Posts Tagged ‘Copper’

ASX Company News: Monax Mining Enters Joint Venture With Antofagasta Minerals

Monday, November 28th, 2011

Monax Mining Limited (MOX) is pleased to announce it has entered into a strategic alliance with Antofagasta Minerals Adelaide Pty Limited (Antofagasta), a subsidiary of Antofagasta plc, for copper exploration within South Australia, exclusive of Monax’s current portfolio in South Australia.  The alliance builds upon the already existing relationship developed on the farmin agreement Monax has with Antofagasta on Monax’s flagship Punt Hill copper-gold project.

South Australia has been the location for three significant copper discoveries in the last 12 years with Prominent Hill, Carrapateena and Hillside all located within the highly prospective Olympic Iron-Oxide Copper-Gold province. Both Monax and Antofagasta plc strongly believe that further exploration of this copper-gold province will result in additional significant discoveries, and it is this belief that underpins this strategic alliance. The significance of this copper province has been highlighted recently by purchase of Carrapateena by OZ Minerals and the agreement between Rio Tinto and Tasman Resources on the Vulcan project.

Under the terms of the Agreement, Antofagasta will provide US$1 million to Monax over two years for target-generation and exploration within South Australia.  Properties which are identified as a project of interest become a Designated Project (DP).  Once a DP has been formed, Antofagasta will have acquired a 51% interest and Monax a 49% interest in the project.  Antofagasta will then have the option to earn an additional 19% of any DP (for a cumulative 70% interest) by spending a further US$4 million within three years.  At this stage, Antofagasta will make a cash payment (success fee) to Monax of US$3 million.

The Alliance will target properties containing copper, gold, silver, molybdenum, lead, zinc, nickel and platinum group minerals. Properties identified by Monax under the Alliance that are not jointly pursued will then be available for Monax to pursue on its own. Decisions relating to the Alliance will be made jointly by a Technical Committee comprising two representatives from each company, with Antofagasta holding the casting vote whilst sole funding.

www.monaxmining.com.au

http://www.traderdealer.com.au/fundamentals/mox

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Stock Market Analysis: U.S. & European Markets Approach 2011 Highs

Friday, July 8th, 2011

* U.S. stock markets continued higher overnight, after surprising strength in jobs and improving retail sales. The major Non-Farms jobs report is due out Friday and next week’s start of the season of corporate earnings reports.
* European markets closed higher overnight, with the Stoxx Europe 600 finishing 0.4% higher.  The ECB has acted to support Portugal after it was downgraded last week and strong U.S. employment data surprised analysts.
* Asian stock markets closed mixed yesterday.  Banks mostly rose after the Chinese central bank lifted its benchmark deposit and lending rates by 0.25 percentage point.
* Commodities prices traded generally higher again. Copper prices are at 10 week highs.

The SPI Futures is trading around the key pivot level of 4600, ending up 0.7% (or 32 points) at 4,617. The key levels for our index today are 4660 and 4580.  Australian shares are set to trade higher today after positive leads from key markets in the U.S. and Europe, and news of surprising jobs data both locally and in the U.S.  Locally the unemployment rate remained steady at 4.9% but with jobs growth improving.  The details of the Carbon Tax will be revealed on Sunday.  The U.S. Non-Farm Payrolls report is due out Friday. Investors are likely to go bargain hunting today, with many stock valuations looking attractive, particularly if markets can break to new highs.

See below for ASX listed companies in the news today.

U.S. Markets

U.S. stock markets continued higher overnight, after surprising strength in jobs and improving retail sales.  The Dow Jones Index finished higher for a seventh day of gains in eight sessions and looks set to test its April 29 closing high of 12810. 

In the broader markets the S&P 500 and the Nasdaq both closed higher and are within sight of their 2011 highs. The financial, energy, materials, consumer staples and technology sectors all posted strong gains. 

Investor sentiment was boosted by the June U.S. ADP private sector jobs gains that showed 157,000 jobs were created, almost double analysts’ expectations, and other data showed that new claims for unemployment benefits fell by more than expected last week. This jobs data bodes well for tonight’s U.S. nonfarm payrolls employment report. Monthly retail sales results were strong and this pushed consumer staples stocks higher. 

In commodities crude oil futures were higher above $US98 a barrel, while gold futures continued with their recent gains. Copper prices are at 10-week highs. The U.S. dollar was flat against the euro, and steady against the yen.

All ten company groups that make up the S&P index traded higher: Materials were up 1.5%, the Financials sector was up 1.6%, Consumer Staples were up 1.4%, Energy was up 1.5%, Industrials were up 1.1%, and the Technology sector was 1.2%.

The Dow Jones closed up 0.7% (or 93 points) at 12,720, the S&P 500 index closed up 1.1% (or 14 points) at 1,353, the Nasdaq ended up 1.4% (or 38 points) at 2,873, and the smaller cap Russell 2000 was up 1.5%.

European Markets

European markets closed higher overnight, with the Stoxx Europe 600 finished 0.4% higher.  The ECB has acted to support Portugal after it was downgraded last week and strong U.S. employment data surprised analysts. 

The European Central Bank is supporting Portugal by suspending the minimum credit-rating threshold on the Portuguese government debt used for collateral with the central bank, and the Portuguese market jumped 1.8%. 

Markets in Europe gained as a stronger than expected U.S. survey of private-sector hiring and data showed new unemployment claims falling slightly last week.

News of central bank moves on interest rates left markets unmoved, as the expected ECB decided to lift interest rates by 0.25 points to 1.5%, while the Bank of England left its rate on hold. 

In London, the FTSE 100 index rose, as hedge-fund manager Man Group jumped 3.6% after reporting record quarterly sales of $US9 billion.  The German market rose within sight of its 2011 high, with automobile makers were higher after BMW reported a 16% rise in global car sales in June.

In London the FTSE 100 index was up 0.3% (or 52 points) at 6,054, the German DAX was up 0.5% (or 40 points) at 7,471, while in France the CAC was up 0.5% (or 19 points) at 3,979. 

Asian Markets

Asian share markets ended mixed yesterday, with China bank shares rising in Hong Kong on hopes of the interest-rate increase by the Chinese PBOC central bank, the last for the year.   

In Japan the Nikkei Stock Index ended flat at its highest level since the March earthquake and at 4-month closing highs.  Utilities stocks were sold-off due to growing uncertainty after the government said it is considering special stress tests for all nuclear plants. 

In China the Shanghai Composite lost ground, while in Hong Kong the market was flat. Chinese banking shares mostly rose after the People’s Bank of China (PBOC) lifted benchmark deposit and lending rates by 0.25 percentage points after market on Wednesday, in order to keep inflation in check.

The SSE Composite was down -0.6% (or -16 points) at 2,794, while in Hong Kong the Hang Seng Index was up 0.1% (or 12 points) at 22,530 and in Japan the Nikkei 225 Index was down -0.1% (or -11 points) at 10,071. The South Korean KOSPI was up 0.4% for the session, while the Indian market was up 1.9%.         

