movement

The Dow Jones Industrial Average

Up 1.0% (or 101 pts)  at 10,525

The S&P 500

Up 1.1% (or 12 pts)  at 1,115

The Nasdaq

Up 1.2% (or 27 pts)  at 2,296

 

 

The FTSE 100

Up 0.7% (or 39 pts)  at 5,351

The German DAX

Up 0.5% (or 28 pts)  at 6,194

SSE Composite (China)

Up 0.8% (or 0 pts)  at 37.7

 

 

The Dollar Index

Down -0.46% at 82.09

The Australian Dollar

Last traded at 90.16

The Commodities Index

Up  Marginally 0.02% at 266.7

 

 

Crude Oil Futures

Down  Marginally -0.1% at $78.87

Gold Futures

Down $US4.72 at $S1,183.10

Copper Futures

Up 1.18% at $3.2250

SPI Futures

Up 0.6% (or 26 pts) at 4,502.0

 

 

 

 

Market

Movement

SSE Composite (China)

Up 0.7% at 2,589

Hang Seng Index (Hong Kong)

Up  Marginally 0.1% at 20,840

Nikkei 225 Index (Japan)

Up 0.8% at 9,504

SPI: Above key Level 4400 – SPI up 0.6% at 4,4502…

ASX News Today

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.6% (or 26 pts) at 4,502.  Miners and Consumer Staple stocks should lead rises today, while Insurers and retailers are likely to weigh on the market today. Key levels today are 4550 and 4350, with pivot around 4400. M&A activity continues to drive specific stocks.
AFI- The Investment Company (AFI) annual profit fell 11.9 per cent, but says it will
take a patient approach to investing in 2010/11.

BKW- Brickworks has announced two new debt facilities worth $65 and $94 million to further strengthen its balance sheet and financial position.

CXY- The WA miner is planning to trial underground coal gasification (UCG) in the same southern Queensland town where another UCG project was forced to shut down because of a water contamination scare.
GUD- GUD Holdings Ltd, which owns Sunbeam and other consumer brands, reported a record FY10 profit of $46.4 million, and expects moderate sales growth in the FY11 financial.

HVN- Harvey Norman the electrical and whitegoods retailer reported flat sales for the year as consumers cut spending on luxury items; no longer having the benefit of the government stimulus money in the 4Q last year.  The 4Q result, with total sales from Australia down 4% and like-for-like sales down 3.4%, disappoints the market.

IAG- IAG the insures says it expects to report a FY10 profit drop of around 50%.
FMG- A mining sector representative body has threatened to relaunch its advertising war against the tax.  The Association of Mining and Exploration Companies (AMEC), which represents small-to-mid tier miners, says it could relaunch its ad campaign within days.
LEI- Leighton Asia has secured a $172 million contract to provide mining services at the Martabe Gold Mine in Indonesia’s North Sumatra Province.

MAK- Minemakers shares surged 23% after saying it would offer half of the company in exchange for debt funding for its Wonarah phosphate project in the NT.

QBE- QBE Insurance 1H10 profit is expected to be down 40 percent on the pcp, as net investment income took a hit.  The fall is a result of $254.72 million in equity losses, versus $US102 million in the pcp.

ROC- ROC Oil said production was weaker in the June quarter but it remains on target to meet 2010 production guidance.
TSE- Transfield Services Ltd subsidiary, USM, has secured a $95 million one-year contract to deliver maintenance services to more than 4,000 Walmart stores across the U.S.

WES- Wesfarmers Ltd says its 2009/10 retail sales growth was solid, lifting its sales by 4.3 per cent at its Coles supermarket business

Economic Reports :

HIA – Housig Trades Report for June Quarter
NBN – panel discussion today in Melbourne

Companies:
ALZ – 1H10 results
CEY – Quarterly activities
OSH – 2Q production report
Expect to see our market trade higher today.  Insurers likely to weigh on the market.

Market Summary

ASX – to open higher
US & UK/Europe – higher.

US ADRs –  Broadly higher!!!…

BHP up 0.3%  & RIO up 0.1%; AWC up 2.0%
ANZ up 2.0% & NAB up 3.4%
NEM down 1.6%, JHX up 4.7%, NWS up 0.9%
Commodities Stock Index up 0.7%
Gold Stocks Index down 0.9%
Oil Stocks Index up 1.7%
By Michael Hevern
Head of Research

Stock Market Analysis: EU Stress Relief and Strong US Earnings Push Markets Higher

Monday, July 26th, 2010

Stock Market Analysis

EU Stress Relief and Strong US Earnings Push Markets Higher

U.S. stocks rose on Friday amid better-than-expected corporate earnings and in Europe the Bank “stress tests” delivered few surprises.

