Posts Tagged ‘Dividend’

Stock Market Analysis: Market Caution Remains Due to Greek Bond Standoff

Tuesday, January 31st, 2012

* US stock markets have recovered from an early sell-off ending modestly lower for the session.
* European stock markets fell overnight as investors grew increasingly concerned about the lack of a Greek debt-restructuring deal.
* Asian markets fell yesterday as investors were cautious ahead of a key summit of European leaders later in the day and Chinese PMI out Wednesday.
* Commodities prices traded mostly lower, as Gold prices dropped to around $US1,730, while crude-oil closed up around $US99.

The SPI Futures is trading above the key pivot level of 4180, ended down -0.2% (or -7 points) at 4,238. The key levels for our index today are 4180 to 4230.

Last week the Australian share market ended up for a fourth consecutive week, with shares up around 5.5 percent so far in 2012.

Yesterday Aussie shares fell, led down by the financials, as investors waited for news on Europe debt talks.

Aussie shares are expected to ease today and traders are should be looking to protect recent profits, after weaker leads again from the US and European markets.

See below for ASX listed companies in the news today.

Economics News Today

*  Dec     Financial Aggregates, including Private Sector Credit�
*  Dec     NAB Business Survey�
*  Dec     International Reserves & Foreign Currency Liquidity.

US Markets

US stock markets have recovered from an early sell-off ending modestly lower for the session. Traders are showing concern that the standoff between Greece and its private creditors is still not resolved, as well as an alarming surge in Portugal’s borrowing costs.

Financial companies led stocks lower as investors remain wary of the potential for Europe’s debt issues to spread causing contagion across the global financial system. Eight of 10 sectors on the S&P 500 finished in the red for the session, with the only exceptions being the telecommunication and technology sectors. Trading volumes were down as fund managers are looking to hold on to their January profits as the month end nears.

The ten company groups that make up the S&P index traded mixed with Materials down -0.2%, Financials down -0.9%, Energy down -0.5%, Industrials down -0.4%, Technology up 0.3%, while Consumer Staples were down -0.3%.

The Dow Jones closed down -0.1% (or -6 points) at 12,654, the S&P 500 index down -0.3%  (or -3 points) at 1,313, the Nasdaq ended down -0.2% (or -5 points) at 2,811 and the smaller cap Russell 2000 was down -0.6%.

European Markets

European stock markets fell overnight as investors grew increasingly concerned about the lack of a Greek debt-restructuring deal. The Stoxx Europe 600 Index closed down -1.1%.  All the key markets were down over -1% for the session.

Across the region the financials led the sell-down with the Stoxx Europe 600 Index Banking sector closing down -3.1%. Investors were worried due to Friday’s Fitch ratings agency downgrade of Italy, Spain, Belgium, Slovenia and Cyprus and cut its outlook in Ireland. 

Investors are concerned over the Greek debt negotiation and are now shifting their attention to Portugal, which could be the next in line for a bailout after their borrowing costs surged with the 10-year government bond yield reaching euro-era highs, with the 10-year Portuguese government bond yield at 17.39%.

The meeting of the European Union leader’s summit is underway in Brussels. It aims to endorse a permanent bailout fund with a lending capacity of EUR500 billion, and to finish details of a “fiscal pact” aiming at budget deficits.  There is some good news as all European Union countries, except Britain and the Czech Republic, have agreed to sign a new treaty designed to stop overspending in the eurozone and put an end to the bloc’s disastrous debt crisis, while also pledging to stimulate growth across the region.  The eurozone’s 17 nations hope that the tighter rules will convince investors that all countries will get their debts under control and restore confidence in their joint currency.

In London the FTSE 100 index closed down -1.1% (or -62 points) at 5672, the German DAX was down -1.1% (or -67 points) at 6,444 while in France the CAC was down -1.6% (or -53 points) at 3,265. Spain was down -1.6% and Italy ended down -1.2%.

Asian Markets

Asian stock markets fell yesterday as investors were cautious ahead of a key summit of European leaders later in the day and Chinese PMI out Wednesday.  Japanese stocks closed lower.

Chinese traders returned in a sombre mood and sold down stocks, due to disappointment over a lack of policy easing from the government. The Hong Kong market was also lower, as shares of developers and Chinese banks fell sharply on fears over the property sector’s outlook in the absence of any policy easing. The Taiwanese market bucked the trend, rising sharply as the market returned after a long Lunar New Year holiday. 

In China the SSE Composite closed down -1.5% at 2,285, while in Hong Kong the Hang Seng Index was up -1.7% at 20,160 and in Japan the Nikkei 225 Index closed down -0.5% (or -48 points) at 8,793, while the Indian market was down 2.2%.

Commodities

The Dollar Index was lower at 78.36 on a higher Euro, while the Australian Dollar last traded higher at 1.0667. Commodities prices traded lower.

For the session the benchmark crude NYMEX for January delivery was down -0.6% (or -$US0.63) to settle at $US98.93.  Copper prices are seeking a support level as Copper for January delivery was down -1.6% (or -6.4 cents) at $US3.8263.  January gold was down -0.1% (or -$US1.70) at $US1,730.

ASX News Today

GGP – Golden Gate Petroleum, with a market cap of just $44 million, says it no longer needs to raise further capital and is forecasting Golden Gate will produce close to 1000 barrels of oil a day, in the next 9 months.

OST – OneSteel will receive $64 million to help it prepare for the introduction of the federal government’s carbon tax in July.

ROC – ROC Oil lifted production in the December quarter, but for the year it was down.  4Q production increased by 7 percent on the previous quarter to 708,675 barrels of crude oil, bringing full-year total to 2.73 million barrels of oil equivalent, compared to 3.1 mmboe in 2010.

WES – Wesfarmers to release second-quarter sales figures on Thursday.

WOW – Woolworths, Australia’s biggest supermarket chain, releases second-quarter sales figures today.  Woolworths has appointed Christine Cross, David Mackay and Michael Ullmer as non-executive directors.

Ex-dividend Date

None

Market Summary 

ASX – to open lower
US & UK/Europe – lower
Commodities Stock Index  down -0.5%
Gold Stocks Index down -1.3%
Oil Stocks Index down -0.1% 

US ADRs – Broadly Lower

BHP down -0.9% & RIO down -0.2%; AWC down -1.1%
ANZ down -0.9% & NAB down -1.4%
NEM   down -0.5%, JHX down -2.3%, NWS  up 0.3%

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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Stock Market Analysis: Markets Mixed Awaiting Greek Solution

Tuesday, January 24th, 2012

* US stock markets ended flat and are headed for their best January performance since 1997.
* European stock markets reached 5-month highs overnight. The European Stoxx 600 index closed 0.5% higher.
* Many Asian stock markets are closed for the Luinar New Year holidays.
* Commodities prices traded mostly higher, as Gold prices higher to around $US1,677 and while crude-oil closed up around $US100.

The SPI Futures is trading above the key pivot level of 4180, ended up 0.4% (or 16 points) at 4,208. The key levels for our index today are 4150 to 4230.

Yesterday Australian shares ended slightly lower, as lacklustre local producer pricing figures and eurozone uncertainty over a Greek debt deal pushed investors to take profits after the rally last week.  This is a holiday shortened week, as a number of Asian markets will be closed for the Lunar New Year holidays. The Australian Bureau of Statistics has reported today that producers prices rose at a slower pace than economists forecast last quarter as cheaper agriculture costs partly offset more expensive industrial machinery. The producer price index (PPI) rose 0.3 percent in Q4 2011 from the previous quarter, when it gained 0.6 per cent and the PPI index rose 2.9 percent in the fourth quarter from a year earlier. Drilling into the report showed the cost of industrial machinery and equipment manufacturing gained 3.2 percent, while prices dropped -21.8 percent in a category called other agriculture. 