Commodities

The Dollar Index was flat at 74.91 on a lower Euro, while the Australian Dollar last traded higher at 106.82. Commodities prices were mixed.

For the session the benchmark crude NYMEX for July delivery was up 2.1% (or $US2.02) to settle at $98.67. Copper prices are still below 2-year highs as copper for July delivery was up 2.1% (or 9.2 cents) at $US4.4180.  July gold was up 0.1% (or $US1.50) at $US1,531.90.

ASX News Today

APD – APN Property Group will buy 67.5 percent of ING Healthcare Pty Ltd, the manager of the ING Real Estate Healthcare Fund.

AUN – Austar the regional pay-tv provider has urged caution following media reports that Foxtel is about to formalise its bid for the company. Elsewhere some of News Corp’s advertisers have said they may pull out of its UK publications.

BHP – BHP Billiton has suspended rail and port operations at its Port Hedland iron ore facility due to a death at the site.

BKN – Bradken the Australian mining equipment supplier says earnings will be boosted by $28 million (6%) after it bought two other supply companies.

CEU – ConnectEast Group, the operator of Melbourne’s EastLink motorway, said average daily revenue during 2010/11 gained 11.2 percent from a year earlier.

CSR – Building materials company CSR is assessing a number of opportunities for bolt-on acquisitions and says the sale of its Brendale property will be completed in 2H12.

CXY – Cougar Energy will cease its coal gasification activites in southern Queensland after cancer-forming chemicals such as benzine were found in the ground water.

ELD – Elders Ltd, Australia’s largest livestock agent, gained after saying it would resume live cattle exports to Indonesia next month.

GDO – Gold One International increased production in the June quarter by 9 per cent from the March quarter.

NWS – News Corp will cease the publication of its UK News of the World tabloid on Sunday after phone mailbox allegations have been unveiled.

RMD – ResMed, the supplier of equipment to treat sleeping and respiratory disorders, has acquired BiancaMed Ltd, an Irish company that supplies a sleep monitoring device.

SGT – Optus been ordered to pay a fine of $5.26 million after losing a case about misleading advertising.

Local Corporate Reporting

EDT Retail Trust (EDT)   General Meeting

Ex-dividend Date

Trafalgar Corporate (TGP)

Market Summary

ASX – to open higher
US & UK/Europe – higher
US ADRs – Broadly Higher

BHP up 1.8% & RIO up 1.8%; AWC up 2.9%
ANZ up 1.2% & NAB up 2.3%
NEM  up 0.8%, JHX up 2.0%, NWS flat

Commodities Stock Index up 1.3%
Gold Stocks Index up 0.3%
Oil Stocks Index up 1.5% 

By Michael Hevern
Head of Research

For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

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The Bell Did Toll At The Market Top

Friday, June 24th, 2011

Back at the start of May we warned of an impending market pullback, which has subsequently unfolded over the past eight weeks. In our discussion on leading indicators, and in particular divergences, we identified that there was a classic inter-market divergence beginning between the U.S. S&P 500 and the copper chart, and this was evident in the Aussie market too.

U.S. Markets

Commodities prices pulled back from record levels earlier in the year and we highlighted that the commodities markets are correlated to the equities markets, particularly for Australia. The charts showed that divergence signals had developed between copper and the S&P 500 on a number of occasions over the past couple of years and that the copper price had led the equities markets in early 2009 and mid-2010. This is shown in the charts below.

S&P 500 chart
Chart 1: S&P 500 chart

Copper chart
Chart 2: Copper chart

We analysed copper because it is the key metal used by manufacturing and constructions industries and its fortunes are therefore closely tied to the equities markets. Copper prices have continued to be in a steady decline for most of this year as copper futures have now fallen 10% since setting an all-time high in mid-February, and are still down -5% year-to-date.

History has repeated itself and the divergence that was identified in late April/early May has been confirmed with the S&P 500 equities falling steadily. The S&P 500 has now fallen since our article, and is down -5% from its February high.

Aussie Market

We also highlighted the divergences between copper prices and the Aussie market and our equities prices have now followed the lead of the copper price, therefore the divergence that was identified in late April has been confirmed.

ASX S&P 200 chart
Chart 3: ASX S&P 200 chart

The Trade

Copper prices have continued their decline, which is an indication that the equities may have some more downside near-term. There are also plenty of headwinds near-term, including:
* The impending end to the U.S. Federal Reserve’s $600 billion asset-purchase program (QE2) on 30th June;
* The end-of-year portfolio cleanouts; and
* The ongoing Greek saga which still has not yet been resolved.

You can make money in a down market through the use of options strategies. We have identified a number of key strategies that allow you to generate income with defined risk management. If you would like to discuss trading in this environment in more detail, you can call me directly on 1300 610 024.

By Michael Hevern
Head of Research


The Market Analyser software provides you with access to the charts above using the following codes: S&P 500 [.GSPC], ASX S&P 200 [.AXJO] and Copper [HGc1]. You can sign up for a free trial of Market Analyser Gold, or for more information take a tour of the software.

MDS Financial Research monitors the market daily and highlights trading stocks when they are ready to run. Sign-up for a 14-day trial today.

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Stock Market Analysis: Leading Indicators – Divergence

Friday, May 6th, 2011

Traders are always looking for indications as to what the market will be doing in the near to medium term. A leading indicator is divergence, in which the price of the share or index moves away from an indicator, signaling a trend reversal.

However the problem with divergence is that it is not good at timing signals, as it could last for months before the markets get back in sync. When markets reach a tipping point, the longer term investors are often the last to know, as we’ve seen recently within the silver market.

The US markets may well be nearing such a tipping point. The S&P 500 index has had a negative start to May following a strong April, and this marks the first time the index has declined over the first three trading sessions of a month since October 2008. We also see that commodities prices have recently been hit across the board with crude oil, gold and silver prices all down. Silver prices are down 28 percent in just seven trading sessions. Another catalyst could be the market’s reaction to the impending end of the US Federal Reserve’s $600 billion asset-purchase program (QE2) in June.

The savvy trader seeks clues of some early warning of a market turnaround, and there are some key market segments and inter-relationships that can be helpful in pointing to a turnaround.

The US Markets

The US markets have had a great run since the end of the GFC in early 2009, however the S&P 500 index had a negative start to March, which marks the first time the index has declined over the first 3 trading sessions of a month since October 2008 and this could be pointing to a change in investor sentiment.

Divergence has appeared, as shown in the chart below. The momentum technical indicator for the S&P 500, which tracks the rate of change, has been showing negative divergence over the past few months.

This divergence, along with a number of divergences as discussed below, could be signalling warning bells.

Silver Price Turnaround

The recent turnaround in the silver market shows what can happen when a divergence signal works.