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.9% (or 40 pts) at 4,476.0 (up 0.8% for the week). Miners and Consumer Discretionary stocks should lead rises today. Key levels this week are 4550 and 4350, with pivot around 4400. M&A activity continues to drive specific stocks.

US Markets

U.S. stocks continued higher Friday, as the giant conglomerate GE reported better-than-expected and increased its dividends.  This  helped the S&P 500 push above the key level of 1,100. for the first time this month. According to a Bloomberg survey in the U.S., about 85 percent of companies in the S&P 500 Index that have reported results since 12 July have beaten analyst earnings forecasts.

The key performers included Industrial, Materials and Consumer Discretionary all up around 2 percent on the session.  Rio, the world’s third largest mining company, rallied 11 percent, while big brother BHP Billiton,  advanced 8.5 percent for the week. Copper was a star performer, rising every day last week as shrinking inventories signaled an improved outlook for demand. The positive sentiment was broad-based with 4 stocks rising for every 1 that fall, on the NYSE.

The Dow closed up 1.0% (or 102 points) at 10,425 (up 3.3% for the week), while in the broader market the S&P 500 index up 0.8% (or 9 points) at 1,103 (up 3.9% for the week) and the tech-heavy Nasdaq ended up 1.1% (or 24 points) at 2,269 (up 4.1% for the week).

European Markets

European stocks advanced.  7 of 91 banks failed the ECB Bank “stress tests”, fewer than expected, but analysts questioned whether the tests were tough enough, as the tests only showed $US3.5 billion needed to be raised to prop up capital adequacy.  Previous estimates ranged form $75 to $85 billion would need to raised.  Only time will tell whether ECB’s hope of easing fears over any impact from the euro zone debt crisis will be realised.  Positive earnings reports from Fiat to Apple reassured investors that the global economic recovery is intact amid signs the region is weathering the sovereign debt crisis. The UK economic data was also positive showing the economy grew at the fastest pace in four years in the second quarter as rebounding services, manufacturing and construction ignited, supporting the bullish sentiment.  In London the FTSE 100 index closed flat (or -1 points) at 5,313 (up 3.0% for the week), the German DAX up 0.4% (or 24 points) at 6,166 (up 2.1% for the week), while in France the CAC was down marginally 0.1% at 3603 (up 3.3% for the week).

Asian Markets

Asian markets rose for a third week, with the exception of Japan who have their concerns of the impact of a stronger Yen on their export economy.  The Shanghai Composite finished nearing a three-week high, led by rising commodities prices and the strong U.S. earnings reporting season.  In China the SSE Composite closed up 0.4% (or 10 points) at 2,572 (up 6.1% for the week), while in Hong Kong the Hang Seng Index was up 1.1% (or 226 points) at 20,815 (up 2.8% for the week) and in Japan the Nikkei 225 Index was up 2.3% (or 210 points) at 9,431 (up 0.3% for the week).

Commodities

The Dollar Index up 0.2% at 82.46 on higher Euro, while the Australian Dollar last traded higher at 89.55 (up 3.6% for the week).  Commodities were generally higher (up 1.8% for the week).

Oil prices surged as stock markets rallied and investors reacted to a possible storm threat for oil operations in the Gulf of Mexico.  The benchmark crude NYMEX for September delivery was down 0.5% (or $US0.50) to settle at $US78.89 (up 4.6% for the week). Copper prices are trading above the key $US3.00 a pound, Copper for September delivery delivery was up 1.1% (or 3.4 cents) at 3.1950 a pound (up 9.4% for the week).  Gold was flat, with August gold was flat at $US1,195.10 an ounce (up 0.5% for the week) .

Key News International Drivers Today

US –  S&P 500 companies continue to report earnings this week.

EU – M&A activity. Bank “stress test” results had no surprises, but there are concerns over results.
CHINA – Commodity prices and Property developers rise, on speculation the government may ease policies.
Markets Overview

ECB Stress Relief and Strong US Earnings Push Markets Higher

Market

Movement

The Dow Jones Industrial Average

Up 1.0% (or 102 pts)  at 10,425

The S&P 500

Up 0.8% (or 9 pts)  at 1,103

The Nasdaq

Up 1.1% (or 24 pts)  at 2,269

The FTSE 100

Down  Marginally 0.0% (or -1 pts)  at 5,313

The German DAX

Up 0.4% (or 24 pts)  at 6,166

SSE Composite (China)

Up 0.4% (or 10 pts)  at 2,572

The Dollar Index

Up 0.2% at 82.46

The Australian Dollar

Last traded higher at 89.55

The Commodities Index

Down  Marginally -0.09% at 266.6

Crude Oil Futures

Up 0.5% at $78.89

Gold Futures

Flat at $1,195.10

Copper Futures

Up 3.4 cents at $3.1950

SPI Futures

Up 0.9% (or 40 pts) at 4,476.0

Market

Movement

SSE Composite (China)