The interest rate futures market is still forecasting the chances of another rate cut when the RBA next meets on February 7, at about an 80 percent chance.  Shares in the All Ordinaries (XAO) traded eased again today, closing down -0.4% at 4288, as the S&P/ASX 200 (XJO) closed down -0.3% at 4225.

Aussie shares are expected to hold on this option expiry day and traders are expected to continue to look for bargains today, after mixed leads from the US and European markets.�

See below for ASX listed companies in the news today.

Economics News Today

*   None.

US Markets

US stock markets ended flat and are headed for their best January performance since 1997.  US investors watched Europe for developments in its debt crisis. Investors monitored Greece as it endeavours to negotiate a debt-restructuring agreement with its private creditors.
All three benchmarks have posted weekly gains for the past three weeks, and traders cited profit-taking for the flat session.  Energy stocks were in focus as crude-oil continues to hold around $US100.  Chesapeake Energy jumped on 6.3% after the natural-gas producer said it plans to further reduce dry-gas drilling activity by 50% and to curtail its gross gas production by about 8% in response to a drop in natural-gas prices.

All ten company groups that make up the S&P index traded mixed with the Materials down -0.1%, Financials sector up 0.4%, Energy sector was up 0.8%, Industrials sector was down -0.1%, Technology was up 0.3%,  while  Consumer Staples were down -0.1%.

The Dow Jones closed down -0.1% (or -12 points) at 12,709, the S&P 500 index up 0.1%  (or 1 points) at 1,316, the Nasdaq ended down -0.1% (or -2 points) at 2,784 and the smaller cap Russell 2000 was down -0.2%.

European Markets

European stock markets reached 5-month highs overnight. The European Stoxx 600 index closed 0.5% higher.  Investors remain  optimistic as they await the resolution between Greece and its creditors over an agreement on a deal to write down debt with proposed haircuts of up to 70%.  
Across the region bank shares across Europe surged after FT reports that Germany and France are urging the relaxation of global bank-capital rules to prevent a lending slowdown. In Germany banks surged with Commerzbank AG jumped 13% and Deutsche Bank AG rose 3.1%, while in Italy, Banca Monte dei Paschi de Siena SpA surged 14% and UniCredit SpA advanced 10%.  
In Greece the market surgeded 5.1%, as the government is reported to be getting closer to an agreement with private creditors,as they seek to cut Greek debt by as much as EUR100 billion.  Resolution and agreement is critical for Greece to avoid a default when EUR14.4 billion comes due 20th March. The IMF has warned that the global economy could slip into a “1930s moment” unless Europe deals with its debt crisis.  
In London the FTSE 100 index closed up 0.9% (or 54 points) at 5782, the German DAX was up 0.5% (or 32 points) at 6,437 while in France the CAC was  up 0.5% (or 17 points)  at 3,338, Spain was up 0.7% and Italy ended up 1.8%.

Asian Markets

Many Asian stock markets are closed for the Luinar New Year holidays.  Many regional markets, including those in Shanghai, Hong Kong and Seoul, were closed for Lunar New Year holidays. Japanese stocks ended flat, with rising exporter shares offset by losses in energy sector shares. Exporters mostly advanced in Japan with Toshiba climbing 4.3% and Sony jumping 4%. 

In China the SSE Composite was closed at 2,319, while in Hong Kong the Hang Seng Index was closed  at 20,110 and in Japan the Nikkei 225 Index closed flat (or  -1 points) at 8,766, South Korean KOSPI was closed for the session, while the Indian market up 0.1%.

Commodities

The Dollar Index was lower  at 79.77 on a higher Euro, while the Australian Dollar last traded higher at 1.0525. Commodities prices traded mostly higher.

For the session the Benchmark crude NYMEX for January delivery was up 1.6% (or $US1.61) settle at $US99.94.  Copper prices are seeking a support level as Copper for January delivery was up 1.4% (or 5.4 cents) at $US3.7930.  January gold was up 0.9% (or $US14.30) at $US1,677.  

ASX News Today

 
AFI – African Iron’s major shareholder Cape Lambert Resources has formally accepted a take-over offer from South African miner Exxaro.
   
APA may be forced to significantly sweeten its offer price for rival pipeline owner and operator Hastings Diversified, according to a UBS note to clients today.  The investment bank said units in Hastings could be worth as much as $2.45 each, which is significantly higher than the bid price of around $2.00 per unit offered by APA.

ANN – Ansell the gloves and condoms supplier appointed Koreca Industries to distribute Ansell’s personal protective equipment products in the Republic of Korea.

BHP – BHP Billiton is progressing along with its Pilbara,WA,  port expansion plans.  The plan to spend over $20 billion over eight years in expanding its port facilities in the Pilbara region are a step closer today, after the company received approval from the WA’s Environment Protection Authority for its Outer Harbour plan at Port Hedland.  At full capacity, the Outer Harbour plan is designed to lift BHP’s Pilbara iron ore exports to 350 million tonnes by 2020, which is more than double this year’s 159 million tonnes forecast shipments.

EXT – A Chinese nuclear company is a step closer to making a bid for Australian uranium firm Extract Resources after gaining a 30 percent stake in its biggest shareholder.

LYC- Lynas shares are in a trading halt, as the rare earths miner is seeking to finalize a funding deal, which analysts estimate to be up to $100 million.  The halt comes a week before a meeting of Malaysia’s Atomic Energy Licensing Board, which is to decide whether to approve a temporary license for Lynas to commission a rare earths processing plant in central Malaysia.

MBN – Mirabela Nickel says the record production in the December quarter has helped it meet its 2011 targets, and the company expects higher production in 2012.

NCM – Newcrest Mining reported gold production rose 3 percent in the December quarter, compared with the previous three months, but was down 20 percent on the prior corresponding period.

NXS – Nexus Energy announced it will form a joint venture with oil major Royal Dutch Shell and Osaka Gas to develop its Crux field in the Browse Basin, WA.
   
ORG – Orgisn says the Australia-Pacific LNG gas project in Queensland is nearing a positive final investment decision after a sales deal with China’s Sinopec was made legally binding.

WSA – Western Areas hopes to become Australia’s second largest nickel producer through the expansion of its existing domestic output and new mines in Finland and Canada.

Ex-dividend Date
None
 

Market Summary 
ASX – to open flat
US & UK/Europe – mixed

Commodities Stock Index  up 0.4%
Gold Stocks Index up 1.7%
Oil Stocks Index up 0.8% 

US ADRs – Broadly Mixed!!…

BHP up 0.9% & RIO up 1.7%; AWC up 3.5%
ANZ up 0.4% & NAB up 0.1%
NEM  down -0.1%, JHX down , NWS up 0.6%

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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Stock Market Analysis: Markets Lower On S&P Eurozone Downgrades

Monday, January 16th, 2012

* US stock markets fell on Friday, but managed to finish off their lows again and had modest gains for the week. The US earnings reporting season continues.
* European stock markets mostly eased Friday night, as Standard and Poors threatened downgrades. The Stoxx Europe 600 index closed down 0.2%, but is up 1.9% YTD.
* Asian shares finished mostly higher on Friday, but China still hovers around 34-month lows.
* Commodities prices traded lower, although Gold prices traded higher to around $US1,630. Crude-oil closed around $US99.

The SPI Futures is trading below the key pivot level of 4180, ending down -0.4% (or -17 points) at 4,163. The key levels for our index this week are 4080 to 4280.

Aussie shares are expected to open lower as traders digest the news of the S&P eurozone downgrades and the negative leads from the US and European markets.

See below for ASX listed companies in the news today.

US Markets

US stock markets fell on Friday, but managed to finish off their lows again and had modest gains for the week.

Stocks eased due to fears of credit downgrades of several eurozone countries (which did materialise after market), and disappointing results from J.P.Morgan.

