Online Stockmarket Trading Update

Presented by Michael Hevern
Cubefinancial

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Good Morning and Welcome to Cube Wrap for Wednesday, the 8th of October, I’m Michael Hevern for Cube Financial.

The information presented in this presentation 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.  Again, it is general advice only.

Well, the roller coaster ride continued on the US markets, down another 5% even after our markets staged a brilliant recovery after the surprise of 1% great cut by the RBA.  The volatility index is at extreme showing that emotion is ruling at the moment.  I will talk that out a little bit later, but we saw the Nikkei came out and said that the Fed is likely to cut rates and the market is anticipating a rate of cut of almost or around 1%, which is very significant considering the Fed rate at the moment, 72% and that have a lot of room to move there.

The government is also coming out and saying that they are looking at providing support for the cooperate paper sector of the market, so that they can get this credit crisis all move in liquidity in the credit markets.  At present, it is expected that the top firms will benefit from this move.  The EU minister’s plan for financial payouts  in the Euro is on with banks as big as Deutsche bank being rumor to have been in trouble as far as capital backing is concerned that has put a big damp now on the European markets in the last few days.

The NASDAQ was down 6% finishing on its lows and the lows of 2004, it is especially on the backs of poor economic data going forward.  We saw in the US that Morgan Stanley was down 23% that is even after Mitsubishi financial from Japan agreed to a 21% state for 9 billion dollars.  The fall of 23% wiped out 7 billion dollars of its market cap.  The Royal Bank of Scotland also fell 39% in the UK adding to the revise of the financials in the UK sector.  The financial index over in the US was down 5.3% on overnight.

We saw that in the UK that market was fairly flat.  They are waiting on the Bank of England’s decision which is due on Thursday.   Banks were sold off heavily and materials and energy stocks recovered slightly.  The FTSE was up 0.4% for the session.  The energy stocks recovered with BP, Royal Dutch, Shell, and BG group all up between 3% and 4.5% and the big miners also bounced with BHP, Rio, Anglo, and the Dutch were all between 1% and 11% on the session.

We saw the banks in turmoil with the Royal Bank of Scotland down 39%, which is the lowest level it has seen for 15 years.  Lloyds shed 13% and Barclays sink 9%.  HBOS also sold off 41% to be the top loser in the FTSE 100.  There is a move to the energy stocks and Glaxo Smith Kline and Shire were up 2% and 3.5% respectively.  Drink groups were up in the definitive line with SABMiller up 10% and Diageo up 5.5% on the session.

We saw in Europe the CAC and DAX, CAC was up 0.5% while the DAX was down 1.1% that was on the back of these rumors about financial backing of the banks in Europe.  In Asia, we saw the Nikkei down 3% testing its 2003 lows and again it is a similar story that banks were down and exporters were down as well on the back of the sliding economic growth.  The Canon was down 3%, Coke Zero down 2.3%.  Honda and Toyota down around about 4%, Sharp down 8.8%.  Elsewhere in Asia, we saw the Chinese market down 0.7% and Hong Kong was down 4.9% for the session.  I was a bit worries yesterday that was sounding fairly negative finally relieved that yesterday was the fact that the RBI cut the interest rates by 41%, which surprised all the market and so a short rally in the afternoon session.

The SPI however is down overnight around about 266 points, so I expect the gains of yesterdays afternoon to be within the way yet again.  In the commodities markets, we will see the oil sink up above the $90 mark as OPEC Libyan chief oil minister came out and said that OPEC may cut production if the oil price does hang around below $90 going forward.  There is also a slide out of the USD.  We saw the gold price up to $882, that is on the weekly USD, the fact that there has been so many bail outs there they are going to have to start printing money over there.  The commodities were mixed, we saw silver up 0.8% while the copper was up 1.4%, lead down 0.2%, zinc down 0.2%, aluminum up almost 2%, and nickel down 0.5% and that was after a big sell off in previous session.

In the market on the ASX today, you look for gold stocks to offer some support.  They have been sold off in last few days, so many good buying there.  We saw CBA has announced that they have bought Bank West for the tune of 201.2 billion dollars that is seen as very opportunistic and going forward as long as the ASIC baking is there, should be a good deal for CBA.  Stockland took the opportunity after the RBA announced a 1% rate cut to raise 300 million dollars at $5.30 which is about what it was trading at before the rate cut.  It is JP Hi-Fi there.  It came out yesterday and said that its business is tracking quite well to the margin with sales on budget and earnings above budget at the moment for the first quarter of 2009.

Financials likely to be the big suffers in our market today.  We will end it down expect moving to defensive price today.  Stocks like Coca Cola and Fosters had been doing well of late.

Just before I go I did mention the volatility index being at all time highs, see there that is a blue line, it has spiked to the highest level that has been seen since it started to be recorded they actually record the footscall ratios in and effort to identify the amount of traders or investors long versus those being short.  You can see there the last time it spiked at this level is 2002.  We saw the bottom in March and the market did see a low again right through and to late last year.  We also saw back in 1998, where similar spike in the volatility index or the market raise up for 18 months before pulling back.  So you can see we are at all-time highs the feat that they will gauge, which is its volatility index is at all-time highs and did really hit albeit stabilization on the markets.  We will see a bit of a good run finishing up to 18 months if history repeats.

Should you have any questions about the information provided within this presentation, please call the equities options desk or the CFD advisory desk on the numbers provided, and as always trade carefully.