Up 0.4% at 2,572

Hang Seng Index (Hong Kong)

Up 1.1% at 20,815

Nikkei 225 Index (Japan)

Up 2.3% at 9,431

SPI: Above key Level 4400 – SPI up 0.9% at 4,408…

ASX News Today

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.9% (or 40 pts) at 4,476.0 (up 0.8% for the week). Miners and Consumer Discretionary stocks should lead rises today. Key levels this week are 4550 and 4350, with pivot around 4400. M&A activity continues to drive specific stocks.
ABQ- Allied the franchise owner and operator again lowered profit guidance for the second time in six weeks. Share fell 15%.
AGK- AGL Energy has successfully transferred some of its debt to the US market as part of plans to extend its debt maturity and diversify its funding sources.  They priced $US300 million of unsecured notes in the US private placement market.  The funding will come from two tranches of 12-year and 15-year maturities for $US165 million and $US135 million.
CBA- says its funds under administration declined slightly during the June quarter as local and international shares fell.
GRR- Grange the iron ore miner will dispose of two non-core assets so it can focus on its main business.

LEI- Leighton the mining contractor has made a private debt placement in the US.  They priced a US$350 million private placement of maturities ranging from five- to 10-year notes.

MAP- reported a double-digit increase in earnings for the 1H10.
NAB- faces Law firm Maurice Blackburn soon filing class action against NAB for failing to disclose its exposure to $1.2 billion worth of collateralised debt obligations (CDOs).
SHL- Sonic confirmed its latest full year earnings guidance and said its US operations achieved 2H10 organic revenue growth of 3.6 per cent.
WPL- Woodside reported a fall in production in 2Q 2010, but higher commodity prices boosted revenue by almost 50 per cent.

Economic Reports :

Producer Price Index for Q2 (forecast QoQ 1.1% from 1.8% and YoY 6.6% from 7.8%).
Expect to see our market trade higher today, after stress relief after European bank “stress test” results presented few surprises.

Market Summary

ASX – to open higher
US & UK/Europe – higher.

US ADRs –  Broadly higher!!!…

BHP up 1.1%  & RIO up 4.3%; AWC up 3.1%
ANZ up 1.0% & NAB up 1.1%
NEM up -0.1%, JHX up 1.1%, NWS up 2.1%
Commodities Stock Index up 1.2%
Gold Stocks Index up 0.4%
Oil Stocks Index up 1.2%
By Michael Hevern
Head of Research

Stock Market Analysis: Leading Indicators for Mining Stocks Part 1

Friday, July 23rd, 2010

Leading Indicators for Mining Stocks – Part 1

This is the first installment of a three-part special on the leading indicators for mining stocks, brought to you by our research department.

The markets have been difficult in recent times as the bulls and the bears have been wrestling for control. We have identified some leading indicators that will give investors an edge in identifying the potential direction of the specific share price movements.

Mining Stocks

The materials sector has continued to underpin the performance of the broader Australian market. It lead the recovery back in early 2009, but has weighed on the markets as a result of the uncertainties from the proposed Resources Super Profits tax.

Sentiment in the mining sector has started to recover and Merger & Acquisition (M&A) activity has picked up since the Government’s reinvention of the RSPT to the watered down version – the Minerals Resource Rent Tax (MRRT).

Commodity prices can be used as a leading indicator for share price movements. We have reviewed key mining stocks that are highly liquid and respond well to movements in commodities. Please note that the commodity prices are recorded in Aussie dollar terms.

BHP Billiton Limited (BHP)

BHP is the world’s largest diversified resources company and is primarily driven to service Asia. BHP is a well managed global resource leader with a balanced portfolio of world class, long life assets and a full suite of conventional energy products. It prides itself on having low cost operations and a strong balance sheet. Most of its revenue comes from the relatively stable economies of Australia and NZ, North America and Europe.

Copper has also been a highlight this week breaking to new monthly highs, with the last trading being above the key $US3.00 a pound at $US3.1675. Copper is considered a bellwether for underlying economic strength and this is a positive for BHP.

The chart below illustrates how closely correlated copper and BHP are. The chart shows that back in early 2008 the copper price foreshadowed a pullback in the BHP share price by about six weeks. While in early 2009 the copper price gave a confirmation of turn around in BHP’s share price.

Copper is a leading indicator for BHP share price movements

Copper is a leading indicator for BHP share price movements

The correlation has held throughout 2009 to 2010, however for the year-to-date the copper price has not offered a leading indication for the BHP share price. This may be about to change with the copper price breaking to new monthly highs, indicating BHP could be setting up for another run higher.