Divergence appeared (as shown in the chart below) with the momentum technical indicator. Negative divergence developed in the last few days of April.

Divergence can work spectacularly, as shown with the silver market. The fantastic run of silver was splashed across the press last week, but silver prices have since plunged 28 percent in the past seven trading sessions.

Inter-Market Divergence

Divergence can develop between inter-related markets. Commodities prices have pulled back from record levels recently and the commodities markets influence the equities markets.

The charts below show that divergence signals have developed between copper and the S&P 500 on a number of occasions over the past couple of years, with the copper price leading the equities markets in early 2009 and mid-2010.

Copper is the key metal used by the manufacturing and construction industries and its fortunes are therefore closely tied to the equities markets. Divergence has again developed between copper and the S&P 500. Copper prices have been in steady decline over the last few months with copper futures falling 11% since settling at an all-time high in mid-February. Copper prices are now down 7% year-to-date, while the S&P 500 is still above its February high and is up 7.1% year to date. If history repeats itself, then the S&P 500 equities are setting up for a fall.

The Aussie Market

The Aussie market is tied closely to the fortunes of the commodities markets and has been under-performing the US markets, as shown in the charts below. It is good to note that in real terms the US markets have really under-performed Australia because their gains have been driven by the weakness in the US dollar.

The divergences between copper prices and the Aussie market have also resulted in our equities prices following the lead of the copper price, and we too are setting up divergence in the current market.

The Trade

There are a number of indicators showing divergence, which could be a warning that markets are setting up for a turnaround. The sell-off in the silver market shows what can happen when markets get ahead of themselves.

If copper prices continue to decline then equities may be in trouble, and another catalyst could be the market’s reaction to the impending end of the US Federal Reserve’s $600 billion asset-purchase program (QE2) in June.

By Michael Hevern
Head of Research

MDS Financial Research
MDS Financial Research monitors the market daily and highlights trading stocks when they are ready to run. Sign-up for a 14-day trial today.

Market Analyser Software Trial
The Market Analyser software provides you with access to the charts above using the following codes: S&P 500 [.GSPC], ASX S&P 200 [.AXJO], Copper [HGc1] and Silver [SIc1].

You can sign up for a free trial of Market Analyser Gold, or for more information take a tour of the software.

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Stock Market Analysis: U.S. Market Push Higher On Prospect of QE2

Monday, October 11th, 2010

Stock Market Analysis

U.S. Market Push Higher On Prospect of QE2

U.S. markets ended higher, as a bleak jobs report convinces investors that the Fed will need to introduce quantitative easing (QE2). The US dollar dropped to a 15-year low against the yen on the expectation of QE2. European stocks were mixed Friday, as investors still fear a faltering recovery. Asian markets closed higher led by China. The ASX is set to trade higher today, with the positive lead from the U.S.  Gold prices held around fresh record highs, as the US dollar weakness spurred buying interest in commodities and shares of companies producing them, and in currency trading as the Australian dollar was trading against the U.S. dollar around its highest levels since the currency was allowed to float freely in 1983.

The SPI Futures is just above the key resistance level of 4700 the ASX is set to open higher the SPI Futures closed up 0.5% (or 22 pts) at 4,717 (up 0.9% for week). The key levels for our index this week are 4800 and 4600. M&A activity continues to drive specific stocks. The ASX will trade higher today, with the positive leads from the China and U.S.  Options volatilty is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

US Markets

The Dow Jones closed above 11000 on Friday for the first time since May, as a bleak jobs report boosted expectations that the Federal Reserve will move to stimulate economic growth. The index closed above the 11000 level for the first time since 3 May’10, which was on three days before the “flash crash”, which severe to unnerve the markets in the subsequent 6-months. The Non-farm Payrolls report showed a net 95,000 workers lost their jobs in September, a worse-than-expected decline. The private sector added 64,000 jobs, while the unemployment rate remained unchanged at 9.6% in September. Investors pushed the markets higher on the hope the poor jobs data will increase the odds that the Fed will take new steps to jump-start the economy with QE2. Alcoa was the Dow’s biggest gainer, surging 5.7% after kicking off earnings season with results that exceeded analysts expectations and they lifted their forecast for global aluminum demand in 2010.  The Dow has gained 5.5% year-to-date and the S&P 500 is up 4.5% for 2010. The Materials (up 2%), Energy (up 1.3%) and Consumer Discretionary (up 1.1%) sectors leading the way. The Dow closed up 0.5% (or 58 points) at 11,006 (up 1.3% for week), while in the broader market the S&P 500 index up 0.6% (or 7 points) at 1,165 (up 1.4% for week) and the tech-heavy Nasdaq ended up 0.8% (or 18 points) at 2,402 (up 0.9% for week).

European Markets

European stocks were mixed Friday, as investors still fear a faltering recovery. Global governments are trying to task the IMF with calming the recent outbreak of tensions over currencies, with fears that they many instigate a protectionist backlash. The U.K. market ended little changed for the week. The European Commission (ECB) has warned that the rising euro could jeopardize recovery in the EU bloc. European markets are still under pressure as investors fear that the austerity measures being pursued by the governments will curb economic growth.  In London the FTSE 100 index closed down marginally -0.1% (or -5 points) at 5,658 (up 1.1% for week), the German DAX up 0.3% (or 15 points) at 6,292 (down -0.1% for week), while in France the CAC was down marginally -0.2% (or -7 points) at 3,763 (up 1.0% for week).

Asian Markets

Asian stock markets ended higher Friday.  Chinese stocks jumped for their best percentage gain in more than 4-months, as trading resumed after the week-long Golden Week holiday. Several resource shares traded limit-up , jumping by the 10% daily limit, playing catch up to a recent rally in commodities.  Metal and coal producers jumped higher, helping overcome the early weakness displayed by property developers in the wake of further tightening measures introduced by the government.  The index closed at its highest level in 6-months. Hong Kong stocks finished higher too, while Japanese stocks fell, again led by the exporters.  In China the SSE Composite closed up 3.1% (or 83 points) at 2,739 (up 5.7% for week), while in Hong Kong the Hang Seng Index was up 0.3% (or 60 points) at 22,944 (up 3.7% for week) and in Japan the Nikkei 225 Index was down -1.0% (or -96 points) at 9,589 (up 1.2% for week).

Commodities

The Dollar Index down marginally -0.2% at 77.18 on higher Euro, while the Australian Dollar last traded at 98.48.  Commodities were generally higher, with soft commodities traded “limit-up” for the session.

Gold prices are still around record highs. The benchmark crude NYMEX for September delivery was up 1.2% (or $US0.99) to settle at $US82.84 (up 8.3% for week). Copper prices higher, Copper for September delivery delivery was up 2.5% (or 9.3 cents) at $US3.7770 (up 4.2% for week). Gold prices are around record highs, are around key $US1,350 level, with December gold as up 0.8% at $US1,346.50 (up 3.9% for week).