For the year-to-date the markets are higher, with the Dow Jones Index up 1.7%, the S&P500 up 2.5% and the tech-heavy Nasdaq has jumped 4.1%.

The rumours over eurozone downgrades by the S&P proved correct but did not get confirmed until after market.  Among the largest economies to be downgraded were France, Italy and Spain.

The downgrade concerns compounded investor caution after J.P. Morgan said its investment banking unit posted a profit slide of 52% from last year and a revenue decline of 30%.  The VIX has remain subdued YTD as the US earnings season continues in earnest next week.

All ten company groups that make up the S&P index traded lower. The Energy sector was down -0.5%, Materials were down -0.7%, Financials down -0.8%, Industrials down -0.8%, Technology down -0.6%, while Consumer Staples were down -0.1%.

The Dow Jones closed down -0.4% (or -49 points) at 12,422, the S&P 500 index down -0.5%  (or -6 points) at 1,289, the Nasdaq ended down -0.5% (or -14 points) at 2,710 and the smaller cap Russell 2000 was down -0.8%.

European Markets

European stock markets mostly eased Friday night, as Standard and Poors threatened downgrades. The Stoxx Europe 600 index closed down 0.2%, but is up 1.9% YTD.

Investors were on edge due to concerns over threatened downgrades and news that the talks to restructure privately held Greek debt did not reach a conclusion Friday and are suspended.  Concerns about a French downgrade have largely been expected by the market, but investors still sold stocks on the news.  However afer market the S&P Ratings Agency downgraded 9 of the 17 eurozone nations, with the biggest being France, Italy and Spain.

Investors had been on edge for the past month, ever since S&P announced that it put 15 of the 17 eurozone member countries on review for downgrade in early December.  Market participants have been especially concerned about France losing its top-notch, triple-A rating. AAA rated countries including Germany, Finland, the Netherlands, Luxembourg, Belgium, Estonia and Ireland were all spared from downgrade. The S&P Reatings Agency has cut the French credit rating to AA+ (down one notch) and Austria’s rating was also cut by a similar amount. Italy, Spain, Portugal and Cyprus had their ratings cut by two notches each.  The euro weakened to a 16-month low versus the dollar Friday on these widespread downgrades.

In London the FTSE 100 index closed down -0.2% (or -8 points) at 5,662, the German DAX was up 0.4% (or 27 points) at 6,179 while in France the CAC was down -0.2% (or -5 points) at 3,200. Spain was flat and Italy ended up 2.0%.

Asian Markets

Asian stock markets finished mostly higher on Friday, but China still hovers around 34-month lows.  Japan’s Nikkei Stock Index rose 1.4%, while in China the Shanghai Composite fell for a third consecutive loss. 

In commodities gold futures eased to around $US1,630 an ounce, while crude-oil futures also fell around $US99. 

The Asia markets have had a positive start to the year with the Chinese Shanghai Composite up 2.0%, while in Hong Kong the Hang Seng Index is up 4.2% and in Japan the Nikkei 225 Index is up 0.5%. The South Korean KOSPI was up 2.7%, while the Indian market was up 4.5%, year-to-date (YTD).

In China the SSE Composite was closed down -1.3% (or -30 points) at 2,244, while in Hong Kong the Hang Seng Index was up 109 points at 19,204 and in Japan the Nikkei 225 Index closed up 1.4% (or 114 points) at 8,500. The South Korean KOSPI was up 0.6% for the session, while the Indian market was up 0.7%.

Commodities

The Dollar Index was higher at 81.51 on a lower Euro, while the Australian Dollar last traded lower at 1.0319. Commodities prices traded mostly lower.

For the session the benchmark crude NYMEX for January delivery was down -0.4% (or -$US0.40) to settle at $US99.03.  Copper prices are seeking a support level as Copper for January delivery was lower -0.3% (or -1.2 cents) at $US3.6450.  January gold was lower -1.0% (or -$US16.90) at $US1,632.

ASX News Today

FBU – Fletcher Building, the country’s biggest listed company, has tapped private US investors in a $US300 million ($NZ376.46 million) debt placement to repay bank loans.

GBG – Gindalbie Metals, the iron ore producer, says its flagship Karara project in WA remains on track for first shipments later this year.

GNS – Woodchipper Gunns has welcomed the dismissal of legal action against its Bell Bay pulp mill brought by anti-mill group Pulp the Mill.

NAB – National Bank has transferred almost $600 million in capital to its UK subsidiary to strengthen its balance sheet.

PNA – PanAust has narrowly missed its target for copper production in 2011 despite a record output in December.

STO – Santos has confirmed it will develop the $490 million Fletcher Finucane oil project in the Carnarvon Basin off the northwest coast of WA.

Ex-dividend Date

None

Market Summary

ASX – to open lower
US & UK/Europe – lower
Commodities Stock Index down -0.8%
Gold Stocks Index down -1.3%
Oil Stocks Index down -0.5% 

US ADRs – Broadly Lower

BHP down -1.9% & RIO down -0.8%; AWC down -0.4%
ANZ down -1.1% & NAB down -0.5%
NEM  down -1.0%, JHX down , NWS down -1.2%

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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Stock Market Analysis: North Asian Markets On Edge Over Destabilisation Fears

Tuesday, December 20th, 2011

* US stock markets ended lower, as the ECB warns that the eurozone crisis is set to worsen in 2012. �
* European stock markets ended modestly lower overnight. Investors remained cautious after remarks from by the European Central Bank (ECB) President Mario Draghi on the state of the eurozone.
* Asian stock markets dropped sharply yesteray, as news of North Korean leader Kim Jong Il’s death ignited fears of instability on the Korean Peninsula.
* Commodities prices traded higher, as Gold prices higher to around $US1,600 and while crude-oil closed around $US94.
�
The SPI Futures is trading above the key pivot level of 4180, ended down -0.2% (or -9 points) at 4,038. The key levels for our index today are 3950  to 4080. 

Aussie traders are expected to trade cautiosly again and to stay defensive today, after the negative leads from the US and European markets,  and the added concern over possible destabilising politicking in the Korean Penninsular.  The selling in the retails stocks is likely to continue.  Note that in 7 out of 10 years on average the markets rise around 4.9% in the last 2 weeks of Decemeber.   Remember options expiry on Thursday.
�
See below for ASX listed companies in the news today.

US Markets 

US stock markets ended lower, as the ECB warns that the eurozone crisis is set to worsen in 2012. 
The losses were led by the financials, but there was selling across the board.  Banks were sold-off after the report that the Federal Reserve is set to embrace tougher capital rules proposed by regulators in Basel, Switzerland, that would require large financial institutions to increase their capital reserves. 
Trading volumes were only just over 70% of the daily average as many traders started their holidays early.  On the NYSE five stocks decloned for every one that rose. 
On a brighter note Caterpillar share rose 1.1% after the machinery company reported sales of construction and mining machinery rose 30% in the three months to the end of November, highlighted by strong growth in North America.  Commodities prices are looking for short-term support at current levels.
 
All the ten company groups that make up the S&P index traded lower with the Materials down -1.8%, Energy sector was down -1.8%, Financials sector down -2.3%, Industrials sector was down -1.1%, Technology was down  -1.0%,  while  Consumer Staples were down -1.1%.
 
The Dow Jones closed down -0.9% (or -106 points) at 11,759 the S&P 500 index closed up 0.3%  (or 4 points) at 1,219, the Nasdaq ended down -1.3%  (or -33 points) at 2,522 and the smaller cap Russell 2000 was down -1.5%.