The Trade

Commodity prices can be used as a leading indicator for share price movements, however you need to convert the pricing to Aussie dollar equivalents for the best results. Note that it’s important to check the US ADRs for overnight share price movements as well.

Look out for the second installment of this three part special next week, when we take a look at Newcrest Mining Limited (NCM). To make sure you don’t miss out, sign up to receive our weekly newsletter.

By Michael Hevern
Head of Research

You can receive more fundamental information on BHP Biliton and Newcrest Mining on our website.

The information provided within this blog is general advice only and you should consult the services of a financial professional in order to ascertain whether the information is applicable to your investment strategies and risk profile.

Stock Market Analysis: Earnings and Improving Economic Data Push Markets Higher

Friday, July 23rd, 2010

Stock Market Analysis

Earnings and Improving Economic Data Push Markets Higher

U.S. stocks rose overnight amid better-than-expected corporate earnings, despite economic uncertainty, while in Europe stocks traded higher after a report unexpectedly showed improving EU economic activity.  This will be positive for our market today.

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 1.4% (or 60 pts) at 4,408. Our market looks set to trade lower today. Key levels today are 4450 and 4350, with pivot around 4400. Sectors were strong across the board in the U.S. and this should support our markets today. M&A activity continues to drive specific stocks.

US Markets

U.S. stocks closed sharply higher overnight after the Fed chairman Ben Bernanke in further testimony reiterated the it is prepared to take further action to support the economy if the economic outlook deteriorates.  On the busiest day of the reporting season so far investors welcomed the strong U.S. corporate earnings from bellwether companies including Caterpillar, United Parcel Service and 3M posted with improvements on both the bottom line and the top line. 3M’s 2Q sales surged to two-year highs while earnings jumped 43 percent.  AT&T the telecommunications giant reported a 26% increase in 2Q earnings, benefiting from iPhone activations. Caterpillar reported a 91% surge in 2Q profit and boosted its full-year earnings outlook. In the transport sector, which is considered a leading indicator for the economic health: UPS the shipping giant posted a 90% surge in 2Q profit on higher package volume, revenue growth and margin improvement, and they boosted its 2010 earnings guidance, also Union Pacific the railroad company’s also topped 2Q earnings expectations.

The recovery was broad-based and most sectors were up around 2.5 to 3 percent.  Among the stocks reporting tonight include: Microsoft, Amex.  The Dow closed up 2.0% (or 204 points) at 10,325, while in the broader market the S&P 500 index up 2.3% (or 24 points) at 1,094 and the tech-heavy Nasdaq ended up 2.7% (or 59 points) at 2,246.

European Markets

European markets continued higher for a second session. European markets traded higher as the euro-zone’s composite purchasing managers index and its industrial orders both unexpectedly rose.  The ECB will report on the  European bank “stress tests” results due tonight, but investors focused on U.S. earnings and the reports showing improving economic activity  pushing their markets higher. In the U.K. June retail sales rose a better-than-expected 0.7% on world cup spending.   In London the FTSE 100 index closed up 1.9% (or 99 points) at 5,314, the German DAX up 2.5% (or 152 points) at 6,142, while in France the CAC was up 3.1% (or 106 points) at 3600.

Asian Markets

Most Asian markets rose yesterday, with the exception of Japan (for a fourth session) on their concerns of the impact of a stronger Yen on their export economy.  The Shanghai Composite finished nearing a three-week high, led by property developers, on the back of a report that the government will boost investing in the property sector if they ease their monetary policy.  In China the SSE Composite closed up 1.1% (or 27 points) at 2,562, while in Hong Kong the Hang Seng Index was up 0.5% (or 102 points) at 20,590 and in Japan the Nikkei 225 Index was down -0.6% (or -58 points) at 9,221.

Commodities

The Dollar Index down -0.9% at 82.61 on higher Euro, while the Australian Dollar last traded higher at 89.32.  Commodities were generally higher.

Oil prices surged as stock markets rallied and investors reacted to a possible storm threat for oil operations in the Gulf of Mexico.  The benchmark crude NYMEX for September delivery was rose 3.5% (or $US2.74) to settle at $US79.30. Copper prices are trading above the key $US3.00 a pound, Copper for September delivery delivery was up 2.7% (or 7.15 cents) at 3.1675 a pound.  Gold was higher, with August gold was up $US3.80 or 0.3% at $US1,195.60 an ounce.

Key News International Drivers Today

US – Fed Chairman Ben Bernanke says Fed will be accommodating.  The US housing market surprised, where sales of previously owned homes fell less than expected in June. S&P 500 companies continue to report earnings this week.

EU – M&A activity. Bank “stress test” results will be reported tonight.

CHINA – Inflation is cooling and growth is slowing.  Property developers rise, on speculation the government may ease policies.