Key News International Drivers Today

US - The Non-farm Payrolls report showed a net 95,000 workers lost their jobs in September.
EU - Tensions over currencies wars with fears that they many invite a protectionist backlash.
CHINA – Market plays catch-up. Government stands firm on access to credit.
JAPAN – Exporters weigh as Yen at 15-years highs.

Markets Overview

Market

Movement

The Dow Jones Industrial Average

Up 0.5% (or 58 pts)  at 11,006 (up 1.3% for week)

The S&P 500

Up 0.6% (or 7 pts)  at 1,165 (up 1.4% for week)

The Nasdaq

Up 0.8% (or 18 pts)  at 2,402 (up 0.9% for week)

The FTSE 100

Down  Marginally -0.1% (or -5 pts)  at 5,658 (up 1.1% for week)

The German DAX

Up 0.3% (or 15 pts)  at 6,292 (down -0.1% for week)

The Fench CAC

Down  Marginally -0.2% (or -7 pts)  at 3,763 (up 1.0% for week)

The Dollar Index

Down  Marginally -0.19% at 77.18

The Australian Dollar

Last traded at 98.45

The Commodities Index

Up 2.72% at 295.1

Crude Oil Futures

Up 1.2% at $82.84 (up 8.3% for week)

Gold Futures

Up 0.77% at $1,346.50 (up 3.9% for week)

Copper Futures

Up 2.53% at $3.7770 (up 4.2% for week)

SPI Futures

Up 0.5% (or 22 pts) at 4,717 (up 0.9% for week)

Market

Movement

SSE Composite (China)

Up 3.1%  at 2,739 (up 5.7% for week)

Hang Seng Index (Hong Kong)

Up 0.3%  at 22,944 (up 3.7% for week)

Nikkei 225 Index (Japan)

Down -1.0%  at 9,589 (up 1.2% for week)

ASX News Today<

The SPI Futures is just above the key resistance level of 4700 the ASX is set to open hiher  the SPI Futures closed up 0.5% (or 22 pts) at 4,717 (up 0.9% for week).  The key levels for our index this week are 4800 and 4600. M&A activity continues to drive specific stocks.  The ASX will trade higher today, with the positive leads from the China and U.S.  Options volatilty is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

AMP- AMP Financial Services and Bendigo Bank have entered into a partnership where Bendigo Bank’s 460 branches will sell AMP life insurance products.

AWB-  An independent expert Lonergan Edwards & Associates says the propsed Agrim Inc $1.24 billion takeover offer is fair and reasonable and in the best interests of shareholders.

BHP- BHP expects to pay about $C90 billion in royalties and taxes to local, provincial and federal governments over the multi-decade operating life of its Jansen potash project in Saskatchewan, Canada.

CFE- Cape Lambert Resources Ltd will buy back 10 percent of the company’s ordinary shares as part of a capital management program.

LEI- a subsidiary of Leighton Holdings has announced the securing of a contract with resources explorer CGA Mining, to increase production at a major gold mine in the Philippines.

MND- Monadelphous Group the engineering group, has won contracts worth $120 million for projects in PNG and WA.

MYR- Myer Holdings the retailer has been through a difficult environment in the past fiscal year, but the outlook is improving.

NEC- Northern Energy Corporation the coal explorer, has rejected a takeover offer from rival miner New Hope as inadequate, but is willing to keep talking.

PEM- Perilya the lead and zinc miner, has entered into a binding agreement with Canada’s GlobeStar Mining Corporation as a precursor to a friendly $186 million takeover bid.

QRL – QR National investors will pay $2.50 to $3 a share to get a slice of Queensland’s rail freight business when it is floated 22 Nov’10.  More than $5 billion could be raised in the float.

SDL- Sundance Resources the mining explorer, has appointed Sinosteel Midwest Corp. CEO Giulio Casello as its managing director and chief executive.

RIO- Rio Tinto has not made any final decision regarding the proposed WA iron ore JV with BHP Billiton.

Economic Reports :

NAB Business Survey for September
Housing Finance Housing Finance Approvals for August

Companies:

Peak Oil and Gas $110 million IPO

Ex-Dividends

Coffey International (COF)
Cedar Woods Prop. (CWP)
Integrated Legal (IAW)
K & S Corporation (KSC)
Marbletrend Group (MDB)
Medusa Mining Ltd (MML)
Money3 Corporation (MNY)
NRW Holdings Limited (NWH)
Specialty Fashion (SFH)
Transmetro Corp. Ltd (TCO)

Market Summary

ASX – to open higher
US & UK/Europe – U.S. Higher, Europe Mixed
US ADRs –  Broadly Higher

BHP up 2.2% &

RIO up 2.0%

AWC up 5.0%

ANZ up 0.7% &

NAB up 1.6%

NEM down 0.2%

JHX up 0.8%

NWS up 1.3%

Commodities Stock Index up 1.3%
Gold Stocks Index up 0.6%
Oil Stocks Index up 1.0%

By Michael Hevern
Head of Research

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Stock Market Analysis: Markets Drift Lower, Energy Prices Rise

Thursday, September 30th, 2010

Stock Market Analysis

Markets Drift Lower, Energy Prices Rise

U.S. stocks drifted lower as traders and investors square up for the end of month/quarter. Weakness in financials was offset by gains in energy. The US dollar index has plummeted to an 8-month low again, the gold price held over $US1,300 an ounce and  copper prices rose.  European markets were cool on worries over the financial health of European banks, as civil unrest erupted across Europe over austerity measures.  Asian stock markets ended generally higher on upbeat Chinese manufacturing data. The ASX is expected to trade flat to lower today.

The SPI Futures is just below the key resistance level of 4700 the ASX is set to open lower as the SPI Futures flat at 4,673. The key levels for our index today are 4700 and 4600. M&A activity continues to drive specific stocks. The ASX will trade flat to lower today, as traders and investors square up for the end of month/quarter. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

US Markets

U.S. stocks drifted lower, as weakness in financials was offset by gains in energy on the back of higher oil prices, due to falling inventories.  All three major indices have posted strong returns this month and remain on track for the best September since 1939,  as the fears of the dreaded “double dip” have abated.  The Dow Jones is up 8.1% and the Nasdaq up 12.4% for the month so far.  The markets were weighed down by Financials, Materials and Consumer Discretionary sectors all down over 0.7 percent, while the Energy sector was up 1.1 percent.  The Dow closed down marginally -0.2% (or -23 points) at 10,835, while in the broader market the S&P 500 index down -0.3% (or -3 points) at 1,145 and the tech-heavy Nasdaq ended down marginally -0.1% (or -3 points) at 2,377.