European Markets

European stock markets ended modestly lower overnight.  The Stoxx Europe 600 finished flat. 
Investors remained cautious after remarks from by the European Central Bank (ECB) President Mario Draghi on the state of the eurozone.  Mr Draghi said the eurozone’s economic outlook is highly “uncertain” and Europeans face substantial downside risks into 2012.  A review of the ECB financial stability highlighted that risks had significantly increased and that their is a potential that we will fall into another global recession and a new credit crunch in 2012.  The ECB also said that we may see the failure of two or more European banks before we see the eurozone resolution.
 
In London the FTSE 100 index closed down -0.4% (or -22 points) at 5,365, the German DAX was down -0.6% (or -31 points) at 5,365 while in France the CAC was  up 0.1% (or 2 points)  at 2,972, Spain up 0.6% and Italy ended down -0.2%.

Asian Markets

Asian stock markets dropped sharply yesteray, as news of North Korean leader Kim Jong Il’s death ignited fears of instability on the Korean Peninsula. North Asia stocks markets all sold down on the news, with the South Korean share market plunging tolowest level since mid-October.  Some of these markets came off their lows as ratings agencies retained South Korea’s credit ratings, but warned that Kim’s death was destabilising.

Across the region growth-sensitive stocks continued to underperform as investors are concerned about the worsening global growth outlook.�
 
In China the SSE Composite was closed down -0.3% (or -6 points) at 2,218, while in Hong Kong the Hang Seng Index was dwon -1.2% (or -215 points)  at 18,070 and in Japan the Nikkei 225 Index was closed down -1.3% (or  -105 points) at 8,402, South Korean KOSPI was down  -3.4%  for the session, while the Indian market was down -0.7%.

Commodities

The Dollar Index was higher at 80.36 on a lower Euro, while the Australian Dollar last traded lower  at 98.96. Commodities prices traded mixed.

For the session the Benchmark crude NYMEX for December delivery was yp 0.3% (or $US0.32) settle at $US93.78.  Copper prices are seeking a support level as Copper for December delivery was down -0.7% (or -2.3 cents) at $US3.2860.  December gold was down -0.1% (or -$U1.20) at $US1,599. 

ASX News Today
 
BBG – Billabong International the surfwear giant, shares plunged after a profit warning from raising fears that the difficult Christmas trading perdiod could prove even worse that expected.
 
BEN -  Bendigo and Adelaide Bank increased its capital raising venture to $150 million due to strong demand from institutional investors.
 
DLX – DuluxGroup says a resilient home renovation market and improved performances from its trade businesses will drive net profit higher in 2012.
 
LLA – The owner of Victorian ski resorts Hotham and Falls Creek has recommended shareholders accept a $140 million takeover offer from Europe’s Merlin Entertainments Group.
 
NCM – Newcrest mining has reduced its full-year gold production guidance by about 6%  because of a production disruptions and lower grades and recoveries.
 
QAN – Qantas and its engineers have ended their dispute with the Australian Licenced Aircraft Engineers Association saying it has locked in job security for its members.
 
WOW – Woolworths hotel group has purchased 31 hotels in NSW from the Laundy, Waugh and De Angelis Groups.
 
WPL – Woodside Petroleum denies it is having doubts about building a gas processing plant in the Western Australia north.


Ex-dividend Date

None
 
Market Summary
ASX – to open lower
US & UK/Europe – lower

 

Commodities Stock Index  down -2.7%
Gold Stocks Index down -2.3%
Oil Stocks Index down -1.8% 

US ADRs – Broadly Lower!!…

BHP down -3.4% & RIO down -%; AWC down -7.7%
ANZ down  -2.6% & NAB down -2.2%
NEM  down -1.7%, JHX down -3.0%, NWS down -1.7%

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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Stock Market Analysis: Markets End Lower For The Week

Monday, December 19th, 2011

* US stock markets ended lower for the week, as the eurozone debt crisis continued to weigh on investor sentiment. The quarterly occurrence traders refer to as “quadruple witching” did not impact volatility.
* European stock markets finished mostly lower. The Stoxx Europe 600 edged down again -0.4%.
* Asian stock markets closed broadly higher on Friday but were down for the week.  Traders continue to show caution.
* Commodities prices traded higher, as gold prices moved higher to $US1,593 and crude-oil closed around $US94.

The SPI Futures is trading above the key pivot level of 4180, ending down -0.2% (or -10 points) at 4,124. The key levels for our index today are 4230 to 4100.

On Friday, Australian stocks broke their three-day losing streak following positive data from the US and a successful Spanish bond auction.  However the indexes were lower by around -1% and down for a second week.  There was concern among bank investors in the morning session after an unsourced report in the Australian Financial Review claimed that the banking regulator APRA had ordered the banking sector to stress test their portfolios for an economic shock within the next week.  This test was said to include modelling of a contraction in gross domestic product, the unemployment rate climbing to 12 percent, as well as a 30 percent decline in house prices and a 40 per cent drop in commercial property values.  However ANZ chairman John Morschel rejected the reports, describing the claims as “not correct”. 

Retail shares were hammered on Friday after JB Hi-Fi released a profit warning after market close on Thursday, saying that even though sales were broadly in line with earlier guidance, profits had been hit by steep price deflation, particularly in TV panels, which had fallen by 20 percent to 25 percent and that earnings before interest and tax for the six months to 31 December would be about 5 percent below the previous corresponding period.  JB hi-Fi shares plunged 15% on the news and the whole retail sector was down over -5% at one stage, but retailers did mange to finish off their lows for the session.

Shares in the All Ordinaries (XAO) closed up 0.5% at 4219 on Friday, and the S&P/ASX 200 (XJO) closed up 0.5% at 4152.

Aussie traders are expected to look for defensive bargains today, after the mixed leads from the US and European markets, as traders fears over the eurozone debt crisis remain elevated and US economic data boosted sentiment.  The selling in the materials stocks is likely to ease, as commodities prices recovered.  Note that on average the markets rise around 4.9% in the last two weeks of December and with the recent sell-off we are set up for some recovery in the next few trading days.  Remember options expiry on Thursday.

See below for ASX listed companies in the news today.

Economics News Today

*  Nov     Foreign Exchange Transactions and Holdings of Official Reserve Assets
*   Nov     New Motor Vehicles sales
*   Dec     Consumer Inflationary Expectations Survey
*   Dec     RBA Bulletin.

US Markets 

US stock markets ended lower for the week, as the eurozone debt crisis continued to weigh on investor sentiment.

The Dow Jones Index finished below the 12,000 level, while in the broader markes the S&P 500 and Nasdaq crept higher on Friday, which also marked the quarterly occurrence traders refer to as “quadruple witching”, when stock and exchange-traded fund options expire, and when December index options, index futures and single-stock futures all expire simultaneously. Volatilty remained steady. 

In economic data the US consumer price index was unchanged in November as a drop in energy costs offset a slight rise in food prices and other items, inline with expectations.

Most of the ten company groups that make up the S&P index traded higher with Materials up 0.7%, Energy up 1.1%, Financials up 0.5%, Industrials up 0.7%, Technology up 0.3%, while Consumer Staples were down -0.3%.

The Dow Jones closed down -0.1% (or -2 points) at 11,866, the S&P 500 index closed up 0.3% (or 4 points) at 1,219, the Nasdaq ended up 0.6% (or 14 points) at 2,555 and the smaller cap Russell 2000 was up 0.3%.

European Markets

European stock markets finished mostly lower. The Stoxx Europe 600 edged down again by -0.4%.  Markets continued to pull back as traders questioned the EU leaders’ ability and commitment to address the worsening debt crisis in the face of faltering economic growth and the threat of more credit downgrades from rating agencies. 