Markets Overview

US Earnings & EU Data Give ASX a Positive Lead Today

Market

Movement

The Dow Jones Industrial Average

Up 2.0% (or 204 pts)  at 10,325

The S&P 500

Up 2.3% (or 24 pts)  at 1,094

The Nasdaq

Up 2.7% (or 59 pts)  at 2,246

The FTSE 100

Up 1.9% (or 99 pts)  at 5,314

The German DAX

Up 2.5% (or 152 pts)  at 6,142

SSE Composite (China)

Up 3.0% (or 1 pts)  at 37.3

The Dollar Index

Down -0.94% at 82.61

The Australian Dollar

Last traded higher at 89.32

The Commodities Index

Up 2.04% at 266.9

Crude Oil Futures

Up 3.5% at $79.30

Gold Futures

Up 0.3% at $1,195.60

Copper Futures

Up  0.2% at $3.1675

SPI Futures

Up 1.4% (or 60 pts) at 4,408

Market

Movement

SSE Composite (China)

Up 1.1% at 2,562

Hang Seng Index (Hong Kong)

Up 0.5% at 20,590

Nikkei 225 Index (Japan)

Down -0.6% at 9,221

SPI: Above key Level 4400 – SPI up 1.4% at 4,408…

ASX News Today

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 1.4% (or 60 pts) at 4,408. Our market looks set to trade lower today. Key levels today are 4450 and 4350, with pivot around 4400. Sectors were strong across the board in the U.S. and this should support our markets today. M&A activity continues to drive specific stocks.AXA- AXA Asia Pacific CEO Andrew Penn says growth in the wealth manager’s Hong Kong operations is accelerating.

CCL- Coca-Cola’s 2Q10 net income climbed 16 percent as they sold more soft drinks and juices worldwide ecluding Europe.

CLH- Collection House the receivables manager has raised its full year dividend after posting a 21 percent rise in FY net profit.

FGL- Fosters has seen the publication of an internal earnings target on Thursday.

FMG- a consortium question why they were not included in the negotiations for the new MRRT.

QAN- Qantas says its Boeing 767 airliners do not need any modifications following problems with the planes in the U.S.

LNC- Linc the Underground coal gasification company is still in talks with several parties about selling its non-core Queensland coal tenements.

NAB- says there will be no earnings impact for its UK subsidiaries caused by a $33 million mortgage problem affecting 18,000 British customers.

NCM- Newcrest says its gold and copper production for the year to June 2010, have come in company within guidance, with Telfer production up 8 percent for the quarter.

PNA- PanAust the copper and gold producer is on track to meet guidance after strong 2Q10 production.

PSA- Petsec the oil and gas explorer/producer reduced its 2010 production and revenue forecast to about 4.0 Bcfe and $31.9 million respectively.  They also said that tighter regulations in the Gulf of Mexico in the  in the wake of the BP oil spill would cause delays to its oil and gas projects and push up costs.

STO- Santos says operations at Cooper Basin will production fell 11 per cent in the June Quarter, citing continuing impact from the flooding in Central Australia.
Shares were down 1.5%.

TLS- Telstra is shedding more than 300 senior management roles in Sydney and Melbourne (no frontline staff will lose their job)

Economic Reports :

Import and Export Price Indices Q2.
Expect to see our market trade higher today, there may be caution ahead of the European bank “stress test” results this weekend.
Market Summary
ASX – to open higher
US & UK/Europe – higher.

US ADRs –  Broadly higher!!!…

BHP up 3.8%  & RIO up 4.3%; AWC up 4.6%
ANZ up 2.6% & NAB up 1.8%
NEM up 1.4%, JHX up 5.9%, NWS up 2.6%
Commodities Stock Index up 2.6%
Gold Stocks Index up 2.4%
Oil Stocks Index up 2.4%
By Michael Hevern
Head of Research

Stock Market Analysis: Fed Warns on U.S. Growth. ASX to Trade Lower Today

Thursday, July 22nd, 2010

Stock Market Analysis

Fed Warns on U.S. Growth. ASX to Trade Lower Today

Overseas markets were mixed with comments from the Fed Chairman weighing on the US markets to continue to rise, while Europeans were cautious ahead the European bank “stress tests” results due Friday, but manged to push their markets higher.

The SPI Futures is below the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -1.1% (or -49 pts) at 4,349. Our market looks set to trade lower today. Key levels today are 4400 and 4300, with pivot around 4350. Sectors were weak across the board in the U.S. and this will pressure our markets today. M&A activity continues to drive specific stocks.