European Markets

European stocks ended lower. Civil unrest erupted as hundreds of thousands of workers across Europe protested government spending cuts even as France and Portugal work on new austerity budgets and European Commission proposes new fiscal controls to shrink the large deficits. Early data showing a September rise in euro zone economic sentiment failed to boost European equities, as investors choose to concentrate on sovereign debt issues. Irish banks were sold off around 6 percent, as the cost of insuring against default on the Ireland’s debt surged to a record. In London the market ended flat despite a late rally in the miners.  In the U.K. the GDP expanded in the quarter to June, but the IMF cuts its 2011 economic growth forecast for the U.K. and said the Bank of England (BoE) needs to be ready to add more stimulus if the economy falters.  In Germany stocks dropped led by the banks.  In London the FTSE 100 index closed down marginally -0.2% (or -9 points) at 5,569, the German DAX down -0.5% (or -29 points) at 6,247, while in France the CAC was down -0.7% (or -25 points) at 3,737.

Asian Markets

Asian stock markets ended higher. Japanese shares rose after a better-than-expected business sentiment in the BoJ’s quarterly Tankan survey. The survey showed sentiment among the big manufacturers rose for a sixth quarter, this pushed exporters and automakers broadly higher.  In China, the gauge of nationwide manufacturing activity the HSBC China Manufacturing Purchasing Managers Index (PMI) rose to a 5-month high reading of 52.9 in September. Chinese miners rallied as the U.S. dollar weakened on expectations that the Fed may introduce more stimulus measures, however property shares were hit again by fears of more policy tightening measures the Chinese government.  In China the SSE Composite flat (or -1 points) at 2,611, while in Hong Kong the Hang Seng Index was up 1.2% (or 269 points) at 22,379 and in Japan the Nikkei 225 Index was up 0.7% (or 64 points) at 9,559.

Commodities

The Dollar Index down -0.3% at 78.78 on higher Euro, while the Australian Dollar last traded at 96.59.  Commodities were generally higher.

Gold prices are still around record highs. The benchmark crude NYMEX for September delivery  was up 2.1% (or $US1.62) to settle at $US77.80. Copper prices rose, Copper for September delivery Copper for September delivery was up 0.7% (or 2.4 cents) at $US3.6480. Gold prices are around record highs, are around key $US1,300 level, with December gold was up marginally 0.2% at $US1,309.00.

Key News International Drivers Today

US – Energy stocks rise on the back of higher oil prices, due to falling inventories.

EU – Civil unrest erupted protesting austerity measures.
CHINA –  PMI rose to a 5-month high reading of 52.9 in September. Government stands firm on access to credit.
JAPAN – better-than-expected business sentiment.

Markets Overview

Market

Movement

The Dow Jones Industrial Average

Down  Marginally -0.2% (or -23 pts)  at 10,835

The S&P 500

Down -0.3% (or -3 pts)  at 1,145

The Nasdaq

Down  Marginally -0.1% (or -3 pts)  at 2,377

The FTSE 100

Down  Marginally -0.2% (or -9 pts)  at 5,569

The German DAX

Down -0.5% (or -29 pts)  at 6,247

The Fench CAC

Down -0.7% (or -25 pts)  at 3,737

The Dollar Index

Down -0.30% at 78.78

The Australian Dollar

Last traded at 96.59

The Commodities Index

Up 0.56% at 285.9

Crude Oil Futures

Up 2.1% at $77.80

Gold Futures

Up  Marginally 0.18% at $1,309.00

Copper Futures

Up 0.65% at $3.6480

SPI Futures

Flat at 4,673

Market

Movement

SSE Composite (China)

Flat  at 2,611

Hang Seng Index (Hong Kong)

Up 1.2%  at 22,379

Nikkei 225 Index (Japan)

Up 0.7%  at 9,559

SPI: Below key Level 4700 – SPI flat  at 4,673…

ASX News Today

The SPI Futures is just below the key resistance level of 4700 the ASX is set to open lower as the SPI Futures flat at 4,673. The key levels for our index today are 4700 and 4600. M&A activity continues to drive specific stocks.  The ASX will trade flat to lower today, as traders and investors square up for the end of month/quarter. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

ANZ – ANZ Bank will need to raise around $1.6 billion through an equity raising if it moves to buy a 57% stake in Korea Exchange Bank.

ASX- ASX Ltd is searching for a new CEO after the current CEO Robert Elstone will not renew his contract.

DJS- David Jones the upmarket retailer has reaffirmed its profit guidance for 2010/11.

KCN- Kingsgate Consolidated the gold miner, says production for the September quarter will be lower than the average for financial 2010 due to maintenance, lower grades and heavy rain.

PRC- Pike River Coal will start in-seam exploration drilling of the Paparoa seam on NZ’s South Island, in the 1H11.

LLC- Lend Lease has reached financial close on a $389.5 million army family housing project in Alaska.

NUF- Nufarm the ag chemicals supplier expects to generate better financial results in 2011 after reporting a loss, with profits down 63 percent (ex abnormals).

OSH- PNG villagers have gone on a rampage, attacking an ExxonMobil gas site. Oil Search is a partner in the project.

QAN – Qantas says yields on international routes are up 12-14% so far in FY11 compared to last year.

SIG- Sigma Pharmaceuticals has revalued its goodwill booking a 780 percent fall in its 1H10 result.

TLS- Telstra can comfortably pay a dividend for the current financial year despite spending $1 billion on a strategy change.

VBA – Virgin Blue customers faced more delays yesterday morning after further problems with the airline’s computer systems.

Economic Reports:

RBA Financial Stability Review
Financial Aggregates, incl Private Sector Credit for August
August Building Approvals
August Private Sector Building Approvals
Residential Building Approvals

Companies:

Commonwealth Property Office Fund (CPA)  Full year 2010 AGM
Novogen Ltd (NRT) Full year 2010 Results

Ex-Dividends

PMP Limited(PMP)
Russell High Div (RDV)
WHK Group Limited (WHG)

Market Summary

ASX – to open Lower US & UK/Europe – Lower
US ADRs –  Generally Lower!!!

BHP down 0.5% &

RIO down 2.2%;

AWC down 1.4%

ANZ down 1.1% &

NAB down 1.1%

NEM down 0.5%

JHX up 0.3%

NWS down 2.2%

Commodities Stock Index up 0.4%
Gold Stocks Index down 0.1%
Oil Stocks Index up 0.7%

By Michael Hevern
Head of Research

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Stock Market Analysis: Markets Set for Best September Since 1939

Wednesday, September 29th, 2010

Stock Market Analysis

Markets Set for Best September Since 1939

The U.S. stocks “melt-up” continues, as the gains were broad, but tech stocks saw some profit-taking.  The US dollar index has plummeted to an 8-month low, the gold price surge to around $US1,312 an ounce and copper prices continued their rise. European markets were cool on worries over the financial health of European banks. Asian investors started profit taking for the end of month/quarter. The ASX is expected to trade higher today.