Ratings agencies cast mixed opinions over the eurozone majors, as Standard & Poor’s threatened to cut sovereign ratings not only for many peripheral euro-zone countries but even Germany and France, both of which currently enjoy the top-notch AAA rating.  The Fitch Ratings agency placed six eurozone nations including Spain, Ireland, Belgium and Italy on watch for downgrade, which cast a shadow over the eurozone.  Fitch has spared France from possible cuts reaffirming its AAA rating, but has lowered France’s rating outlook to “negative” from “stable”, citing a 50/50 chance France could lose its AAA rating over the next two years. Investors chose caution on the news. 

The debt laden Italian and Spanish economies are suffering from spiking eurozone borrowing costs which are at EU era highs. The eurozone problems with sovereign debt are threatening to impact on the French and the German economies which are the largest of the eurozone nations, and are now at risk of losing their top-notch investment rating. 

In London the FTSE 100 index closed down -0.3% (or -13 points) at 5,387, the German DAX was down -0.5% (or -29 points) at 5,701 while in France the CAC was down -0.9% (or -26 points) at 2,972. Spain was down -0.4% and Italy ended down -0.3%.

Asian Markets

Asian markets closed broadly higher on Friday but were down for the week.  Traders continue to show caution as the news out of the eurozone becomes increasingly bleak.  The Chinese Shanghai Composite, which is trading at close to 3-year lows, rose 2% on Friday, snapping a 6-week losing streak.  The fortunes for Aisa into the new year will depend on global economic activity, Chinese demand, the US Fed QE3 and whether the EU leaders can implement some coordinated rescue plan for the PIIGS economies.

In China the SSE Composite closed up 2.1% (or 44 points) at 2,225, while in Hong Kong the Hang Seng Index was up 1.4% (or 258 points) at 18,285 and in Japan the Nikkei 225 Index closed up 0.3% (or 24 points) at 8,402. The South Korean KOSPI was up 1.2% for the session, while the Indian market was down -2.2%.

Commodities

The Dollar Index was lower at 80.26 on a higher Euro, while the Australian Dollar last traded lower at 99.82. Commodities prices traded higher.

For the session the benchmark crude NYMEX for December delivery was down -0.4% (or -$US0.34) to settle at $US93.78.  Copper prices are seeking a support level as Copper for December delivery was up 1.9% (or 6.4 cents) at $US3.3350.  December gold was up 1.3% (or $U21.00) at $US1,593. 

ASX News Today

ANZ – ANZ Bank says that the European debt crisis is increasing the cost of funds.

CCL – Coca Cola Amatil says its second half profit will fall by 0.5 percent because of a stronger Australian dollar.  It also confirmed its exit from the Pacific Beverages brewing joint venture with SABMiller, and indicated it expects to pay up to $180 million for Foster’s ready-to-drink (RTD) spirits business.

BEN – Bendigo and Adelaide Bank will pay about $130 million for Bank of Cypress Australia, which caters to the Greek and Cypriot communities in NSW, Victoria and South Australia.

CTX – Caltex expects a drop in profit in 2011 due to challenging trading conditions and disruptions to its operations.

IAG – Insurance Australia Group has bought New Zealand’s second largest general insurer for $NZ380 million. 

JBH – JB Hi-Fi released a profit warning, saying that even though sales were broadly in line with earlier guidance, profits had been hit by steep price deflation, particularly in TV panels, which had fallen by 20 to 25 percent and that earnings before interest and tax for the six months to 31 December would be down -5 percent.

Local Corporate Reporting

DuluxGroup Ltd (DLX.AU)        Full year 2011 AGM  

Ex-dividend Date

SingTel (SGT)
 

Market Summary

ASX – to open higher

US & UK/Europe – higher

Commodities Stock Index  up 0.1%
Gold Stocks Index down -1.7%
Oil Stocks Index down -0.1% 

US ADRs – Broadly Mixed

BHP down -0.6% & RIO down -1.1%; AWC down -2.6%
ANZ up 0.2% & NAB up 0.2%
NEM  up 0.2%, JHX up , NWS down -0.2%

By Michael Hevern
Head of Research

 
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Stock Market Analysis: Trader Caution Prevails

Wednesday, December 14th, 2011

* US stock markets gave back early gains to close lower.  Investors were disappointed by remarks from the Federal Reserve officials.
* European stock markets opened higher but finished off their lows. The Stoxx Europe 600 index closed up 0.5%.
* Asian markets ended lower yesterday, weighed down by a fresh round of concerns over eurozone sovereign-debt problems after ratings agencies renewed their stance of “credit watch negative”.
* Commodities prices traded mixed. Gold prices were higher to $US1,632 and crude-oil closed around $US100. 

The SPI Futures is trading above the key pivot level of 4180, ending down -0.3% (or -12 points) at 4,172. The key levels for our index today are 4250 to 4150.

Yesterday Australian shares traded sharply lower from the open, following the negative leads from the US and Europe after a number of US ratings agencies warned that the EU summit resolve failed to change their determination to downgrade Europe in the New Year. Our miners were hit, after commodities traded lower overnight as traders took risk out of their portfolios. The financials were also sold-down in line with their overseas counterparts.

The National Australia Bank released its monthly business survey yesterday, which showed the business conditions index was up by 1 point after softening in the previous month, while business confidence was unchanged. Business conditions improved slightly in November, thanks to a boost in the mining, retail and services sectors.

Meanwhile the forecast for Australian exports has been revised down. The Bureau of Resources and Energy Economics predicts exports of metallurgical coal will be 150 million tonnes, down from the 156 million previously forecast, citing problems with the Queensland floods and strike action that have hit the sector.  On a positive note they have modestly increased the forecast for total iron ore exports in 2011-12 by 2.4 percent to 460 million tonnes, citing recent expansions to mine and infrastructure capacity.  

Shares in the All Ordinaries (XAO) generally eased again yesterday, closing down -1.4% at 4252, as the S&P/ASX 200 (XJO) closed down -1.4% at 4193.

Aussie traders are expected to be hedging again today, after the negative leads from the US and European markets, as traders’ fears over the eurozone debt crisis continued to undermine confidence, particularly after ratings agencies left national economies on “credit watch negative” after the promises from the EU summit failed to reassure.

See below for ASX listed companies in the news today.

Economics News Today

* Dec Westpac – Melbourne Institute Consumer Sentiment Survey
* Dec DEEWR Vacancy Report

US Markets 

US stock markets gave back early gains to close lower.  Investors were disappointed by remarks from the Federal Reserve officials that they will not be taking any immediate actions to stimulate the US economy, but they left their options open for 2012.

The Dow Jones Index held above 12,000.  In broader market the indexes closed modestly lower, while in the NYSE the decliners outnumber the gainers by 4 to 1, as gains in key stocks in the energy sector failed to be enough to support the overall indexes.

In economics news the US retail sales rose less than expected last month, signalling a disappointing start to the Christmas holiday shopping season, as consumers showed caution given the high unemployment and worries over the eurozone debt crisis.

Commodities prices were mixed, despite the US dollar surging overnight and pushing the euro dollar weaker. Crude-oil futures surged over 3% overnight after rumours that the Iranian government closed the Strait of Hormuz, located between Iran and Oman, the Middle East oil-shipping channel. However oil prices retraced when the rumours proved unfounded. Gold prices ended lower again, as central banks are rumoured to be cashing out to pump liquidity into the eurozone financial system to address the eurozone sovereign debt crisis.

All ten company groups that make up the S&P index traded generally lower with Materials down -1.7%, Energy down -0.9%, Financials down -1.4%, Industrials down -1.3%, Technology down -0.9%, and Consumer Staples were down -0.2%.

The Dow Jones closed down -0.5% (or -66 points) at 11,954, the S&P 500 index closed down -0.9% (or -11 points) at 1,226, the Nasdaq ended down -1.3% (or -35 points) at 2,612 and the smaller cap Russell 2000 was down -2.1%.

European Markets

European stock markets opened higher but finished off their lows. The Stoxx Europe 600 index closed up 0.5%.