US Markets

U.S. stocks closed sharply lower on overnight after the Fed chairman Ben Bernanke warned that the U.S. economy has weakened and that the economic “outlook remains unusually uncertain”.  Bernanke reiterated that the Fed will remain accommodating, however he ruled out any additional near term stimulus spending and said the unemployment will likely remain above 7 percent until at least 2012 (the next election).  The selloff was broad-based and most sectors were around 1.5 percent lower.  This was despite the beter-than-expected reports from Morgan Stanly and Wells Fargo.  Among the stocks reporting tonight include: Microsoft, Amex.

The Dow closed down -1.1% (or -109 points) at 10,121, while in the broader market the S&P 500 index down -1.3% (or -14 points) at 1,070 and the tech-heavy Nasdaq ended down -1.6% (or -35 points) at 2,187. Two stocks fell for every one that rose on the NYSE.

European Markets

European markets finished higher breaking a four session losing streak session. Investors are still cautious though, ahead of the results of the European bank stress tests are due 23 July.  In London the FTSE 100 index closed up 1.5% (or 75 points) at 5,215, the German DAX up 0.4% (or 23 points) at 5,990 and the French CAC was up 0.8% (or 26 points) at  3,494.

Asian Markets

Most Asian markets rose yesterday, with the exception of Japan on their concerns of the impact of a stronger Yen on their export economy.  The Shanghai Composite finished nearing a three-week high on the back of a report that the government will boost investment in the alternative energy sector as well as expectations of strong first half profits for airlines.  In China the SSE Composite closed up 0.3% (or 7 points) at 2,535, while in Hong Kong the Hang Seng Index was up 1.1% (or 223 points) at 20,487 and in Japan the Nikkei 225 Index was down marginally -0.2% (or -22 points) at 9,279.

Commodities

The Dollar Index up 0.7% at 83.32 on lower Euro, while the Australian Dollar last traded lower at 87.64.

Crude oil prices dropped after the weekly report showed U.S. inventories on the rise (up 400,000 barrels).  The benchmark crude NYMEX for August delivery was down 1.3% (or $US1.02) to settle at $US76.56. Copper prices are trading above the key $US3.00 a pound, Copper for September delivery delivery was up 3.0% (or 9.2 cents) at $3.0930  a pound.  Gold was steady, with August gold flat at $US1,191.80 an ounce.

Key News International Drivers Today

US – Fed Chairman Ben Bernanke warns on the “uncertain” economic outlook. S&P 500 companies continue to report earnings this week.

EU – M&A activity. Bank “stress test” results on the 23 July.  .

CHINA – Bargain hunting continues, on speculation the government may ease policies.

Markets Overview

US Earnings Give ASX a Positive Lead Today

Market

Movement

The Dow Jones Industrial Average

Down -1.1% (or -109 pts)  at 10,121

The S&P 500

Down -1.3% (or -14 pts)  at 1,070

The Nasdaq

Down -1.6% (or -35 pts)  at 2,187

 

 

The FTSE 100

Up 1.5% (or 75 pts)  at 5,215

The German DAX

Up 0.4% (or 23 pts)  at 5,990

SSE Composite (China)

Up 0.8% (or 0 pts)  at 36.2

 

 

The Dollar Index

Up 0.69% at 83.32

The Australian Dollar

Last traded at 87.64

The Commodities Index

Flat at 261.5

 

 

Crude Oil Futures

Down 1.3% at $76.56

Gold Futures

Flat at $1,191.80

Copper Futures

Up 9.3 cents at $3.0930

SPI Futures

Down -1.1% (or -49 pts) at 4,349.0

 

 

 

 

Market

Movement

SSE Composite (China)

Up 0.3% at 2,535

Hang Seng Index (Hong Kong)

Up 1.1% at 20,487

Nikkei 225 Index (Japan)

Down  Marginally -0.2% at 9,279

ASX News Today

The SPI Futures is below the key level of 4400 the ASX is set to open lower as the SPI Futures closed down -1.1% (or -49 pts) at 4,349. Our market looks set to trade lower today. Key levels today are 4400 and 4300, with pivot around 4350. Sectors were weak across the board in the U.S. and this will pressure our markets today. M&A activity continues to drive specific stocks.
AXA- AXA Asia Pacific expects 1H10 operating earnings to rise 5.7 percent.BDG -Bendigo Mining the gold producer Bendigo Mining is in a trading halt pending a merger proposal announcement.
BHP- quarterly production figures were strong. They increased shipments of metallurgical coal by around 50 percent, as steel production recovers.
JET – the ACCC has called for comment on Jetset Travelworld’s proposed $180 million takeover of Stella Travel Services.
MCC- “former” suitor Peabody will not confirm whether it stands to benefit from the new MRRT proposal. Peabody has reported that its Australian businesses delivered a 75 percent rise in June quarter pre-tax profits of $255 million.  This sets up a positive lead form other Aussie coal producers this quarter.
PDN- Paladin is on the acquisition trail after NGM Resources has recommended its shareholders accept a $27 million takeover bid from the African-focused uranium miner.
RHG – the former Rams Home Loans Group, has upgraded its profit forecast to between $86 to $96 million, due to a contingent income tax asset.
RXL – Rox Resources the junior exploreris allowing RIO to take a stake and is hoping to develop its Myrtle zinc deposit.
TEN – Ten has withdrawn from the bi-annual survey of television advertising revenue, citing “serious concerns” about the numbers collected.
WOW- Woolworths the grocery heavy weight reported disappointing 4Q sales, with its lowest sales growth n 10 years.