The SPI Futures is just above the key level of 4700 the ASX is set to open higher as the SPI Futures closed up 0.4% (or 17 pts) at 4,715. The key levels for our index today are 4750 and 4650. M&A activity continues to drive specific stocks. The ASX will trade higher today. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

US Markets

U.S. stocks continued their “melt-up”. Investors ignored the drop in consumer confidence and central Atlantic manufacturing conditions, as their focus turned to the Fed as the economic weakness may force the Federal Reserve to introduce more stimulus, by increasing their purchases of US government debt to keep interest rates low. The Conference Board’s confidence index declined to 48.5 lower-than-expected (and the lowest level since February), while the S&P/Case-Shiller index of property values increased 3.2 percent from July 2009, the smallest yeay-on-year (YoY) gain since March. The S&P500 up 9.4% for the month is on track for its best month since April 2009 and best September since 1939.  The Dow Jones is up 8.4% for the month and up 4.1% for the year. The gains were broad with Energy, Consumer Staples, Healtcare and Consumer Discretionary all up over 0.7%. The IT sector saw some profit-taking.  The US dollar index has plummeted to an 8-month low and this saw the gold price surge to a record around $US1,312 an ounce. Also copper prices rose as inventories fell. The Dow closed up 0.4% (or 46 points) at 10,858, while in the broader market the S&P 500 index up 0.5% (or 6 points) at 1,148 and the tech-heavy Nasdaq ended up 0.4% (or 10 points) at 2,380.

European Markets

European stock markets finished slightly lower on worries about sovereign debt, as Irish and Portuguese bonds plunged. However markets rallied off their session lows after reports that the European Central Bank was buying Irish bonds. In the U.K. the markets were supported by the mining stocks on the back of higher gold and copper prices. The German banking sector remains solid, as a report shows Germany’s 14 biggest banks have already boosted their Tier-1 capital capital ratio to 10.1 percent on average, in the first 6 months of the year (up from 9.3 percent). This ratio is a measure of the bank’s financial strength and only one of the 14 banks failed the recent bank stress tests. In London the FTSE 100 index closed up marginally 0.1% (or 5 points) at 5,578, the German DAX flat (or -3 points) at 6,276, while in France the CAC was down marginally -0.1% (or -4 points) at 3,762.

Asian Markets

Asian stock markets ended lower. Asian investors started profit taking for the end of month/quarter.  Japanese shares were were sold off, as a large number of stocks traded ex-dividend.  Chinese banks and property developers fell again, on concerns the government may launch more measures to cool property prices.  Rare Earths stocks have been in favor of late, and Chinalco jumped 4.3% after saying it plans to invest CNY10 billion to develop rare earth resources and acquire a majority stake in Jiangxi Rare Earth and Rare Metals Tungsten Group.  In China the SSE Composite closed down -0.6% (or -17 points) at 2,611, while in Hong Kong the Hang Seng Index was down -1.0% (or -231 points) at 22,110 and in Japan the Nikkei 225 Index was down -1.1% (or -107 points) at 9,496.

Commodities

The Dollar Index down -0.6% at 78.94 on higher Euro, while the Australian Dollar last traded higher at 95.61. Commodities were generally higher.

Gold prices are still around record highs. The benchmark crude NYMEX for September delivery was down -0.4% (or $US-0.34) to settle at $US76.24. Copper prices rose, Copper for September delivery Copper for September delivery was up 1.1% (or 4.1 cents) at $US3.6115. Gold prices are around record highs, are around key $US1,300 level, with December gold was up 0.8% at $US1,308.60.

Key News International Drivers Today

US – drop in consumer confidence to lowest level in 7 months.

EU – Irish and Portuguese bonds plunged.
CHINA – Asian investors started profit taking for the end of month/quarter. Government stands firm on access to credit.
JAPAN – large number of stocks traded ex-dividend.

Markets Overview

Market

Movement

The Dow Jones Industrial Average

Up 0.4% (or 46 pts)  at 10,858

The S&P 500

Up 0.5% (or 6 pts)  at 1,148

The Nasdaq

Up 0.4% (or 10 pts)  at 2,380



The FTSE 100

Up  Marginally 0.1% (or 5 pts)  at 5,578

The German DAX

Down  Marginally 0.0% (or -3 pts)  at 6,276

The Fench CAC

Down  Marginally -0.1% (or -4 pts)  at 3,762



The Dollar Index

Down -0.58% at 78.94

The Australian Dollar

Last traded at 95.61

The Commodities Index

Up  Marginally 0.07% at 284.4



Crude Oil Futures

Down -0.4% at $76.24

Gold Futures

Up 0.76% at $1,308.60

Copper Futures

Up 1.13% at $3.6115

SPI Futures

Up 0.4% (or 17 pts) at 4,715





Market

Movement

SSE Composite (China)

Down -0.6%  at 2,611

Hang Seng Index (Hong Kong)

Down -1.0%  at 22,110

Nikkei 225 Index (Japan)

Down -1.1%  at 9,496

SPI: Above key Level 4700 – SPI up 0.4% at 4,715

ASX News Today

The SPI Futures is just above the key level of 4700 the ASX is set to open higher as the SPI Futures closed up 0.4% (or 17 pts) at 4,715. The key levels for our index today are 4750 and 4650. M&A activity continues to drive specific stocks. The ASX will trade higher today. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

ASX- ASX “speeding ticket”.  has held talks with a “small number of exchange groups” about possible tie-ups but none of the talks have resulted in any firm proposals. They also said in the past quarter |stock option trading activity is up 7% YoY, and futures market activity is up 36% and is showing signs of a strong recovery.

CPB- Campbell Brothers will sell its Cleantec business to Ecolab Inc.

DJS- David Jones the upmarket retailer has reaffirmed its profit guidance for 2010/11.

KCN- Kingsgate Consolidated the gold miner, says production for the September quarter will be lower than the average for financial 2010 due to maintenance, lower grades and heavy rain.

LBT- LBT Innovations the diagnostic technology developer, says a U.S. patent has been granted for the agar plate streaking technology which is the basis for LBT’s “MicroStreak” system.

LNG- Gas companies LNG and Metgasco (MEL) have agreed to jointly study the feasibility of project converting gas to LNG at Gladstone in Queensland.

NUF- Nufarm the ag chemicals supplier expects to generate better financial results in 2011 after reporting a loss, with profits down 63 percent (ex abnormals).

NZO- New Zealand Oil & Gas will issue 5.24 million new shares on Friday under its dividend reinvestment plan.

ORG- Origin is the majority holder of Contact Energy.  Contact shareholders opted to receive $53 million in Origin shares.

OSH- PNG villagers have gone on a rampage, attacking an ExxonMobil gas site. Oil Search is a partner in the project.

VBA – Virgin Blue flight schedule has returned to normal, after Sunday’s check-in chaos. But again had a “glitch” this morning.