The ongoing threat of downgrades by the ratings agencies also weighs on sentiment after Moody’s put eight Spanish banks on review for a possible downgrade.  The successful bond auctions were well received by traders, particularly with the strong demand at a European Financial Stability Facility (EFSF) bond auction as it sold EUR1.97 billion of three-month treasury bills, opting to raise shorter-term funding after last month it had problems with a 10-year bond sale in November. Also on the bond front an auction of short-term Spanish debt exceeded target, with the Treasury selling EUR4.94 billion of 12-month and 18-month bills.  

The German and French markets finished modestly lower overnight, as investors remained on edge and took profits as the German Chancellor Angela Merkel rejected raising the cap on the European Financial Stability Fund, which currently stands at EUR500 billion.

In London the market finished higher on the back of higher oil prices. The FTSE 100 index closed up 1.2% (or 62 points) at 5,490, the German DAX was down -0.2% (or -11 points) at 5,774 while in France the CAC was down -2.6% (or -83 points) at 3,078. Spain was down -0.6% and Italy ended down -0.3%.

Asian Markets

Asian stock markets ended lower yesterday, after a fresh round of concerns over eurozone sovereign-debt problems after ratings agencies renewed their stance of “credit watch negative” after the EU summit resolve.

Commodity linked stocks also weakened across the region, on the back of lower commodities prices.  Stocks with exposure to the eurozone were also sold down.  Japanese markets were down as shares of exporters fell due to concerns over the growth outlook for the European economy. In China the Shanghai Composite dropped another -1.9%, falling for a fourth-straight session, and setting up for a test of 3-year lows.

In China the SSE Composite closed down -1.9% (or -43 points) at 2,248, while in Hong Kong the Hang Seng Index was down -0.1% (or -10 points) at 18,576 and in Japan the Nikkei 225 Index was down -1.5% (or -129 points) at 8,653. The South Korean KOSPI was down -2.2% for the session, while the Indian market was up 0.8%.

Commodities

The Dollar Index was higher at 80.30 on a lower Euro, while the Australian Dollar last traded lower at 100.08. Commodities prices traded mixed.

For the session the benchmark crude NYMEX for December delivery was up 2.2% (or $US2.28) to settle at $US100.05.  Copper prices are seeking a support level as Copper for December delivery was lower -0.6% (or -2.2 cents) at $US3.3850.  December gold was down -0.2% (or -$U4.30) at $US1,632. 

ASX News Today

BTR – Blackthorn Resources the junior minerals explorer has extracted the first ore from its joint venture Perkoa project in Africa, and production remains on target to begin in the second half of 2012.

EXT – The regulator has said that the Chinese state-owned power company must launch a $2.2 billion takeover for Australian uranium company Extract Resources if the Chinese group is successful for its bid for Extract’s 43 percent shareholder.

ORG – Origin says China Petrochemical Corp (Sinopec) has increased its stake in Origin Energy and US giant ConocoPhillips’ Australia Pacific liquefied natural gas (LNG) project.

ORI – Orica says it is producing ammonium nitrate at its Newcastle plant again after being allowed to restart some of its facilities last week.

QAN – Qantas is still in talks regarding the establishment of a premium Asian airline.

RIO – Rio Tinto has increased its holding in Canadian uranium company Hathor Exploration and extended its friendly offer a second time.

TCL – Toll road operator Transurban has refinanced $375 million of debt maturing in August 2012 with a new bank facility.

TLS – Telstra says its revised submission to the competition regulator regarding its participation in the national broadband network does not require further shareholder approval.

WES – Wesfarmers anticipates a $190 million writedown in its Coregas business as a result of amendments to its contracts with BlueScope Steel.

WHC – Whitehaven Coal and Billionaire Nathan Tinkler’s Aston Resources have agreed to a $5.1 billion merger.

Local Corporate Reporting

Westpac AGM

Ex-dividend Date

AWE

Market Summary 

ASX – to open lower

US & UK/Europe – lower

Commodities Stock Inde  down -1.5%
Gold Stocks Index down -3.2%
Oil Stocks Index down -0.4% 

 US ADRs – Mixed

BHP down -2.9% & RIO down -1.4%; AWC down -0.4%
ANZ down -1.5% & NAB down -2.1%
NEM  down -3.2%, JHX down -0.6% , NWS down -0.9%

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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Stock Market Analysis: Markets Down On Downgrade Doldrums

Tuesday, December 13th, 2011

* US and European stock markets traded sharply lower overnight, after a number of US ratings agencies said the EU summit resolution would not stave off potential downgrades into the new year.
* Asian markets rose yesterday, but most only retraced their late Friday sell-off.
* Commodities prices traded lower, as Gold prices plunged to $US1,664 and crude-oil closed around $US98. 

The SPI Futures is trading above the key pivot level of 4180, ending down -1.5% (or -64 points) at 4,196. The key levels for our index today are 4250 to 4150. 

Yesterday the Australian share market had a strong recovery on open, after Friday’s late session sell-off. Trader sentiment was boosted by the positive leads from overseas markets after leaders at the EU summit discussed an action plan to address the region’s economic crisis.  The 26 European Union members, excluding Britain, said that they are set to agree on the new fiscal rules that set out tougher spending measures, in order to reinstate investor confidence in the region’s sovereign bonds and to prevent a ballooning of sovereign debt which has triggered the current eurozone crisis.  

In local economic news, the Australian Bureau of Statistics (ABS) reported that the monthly trade surplus narrowed to $1.59 billion in October from $2.56 billion in September, which was lower than expected and the smallest surplus since March, as Chinese demand for commodities fell. The ABS said iron ore exports to China fell $110 million or 3 percent in October, due to lower prices, as volumes for iron ore were up 6 percent, but prices fell 9 percent.  

Also out yesterday was ABS housing data which showed the number of home loans approved in October expanded for a seventh month, boosting hopes that the housing market may be on the improve. Loans rose 0.7 percent for the month.  

Aussie traders are expected to be cautious today, after the sharply lower leads from the US and European markets, as traders’ fears over the eurozone debt crisis resurfaced after Ratings Agencies said that the promises from the EU summit did little to address the current debt crisis.

See below for ASX listed companies in the news today. 

Economics News Today

*   Oct     Lending Finance
*   Q3      Dwelling Unit Commencements Housing Starts
*   Nov     NAB Business Survey

US Markets 

US stock markets traded sharply lower overnight, after Ratings Agencies dissed the EU summit resolve.  The Dow Jones Index finished just above 12,000, down -1.3%, while the selling was broad based with the S&P500 and the tech-heavy Nasdaq down over -1.3%.

US traders joined in the sell-off following drops in the European indexes and the euro dollar also fell sharply lower after the Moody’s Ratings Service said the EU summit did not do enough to address the eurozone sovereign debt crisis and the Fitch Ratings Agency was even more critical predicting a “significant” economic downturn in Europe as it evaluated the EU summit resolve.

The financial stocks posted the steepest declines in the S&P 500, but tech and materials stocks also took a substantial hit.  A profit warning from Intel was another factor weighing on major indexes, and comes in the wake of the chip maker Texas Instruments also downgrading earnings for the new year.  Materials stocks and commodities sold-down sharply following a report that the Chinese Communist Party leadership has no immediate plans to loosen monetary policy, which is also fuelling concerns over a slowing Chinese economy. 

All ten company groups that make up the S&P index traded generally lower with the Materials down -2.3%, Energy down -2.3%, Financials down -2.4%, Industrials down -1.8%, Technology down -1.3%, and Consumer Staples down -0.3%.

The Dow Jones closed down -1.3% (or -162 points) at 12,021, the S&P 500 index closed down -1.5% (or -19 points) at 1,236, the Nasdaq ended down -1.3% (or -35 points) at 2,612 and the smaller cap Russell 2000 was down -1.6%.