TLS- Telstra is shedding more than 300 senior management roles in Sydney and Melbourne (no frontline staff will lose their job)

Economic Reports :

AXA – AXA Asia Pacific Holdings Ltd group CEO Andrew Penn is will address a business lunch today in Melbourne.
AFOM -  to auction $500 million of October 22, 2010, Treasury notes.
MQG – Macquarie Group deputy managing director Richard Sheppard will address a business lunch today.
NAB – National Australia Bank releases its business survey for the June quarter.

REPORTSJune quarter production reports are due from Santos Ltd, Newcrest Mining Ltd and Beach Energy Ltd, and Petsec Ltd releases June quarter and first half results.

Expect to see our market trade lower today.
Market Summary
ASX – to open lower
US & UK/Europe – mixed.

US ADRs –  Broadly lower!!!…

BHP down 1.2%  & RIO down 1.2%; AWC down 3.8%
ANZ down 1.8% & NAB down 2.8%
NEM down 1.4%, JHX down 3.2%, NWS down 2.3%
Commodities Stock Index down 1.2%
Gold Stocks Index down 0.5%
Oil Stocks Index down 1.3%
By Michael Hevern
Head of Research

Stock Market Analysis: US Earnings Give ASX a Positive Lead Today

Wednesday, July 21st, 2010

Stock Market Analysis

US Earnings Give ASX a Positive Lead Today

Overseas markets were mixed with the US reporting season helping US markets to continue to rise, while Europeans were cautious ahead the European bank “stress tests” results due Friday.

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.9% (or 41 pts) at 4,423.  The RBA minutes were released yesterday saying that the uncertainty over the European debt issues have helped keep our interest rates on hold, however the future direction of interest rates will be driven by the inflation figures due out on 28 July.  Our market should continue to trade firmer again today after good performances from the U.S. and our mining and industrial sectors yesterday.  M&A activity continues to drive specific stocks.  Key levels to watch today are 4500 and 4350, with pivot around 4400.

US Markets

Investors chose to concentrate on the good news overnight as earnings reports were mixed.  Apple, the key NASDAQ stock, once again exceeded expectations with a 78 percent surge in 3Q profits, and sales were up 61 percent. This result indicates that the consumer is still alive in the U.S., however on the flip side Yahoo disappointed with revenue falling and sales down 8 percent (YoY) as they face competition from Facebook and Google. Also disappointing were IBM, Texas Instruments, Johnson & Johnson and Goldman Sachs. Goldman Sachs reported its 2Q profit plummeted 83% to its lowest level since late 2008, as trading revenues declined 36%, which was much more than forecast. Traders sentiment improved late in the day on speculation that the U.S. may be considering a new stimulus package. The Fed chairman Ben Bernanke will address the Senate tonight. The Materials and Energy sectors continued higher up 3% and 2.3% respectively.

The Dow closed up 0.7% (or 76 points) at 10,230, while in the broader market the S&P 500 index up 1.1% (or 12 points) at 1,083 and the tech-heavy Nasdaq ended up 1.1% (or 24 points) at 2,222.

European Markets

European markets finished the session lower for a fourth session. The weaker-than-expected US housing data continued to weigh on sentiment, also Goldmans disappointing results hurt. The results of the European bank stress tests are due 23 July.  In London the FTSE 100 index closed down marginally -0.2% (or -9 points) at 5,139, the German DAX down -0.7% (or -42 points) at 5,967, while in France the CAC was down -0.50% (or 18 points) at 3468.

Asian Markets

Most Asian markets rose yesterday, with the exception of Japan. The Shanghai Composite appears to be holding support at current levels and jumped another 2.2% as banking, property and consumer stocks rose on hopes that the government may not introduce more restrictive policies after several indicators showed last week the economy was cooling. This helped our mining sector.  In China the SSE Composite closed up 2.2% (or 53 points) at 2,529, while in Hong Kong the Hang Seng Index was up 0.9% (or 174 points) at 20,265 and in Japan the Nikkei 225 Index returned from a holiday and was down -1.2% (or -108 points) at 9,300.

Commodities

The Dollar Index up 0.3% at 82.79 on lower Euro, while the Australian Dollar last traded higher at 88.30 The Commodities were generally higher.