WES-Wesfarmers with the Bunnings hardware chain, will increase its investment in NSW by $600+ million in establishing 18 new stores in the next 3-years.

Economic Reports :
Parliament reconvenes

Companies:
ASX Ltd (ASX) Full year 2010 AGM
Nufarm (NUF) Full year results

Sigma Pharmaceuticals Ltd  Interim 2010 Results

Ex-Dividends

Austbrokers Holdings (AUB)
Asian Masters Fund  (AUF)
Devine Limited  (DVN)
Goodman Fielder (GFF)
MAp Group (MAP)
Noni B Limited (NBL)
VDM Group Limited (VMG)

Market Summary

ASX – to open Higher
US & UK/Europe – Mixed
US ADRs –  Broadly Higher

BHP up 1.7% &

RIO up 1.9%;

AWC up 0.4%

ANZ up 2.2% &

NAB up 2.0%

NEM up 2.5%,

JHX down 1.6%,

NWS down 0.3%

Commodities Stock Index up 0.7%
Gold Stocks Index up 2.5% Oil Stocks Index up 0.6%

By Michael Hevern
Head of Research

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Stock Market Analysis: Markets Lower as Gold and Copper Shine

Friday, September 24th, 2010

Stock Market Analysis

Markets Lower as Gold and Copper Shine

U.S. stocks finished lower overnight, as the US dollar fell and gold prices remained near new record highs.  European market were lower as  profit-takers stepped in as the PMI data pointed to a sharp slowdown in euro-zone growth. Asian stock markets ended mixed, as markets were quiet due to regional holidays this week. Base metals closed higher in London as expectations of tightening fundamentals overcame selling pressure from disappointing U.S. data and a firmer US dollar. Investor focus is returning to fundamentals, with concerns about supply constraints for several of the base metals, which is driving demand.  Copper climbed to fresh 5-month highs, Gold is around all-time highs.

The SPI Futures is just above the key resistance level of 4600 the ASX is set to open lower as the SPI Futures closed down -1.0% (or -45 pts) at 4,613. The key levels for our index this week are 4630 and 4530. M&A activity continues to drive specific stocks. The ASX will trade lower today. Note that we are nearing the end of the dividend period (see below), which has been supporting our market in the past month. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

US Markets

U.S. stocks traded lower following the drop in European markets and the euro. The U.S. markets have been trading into key resistance levels this week and have not been helped by recent economic reports. Firstly, the Fed disappointed the markets over their assessment on the U.S. economy saying that it remains weak and at risk, and spoke of the requirement for another round of quantitative easing (QEII), but refrained from pulling the trigger for the moment. Then overnight jobs data disappointed with the Labor Department reporting initial unemployment claims increased by 12,000 to 465,000 in the week ended 18 Sept’10 and the previous week figures were revised up 3,000 to 453,000, while data on sales of existing U.S. homes showed a surge of 7.6% in August, but this did little to help investor sentiment. The Financial and Industrial sectors was fell the most, down over 1.5%.  Even the Mining sector fell 0.9%, despite rising commodity prices.  Overnight the Dow closed down -0.7% (or -77 points) at 10,662, while in the broader market the S&P 500 index down -0.8% (or -9 points) at 1,125 and the tech-heavy Nasdaq ended down -0.3% (or -7 points) at 2,327.

European Markets

European market are down this week. Profit-takers stepped in overnight as a survey of purchasing managers (PMI) pointed to a sharp slowdown in euro-zone growth, refueling economic worries and prompting traders to sell equities. The Markit euro-zone composite output index fell from 56.2 in August to 53.8 in September, posting the largest decline since November 2008.  A reading above 50 indicates growth in activity, but the data also signaled that euro-zone growth slowed sharply at the end of the third quarter. Investors were again spooked about euro-zone sovereign debt and the slowing pace of economic growth prompting traders to sell equities and buy gold. The sovereign debt worries also resurfaced in Europe this week, with the cost of insuring  government debt against default once again soaring, particularly for the PIIGS economies: Ireland, Spain, Portugal and Greece. Also in Ireland data disappointed showing the economy has contracted by 1.2% in the second quarter, highlighting the depth of the nation’s worries.  In London a report said that the U.K. economy will grow slower in 2011 (2%),  less than previously forecast 2.5%, as the biggest public spending squeeze since WWII starts to bite.  Investors have been coming to terms with key FX data this week as the sliding US dollar and strengthening euro  depressed sentiment in Europe, as the trend threatens to European exporters, making them less competitive.  Overnight  in London the FTSE 100 index closed down marginally -0.1% (or -5 points) at 5,547, the German DAX down -0.4% (or -24 points) at 6,185, while in France the CAC was down -0.7% (or -25 points) at 3,710.

Asian Markets

Asian stock markets were mixed. Trading activity has been modest and Asian stock markets mixed, as markets were quiet due to several regional holidays this week. Japanese exporters declined as the yen strengthened to its highest levels against the U.S. dollar in a week. Markets in China were shut from Wednesday for public holidays. The Hang Seng surprised earlier in the week, with property developers driving Hong Kong shares to a fresh 5-month high, as their interest rates are pegged to the US dollar and will remain low for longer.  Overnight in China the SSE Composite was closed at 2,592, while in Hong Kong the Hang Seng Index was closed at 22,048 and in Japan the Nikkei 225 Index was down -0.4% (or -3579 points) at 9,566.

Commodities

The Dollar Index up 0.4% at 80.11 on lower Euro, while the Australian Dollar last traded at 94.68.  Commodities were generally higher.

Gold prices are still around record highs. The benchmark crude NYMEX for September  delivery was up 0.3% (or $US0.21) to settle at $US74.92. Copper prices rose, Copper for September delivery  was up 0.7% (or 2.7 cents) at $US3.5675. Gold prices are around record highs, are around key $US1,250 level, with December gold was up 0.3% at $US1,291.60.

Key News International Drivers Today

US – Initial unemployment claims increased by 12,000 to 465,000 in the week.
EU – A survey of purchasing managers (PMI) pointed to a sharp slowdown in euro-zone growth
CHINA – Markets closed for holidays. Government stands firm on access to credit.
JAPAN – Markets were quiet ahead of  several regional holidays this week.
SPI – Near key Level 4600 – SPI down -1.0% at 4,613

ASX News Today

The SPI Futures is just above the key resistance level of 4600 the ASX is set to open lower as the SPI Futures closed down -1.0% (or -45 pts) at 4,613. The key levels for our index this week are 4630 and 4530. M&A activity continues to drive specific stocks. The ASX will trade lower today. Note that we are nearing the end of the dividend period (see below), which has been supporting our market in the past month. Options volatilty is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

ALS- Alesco the construction, mining and home products provider says its trading performance so far on the 2011 financial year has been below expectations.

AIZ- Air New Zealand says the regulators denying a proposed alliance with Virgin Blue on trans-Tasman services threatens its future and leaves it marginalised.