European Markets

European stock markets retraced sharply overnight, as a number of US ratings agencies said the EU summit resolution would not stave off potential downgrades into the new year. The Stoxx Europe 600 index dropped -1.9%.  

The Moody’s Investors Service said they will still review the ratings of all European Union countries during the first quarter of next year and that the crisis remains “critical and volatile”.  

Financials across the region were heavily sold-down.  Italian stocks gave back all of their gains from the previous session with the index finishing down -3.8%, as traders shook off a successful Italian bond auction, where the Treasury sold EUR7 billion of one-year bills at an average yield of 5.95% (down from 6.09%).  

In Greece the market fell -2.1%, with losses led by the banks as the government resumed talks with inspectors from the International Monetary Fund (IMF), European Union (EU) and the European Central Bank (ECB) about a new bailout plan to help repay its sovereign debt.

In London the FTSE 100 index closed down -1.8% (or -101 points) at 5,428, the German DAX was down -3.4% (or -201 points) at 5,785, while in France the CAC was down -2.6% (or -83 points) at 3,089. Spain was down -1.7% and Italy ended down -2.0%.

Asian Markets

Asian stock markets rose yesterday, but most only retraced their late Friday sell-off.  Traders were relieved that there were no surprises out of the EU summit.  

Exporters and resource stocks were among the best gainers, as an agreement by European leaders at the EU summit to be more fiscally responsible boosted sentiment short-term, however details were sparse and the US Ratings Agencies have said overnight that eurozone downgrades are still likely into the new year.  

The South Korean market rose over 1.3%, however the Chinese Shanghai Composite lost another -1%, due to concerns over the nation’s slowing economic growth, particularly with weakening exports to Europe.

In economic data this week China will be reporting their Money Supply figures, while top Chinese leaders will be meeting to set out China’s economic priorities for 2012, which is important considering the debt turmoil in Europe and the United States, which are the key export markets for the China. There will be a change in Chinese leadership at the beginning of next year.

In China the SSE Composite was down -1.0% (or -28 points) at 2,292, while in Hong Kong the Hang Seng Index was down -0.1% (or -10 points) at 18,576 and in Japan the Nikkei 225 Index was closed down -1.5% (or -129 points) at 8,653. The South Korean KOSPI was up 1.3% for the session, while the Indian market was down -2.2%.

Commodities

The Dollar Index was higher at 79.52 on a lower Euro, while the Australian Dollar last traded lower at 1.0069. Commodities prices traded sharply lower.

For the session the benchmark crude NYMEX for December delivery was down -1.5% (or -$US1.52) to settle at $US97.89.  Copper prices are seeking a support level as Copper for December delivery was lower -2.6% (or 9.3 cents) at $US3.4480.  December gold was down -2.8% (or -$U48.60) at $US1,664. 

ASX News Today

AMP – Investment manager AMP Capital Investors will expand its presence in Japan through a partnership with a Japanese trust bank.

EXT – The regulator has said that the Chinese state-owned power company must launch a $2.2 billion takeover for Australian uranium company Extract Resources if the Chinese group is successful in its bid for Extract’s 43 percent shareholder.

LEI – Leighton Holdings subsidiary Thiess has won a $140 million contract with Australia’s largest electricity distributor Ausgrid to drill a 3.2km tunnel under Sydney’s central business district.

ORG – Origin says China Petrochemical Corp (Sinopec) has increased its stake in Origin Energy and US giant ConocoPhillips’ Australia Pacific liquefied natural gas (LNG) project.   

QAN – Qantas is still in talks regarding the establishment of a premium Asian airline.

TCL – Toll road operator Transurban has refinanced $375 million of debt maturing in August 2012 with a new bank facility.

TEN – Ten Network says conditions in the advertising market are still difficult and were expected to remain so.

TLS – Telstra says its revised submission to the competition regulator regarding its participation in the national broadband network does not require further shareholder approval.

WES – Wesfarmers anticipates a $190 million writedown in its Coregas business as a result of amendments to its contracts with BlueScope Steel.

WHC – Whitehaven Coal and Billionaire Nathan Tinkler’s Aston Resources have agreed to a $5.1 billion merger.

Local Corporate Reporting

None

Ex-dividend Date

None
 

Market Summary 

ASX – to open higher

US & UK/Europe – sharply higher

Commodities Stock Index  down -3.0%
Gold Stocks Index down -3.2%
Oil Stocks Index down -2.5% 

US ADRs – Sharply Lower

BHP down -3.2% & RIO down -3.5%; AWC down -6.6%
ANZ down -2.9% & NAB down -2.1%
NEM  up 1.3%, JHX down -1.7% , NWS down -0.6%

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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Stock Market Analysis: EU Summit Promises Show Promise

Monday, December 12th, 2011

* US stock markets closed the week sharply higher, booking a second straight week of gains.
* European stock markets rose on Friday after eurozone leaders agreed to establish closer fiscal direction in their agereement to address the sovereign debt crisis. The Stoxx Europe 600 index rose 1.2% and for the week, it finished flat.
* Asian stock markets ended sharply lower on Friday as investors headed for the exits ahead of the EU summit meeting.
* Commodities prices traded higher, as Gold prices rose higher to $US1,170, while crude-oil closed around $US100.

The SPI Futures is trading above the key pivot level of 4180, ending up 1.7% (or 73 points) at 4,262. The key levels for our index this week are 4350 to 4180.

On Friday traders were given a negative lead from overnight markets after the European Central Bank President Mario Draghi rejected speculation that the ECB would boost its bond purchase program to help distressed European countries. Shares in the All Ordinaries (XAO) generally eased again, closing down -1.7% at 4264, as the S&P/ASX 200 (XJO) closed down -1.8% at 4203.

Aussie traders are expected to go bargain hunting again today, after the sharply higher leads from the US and European markets, as traders’ fears over the eurozone debt crisis subsided after some positive promises from the EU summit.

See below for ASX listed companies in the news today.

US Markets

US stock markets closed the week sharply higher, booking a second straight week of gains.

The Dow Jones Index surged above 12,000, recouping losses from earlier in the week, while in the broader markets the S&P 500 and the Nasdaq rose over 1.7%, and in the NYSE five stocks rose for every decliner. The Dow Jones had a weekly gain of 1.4%, and is now up 1.2% higher for December, and up 5.2% for the year. The S&P 500 and the Nasdaq finished up 0.9% for the week.

Financials led the gains with the major banks up around 3% after the news from European summit that some agreement had been reached on an action plan going forward.  The leaders promised to increase the financial backstops to countries with debt problems by channelling EUR200 billion of funds to the International Monetary Fund. However, they delayed until March a decision on a proposal to increase the EUR500 billion cap on the funds available to the European Financial Stability Fund (EFSF).

In corporate news a number of companies including the chip maker Texas Instruments and multi-national chemical maker Dupont have reduced their forecast earnings into the new year citing downgraded global economic growth forecasts.

All ten company groups that make up the S&P index traded generally higher with Materials up 1.3%, Energy up 2.3%, Financials outperforming up 2.2%, Industrials up 2.3%, Technology up 1.6%, while Consumer Staples were up 1.7%.

The Dow Jones closed up 1.6% (or 187 points) at 12,184, the S&P 500 index closed up 1.7% (or 22 points) at 1,255, the Nasdaq ended up 1.9% (50 points) at 2,646 and the smaller cap Russell 2000 was up 3.1%.

European Markets

European stock markets rose on Friday after eurozone leaders agreed to establish closer fiscal standards and rules, in their agereement to address the sovereign debt crisis. The Stoxx Europe 600 index rose 1.2% and for the week it finished flat.