Crude oil prices rose as traders eye potential tropical storms in the Caribbean and falling US stockpiles.  The benchmark crude NYMEX for August delivery was up $US0.90 (or 1.2%) to settle at $US77.44. Copper prices are trading above the key $US3.00 a pound, Copper for September delivery delivery was up marginally 2.1% (or 6.4 cents) at 3.0015  a pound.  Gold was higher, with August gold up $US9.80 to settle at $US1,191.70 an ounce.

Key News International Drivers Today

US – Fed Chairman Ben Bernanke to address the Senator tonight. 129 S&P 500 companies will report earnings this week.

EU – M&A activity. Bank “stress test” results on the 23 July.  .

CHINA – Bargain hunting continues, on speculation the government may ease policies.

Markets Overview

Overseas Markets Give Negative Lead for the ASX

Market

Movement

The Dow Jones Industrial Average

Up 0.7% (or 76 pts)  at 10,230

The S&P 500

Up 1.1% (or 12 pts)  at 1,083

The Nasdaq

Up 1.1% (or 24 pts)  at 2,222

 

 

The FTSE 100

Down  Marginally -0.2% (or -9 pts)  at 5,139

The German DAX

Down -0.7% (or -42 pts)  at 5,967

SSE Composite (China)

Down -0.5% (or 0 pts)  at 36.0

 

 

The Dollar Index

Up 0.33% at 82.79

The Australian Dollar

Last traded at 88.30

The Commodities Index

Up  Marginally 0.12% at 261.5

 

 

Crude Oil Futures

Up 1.2% at $77.44

Gold Futures

Up  Marginally 0.01% at $1,191.70

Copper Futures

Up  Marginally 0.02% at $3.0015

SPI Futures

Up 0.9% (or 41 pts) at 4,423.0

 

 

 

 

Market

Movement

SSE Composite (China)

Up 2.2% at 2,529

Hang Seng Index (Hong Kong)

Up 0.9% at 20,265

Nikkei 225 Index (Japan)

Down -1.2% at 9,300

 

 

ASX News Today

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the as the SPI Futures closed up 0.9% (or 41 pts) at 4,423The RBA minutes released yesterday saying that the uncertainty over the European debt issues have helped keep our interest rates on hold, however the future direction of interest rates will be driven by the inflation figuures due out on 28 July. Key levels today are 4500 and 4350, with pivot around 4400.  Our market should continue to trade frimer again today after good performances from the U.S. and our mining and industrials sectors yesterday.  M&A activity continues to drive specific stocks.
AQP- Aquarius Platinum dispels fears it will be forced to change mining methods at its operations in South Africa after it was sold-off on concerns that any changes could involve higher costs.
 

BHP- will release its June quarter production report today.

BNB – the liquidator’s examination of Babcock & Brown continues in the Federal Court.

CEY- Centennial says Banpu which has made a $2.5 billion takeover offer for Centennial, has received approval from the Bank of Thailand for it to remit foreign currency to pay for deal.

CTY – Country Road the embattled fashion retailier expects a 20% drop in annual profit due to aggressive discounting in the retail sector and the startup costs of its new 40 plus brand.

CWN- Crown the gaming firm has government support to expand the number of pokie machines at Perth’s Burswood casino.

ILU_ Iluka the mineral sands miner reported its June quarter production fell following the closure of its WA operations, but sales volumes were up strongly in 2H10

MTU- Shareholders of the telecommunication services provider M2 Telecomm can expect healthy returns, according to the company’s earnings guidance for 2010/11. Shares rose 20 cents to $1.92.

PDN- Paladin the uranium producer is considering taking over NGM Resources.

POS – Andrew Forrest’s nickel explorer Poseidon Nickel is in a trading halt pending a capital raising.
SDL- Sundance the iron ore explorer reports that a definitive feasibility study for its Mbalam project in Cameroon is on track for completion this year. Shares were up 3 cents to $0.15.

WOW- Woolworths will release its fourth quarter sales result today.

Economic Reports :

Westpac-Melbourne Institute reports the May Indexes of Economic Activity
Expect to see our market trade firmer today. M&A is picking up.

Market Summary

Westpac-Melbourne Institute reports the May Indexes of Economic Activity
Expect to see our market trade firmer today. M&A is picking up.

Market Summary

ASX – to open higher
US & UK/Europe – mixed.

US ADRs –  Broadly higher!!!…

BHP up 4.7%  & RIO up 5.6%; AWC up 6.2%
ANZ up 4.1% & NAB up 4.0%
NEM up 1.7%, JHX up 5.0%, NWS up 1.8%
Commodities Stock Index up 2.8%
Gold Stocks Index up 2.2%
Oil Stocks Index up 1.4%
By Michael Hevern
Head of Research