BHP – Potash Corp has asked a US court on to block a $US39 billion hostile takeover by BHP. However BHP Billiton will stick to plans to dismantle the Canpotex potash cartel if its hostile takeover of Potash Corp succeeds.

BKW- Brickworks has forecast a short-term softening in demand as work from the school building and first homebuyer programs comes to an end.

BWN – Bhushan Steel the New Delhi-based firm will make an on-market takeover bid for Australian coal and mineral exploration minnow Bowen Energy Ltd.

MOL- Moly Mines has reached a milestone with the wet commissioning of its Utah Point berth and loader at Port Hedland. It has awarded the ore haulage contract for the 1 million tonne Spinifex Ridge Project to Bullbuck Pty Ltd.

MMX- Murchison Metals Ltd has increased the mineral resource estimate by 7.3% at its Jack Hills magnetite and hematite iron ore project in WA.

NAV- Navigator Resources is in a trading halt as the company announced a pit wall collapse at its Bronzewing Gold Project on Wednesday.

SKI – Spark Infrastructure Group the Utility owner, has launched a $295 million capital raising and has proposed a simplification of its listed security structure.

STO- Santos says Asia’s demand for natural gas will more than double in the next 15 years, offering significant opportunities for Australian exporters.

TAL- Tower Australia will enter the life insurance market in an alliance with Virgin Money.

TLS – Telstra expects $US433 from SouFun sale. Telstra says talks with the federal government on the National Broadband Network (NBN) are progressing. However jobs will be cut at Telstra as it aims to simplify its business and improve customer satisfaction.

VBA- The ACCC has given preliminary approval to an alliance between Virgin Blue and Middle East-based airline Etihad, which would see the airlines cooperate on pricing and scheduling.

Economic Reports:

The Federal Government needs to find a speaker

Companies:

Lend Lease Corp (LLC) Full year 2010 Dividend payment

Ex-Dividends

Aurora Sand Au Trust (ABW)
Aurora Global Trust (AIB)
Ask Funding Limited (AKF)
Aurora Sandringham (AOD)
Aspen Group (APZ)
Aurora Property (AUP)
Australian Enhanced (AYF)
Adelaide Managed (AYT))
Belmont Holdings (BTA)
Cabcharge Australia (CAB)
Clime Investment (CIW)
Chandler Macleod Ltd (CMG)
Ethane Pipeline EPX)
G8 Education Limited (GEM)
Globe International (GLB)
Garratt’s Limited (GRT)
Hastings Diversified (HDF)
Hastings High Yield (HHY)
ING Industrial Fund (IIF)
ING Office Fund (IOF)
London City Equ. Ltd (LCE)
Mirvac Group (MGR)
Multiplex European (MUE)
Myer Holdings Ltd (MYR)
OM Holdings Limited (OHM)
Peters MacGregor Inv (PET)
Prime Infr Group (PIH)
Prime Media Grp Ltd (PRT)
Snowball Group (SNO)
Sirtex Medical  (SRX)

Market Summary

ASX – to open Lower US & UK/Europe Lower
US ADRs – Broadly Lower

BHP down 0.6% &

RIO down 0.6%

AWC down 1.4%

ANZ down 0.2% &

NAB down 0.9%

NEM down 1.7%

JHX down  0.9%

NWS down  1.3%

Commodities Stock Index down 0.8%
Gold Stocks Index down 0.8% Oil Stocks Index down 0.8%

Michael Hevern
Head of Research

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Stock Market Analysis: Weekly Market Wrap

Friday, July 30th, 2010

Weekly Market Wrap – Stress Relieved

Overseas markets generally traded higher this week after the successful completion of the ECB Bank “stress tests”. Banks benefited, trading higher this week. Markets are generally trading above their 200 day moving average, with the exception of China and Japan, and Copper has again been a highlight, rising to a 10-week high.

US Markets

The positive sentiment resulting from the earnings season has been tempered this week, as economic data in the U.S. pointed towards a slowing economy. Consumer confidence has slumped and durable goods orders dropped last month, raising concerns that the economic rebound is slowing as the government unwinds stimulus programs. This may be confirmed if the U.S. gross domestic product data, due out tonight, shows growth has slowed (the forecast is for a GDP of 2.6 percent in the second quarter). Overnight the Dow closed down -0.3% at 10,467, while in the broader market the S&P 500 index was down -0.4% at 1,102 and the tech-heavy Nasdaq ended down -0.6% at 2,252.

European Markets

European stocks advanced this week on the back of the successful completion of the ECB Bank “stress tests”. The results showed only 7 out of 91 banks failed the test which was fewer than expected, but analysts questioned whether the tests were tough enough, as they only showed $US3.5 billion needed to be raised to prop up capital adequacy (previous estimates had ranged from $75 to $85 billion). 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, supported more bullish sentiment. The Swiss banking giant UBS, upgraded its weighting on European equities to neutral from underweight. There appears to be a rotation to more positive sentiment in Europe as shown by the Euro being up above $US1.31, its highest since May. Overnight in London the FTSE 100 index closed down marginally, -0.1% at 5,314, the German DAX was down 0.7% at 6,135, while in France the CAC was down -0.5% at 3652.

Asian Markets

Asian markets had a solid week. Chinese equities continued to rise as the Central Bank said China’s economic fundamentals are “good”. 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, and overnight in China the SSE Composite closed up 0.6% at 2,648, while in Hong Kong the Hang Seng Index was flat at 21,094 and in Japan the Nikkei 225 Index was down -0.6% at 9,696.

Commodities

Copper continued to shine this week, rising to an 11-week high on signs that growth is sufficient in China and the U.S. to spur demand. Copper prices rose to new monthly highs, above the key $US3.00 a pound, up 1.4% (or 4.4 cents) at $US3.2850 a pound. Oil prices held up this week with the benchmark crude NYMEX for September delivery rising 1.7% (or $US1.37) to settle at $US78.36 a barrel. Gold broke below key support. Overnight August gold was up $US8.80 at $US1,171.20 an ounce.

ASX News

The election dominated the news this week, but there were few surprises. Overseas market movements have dictated Aussie investor sentiment. Improvements in China have seen commodities prices continue to rise, while in Europe sentiment in improving.

Our View

Markets have again drifted higher as trading volumes continued to pick up this week. There does not appear to be a catalyst that will push markets through current key levels. China and Japan have been positive for Asian markets. The U.S. economic data is disappointing while Europe appears to be improving.

Overseas markets are keenly anticipating the U.S. GDP report and the European unemployment and consumer price index due out tonight. China also report their PMI data on Sunday.  The outcome of these reports will set the tone for next week.

The S&P ASX200 is currently trading around 4485. The key support level on the ASX is still around 4,200 and the key levels for our index next week are 4600 and 4350, with pivot at 4450.  The pending elections will have a dampener on the markets near term.

By Michael Hevern
Head of Research

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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.

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