At the EU summit in Brussels the 17 countries of the eurozone formally agreed to run only minimal budget deficits in the future and allowed the European Court of Justice the right to take action against national laws that do not enforce such discipline, which is seen as a major move of eurozone national sovereignty over budget policy. Only time will tell whether this actually works in practise.

The UK made it perfectly clear that they will not be joining the eurozone, now or in the future.  The new inter-governmental accord to be adopted by 26 European Union nations (excluding the UK) will agree to tougher fiscal rules, in an attempt to address the ballooning sovereign debt crisis.

Yet again the agreement was scant on details, however the EU leaders agreed to cap the European Financial Stability Fund (EFSF) at EUR500 billion, and that EU nations would provide up to EUR200 billion in loans to the International Monetary Fund to increase its funding ability.

The Italian market jumped 3.4% while in Germany and France the markets rose around 2%, while London’s FTSE 100 gained just 0.8%, after the UK declined to partake in the EU agreement.

Asian Markets

Asian stock markets ended sharply lower on Friday as investors headed for the exits ahead of the EU summit meeting.  This sets up for a recovery today following on from positive leaders from the US and Europe.

Around the region, growth-sensitive exporters and resources stocks were lower, as energy stocks sold off after crude oil futures posted their largest decline in three weeks, while financials were again hit hard.

The Chinese market is hovering near 3-year lows as investors continue to be wary of the global economic gloom, even the lower-than-expected inflation data failed to boost sentiment. Chinese CPI and PPI figures did not boost sentiment and we saw a sell-down of the growth-sensitive resource stocks on Friday.  

The index hovered below the 4200 level late in the session threatening to give back all of December’s gains. The Chinese annual inflation rate fell in November to 4.2 percent, the lowest level since September 2010.  The rate is now close to the government’s official target of 4 percent.  However the lower than expected figure has prompted analysts to suggest that there is a need for further monetary policy easing to address the deteriorating domestic and international economic conditions.  Elsewhere, the Chinese official purchasing managers’ index (PMI) showed that factory activity in November shrank from October, as industrial production growth slowed to 12.8 percent from more than 13 percent.

In China the SSE Composite was down -0.6% (or -14 points) at 2,3215, while in Hong Kong the Hang Seng Index was down -2.7% (or -521 points) at 18,586 and in Japan the Nikkei 225 Index was down -1.5% (or -129 points) at 8,536. The South Korean KOSPI was down -0.3% for the session.

Commodities

The Dollar Index was lower at 78.63 on a higher Euro, while the Australian Dollar last traded higher at 1.0190. Commodities prices traded higher.

For the session the benchmark crude NYMEX for December delivery was up 1.1% (or $US1.07) to settle at $US99.83.  Copper prices are seeking a support level as Copper for December delivery was up 1.7% (or 5.8 cents) at $US3.5560.  December gold was up 0.2% (or $U3.00) at $US1,710.

ASX News Today

AGK – AGL faces Hunter Valley winemakers saying that they are going to expel natural gas company AGL from their ranks because of its coal seam gas exploration.

AMP – Investment manager AMP Capital Investors will expand its presence in Japan through a partnership with a Japanese trust bank.

EXT – The regulator has said that the Chinese state-owned power company must launch a $2.2 billion takeover for Australian uranium company Extract Resources if the Chinese group is successful in its bid for Extract’s 43 percent shareholder.

HVN – Harvey Norman says it did not knowingly mislead consumers when it advertised 3D televisions in regional areas, despite being fined.

TCL – Toll road operator Transurban has refinanced $375 million of debt maturing in August 2012 with a new bank facility.

TEN – Ten Network says conditions in the advertising market are still difficult and were expected to remain
so.

TLS – Telstra says its revised submission to the competition regulator regarding its participation in the national broadband network does not require further shareholder approval.

Ex-dividend Date

James Hardie Industries (JHX)
Lemarne Corporation (LMC)

Market Summary

ASX – to open higher
US & UK/Europe – sharply higher
Commodities Stock Index up 2.5%
Gold Stocks Index up 1.1%
Oil Stocks Index up 2.5%

US ADRs – Sharply Higher

BHP up 2.4% & RIO up 2.2%; AWC up 4.5%
ANZ up 1.7% & NAB down -0.3%
NEM up 1.3%, JHX up NWS up 2.0%

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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Stock Market Analysis: Investors Nervously Await EU Summit Outcome

Friday, December 9th, 2011

* US stock markets suffered sustained selling, finishing on the session lows.
* European stock markets pulled back overnight, after the president of the European Central Bank made it clear that the ECB will not ramp up purchases of government bonds. The Stoxx Europe 600 index dropped -1.5%.
* Asian stock markets ended mostly lower yesterday, as investors were cautious ahead of a number of key EU meetings.
* Commodities prices traded lower, as Gold prices dropped to $US1,709 and crude-oil closed around $US98.

The SPI Futures is trading around the key pivot level of 4180, ending down -1.6% (or 67 points) at 4,219. The key levels for our index today are 4150 to 4230.

Yesterday Australian shares traded modestly lower after a disappointing jobs report, which showed the Australian economy lost around 40,000 full-time jobs last month. This has pushed the unemployment rate back up to 5.3 percent, and further fuelled the likelihood of more interest rate cuts in the new year. Economists had forecast that the economy would add a net 10,000 jobs for November.  

Shares in the All Ordinaries (XAO) generally eased lower yesterday, closing down -0.3% at 4339, as the S&P/ASX 200 (XJO) closed down -0.3% at 4281.

The Housing Industry Association-Commonwealth Bank has calculated that housing affordability has improved for the third straight quarter, due to weaker house prices and falling fixed interest rates. The index of housing affordability rose by 1.2 percent in the September quarter to a reading of 57.2, up from 56.5 in the June quarter. This index was at 54 back in December 2010.  

After two days of silence the ANZ Bank is the first of the big four banks to cut interest rates in the wake of the Reserve Bank’s decision this week. ANZ joins the Bank of Queensland in passing on the full 25 basis point cut, saying that given the economic conditions facing consumers it should deliver the full rate cut to its customers. The rate cut will take effect on 16 December, and will see their standard variable mortgage rate reduced to 7.30 percent.

Aussie traders are expected to sell again today, after the sharply lower leads from the US and European markets. Traders’ fears over the eurozone debt crisis escalated after discouraging comments from ECB.

US Markets 

US stock markets suffered sustained selling throughout the session, finishing on the session lows.  

The Dow Jones Index closed below 12,000 for the first time since 29 November, and the broader markets fell over -2%, as traders headed for the exits across the boards. On the NYSE decliners outnumber gainers by a staggering 8 to 1.  Financials led the selling rout with the sector down -3.9%, with Morgan Stanley and Citigroup two of the S&P 500′s biggest decliners, plunging over -7% for the session.

The selling started from the open after the ECB President Mario Draghi rejected any notion of more ECB bond buying to shore up the eurozone, and indicated that the central bank has no new plans to bail out debt laden PIIGS governments. These comments were enough to trigger selling ahead of the crucial EU summit meeting tonight, with the old “sell first” then ask questions mentality prevailing.

In economic data, the number of US workers filing new applications for unemployment benefits fell to the lowest level in nine months, while wholesale inventories for October rose 1.6% as companies stocked up in anticipation of strong holiday sales.  

Commodities prices fell as the US dollar index rose in a “flight to safety”, with crude-oil below $US100 and gold back around $US1,700.

All ten company groups that make up the S&P index traded generally lower with Materials down -3.1%, Energy down -2.8%, Financials outperforming down -3.9%, Industrials down -2.5%, Technology down -1.6%, and Consumer Staples down -2.1%.

The Dow Jones closed down -1.6% (or -199 points) at 11,997, the S&P 500 index closed down -2.1% (or -27 points) at 1,234, the Nasdaq ended down -2.0% (or -53 points) at 2,596 and the smaller cap Russell 2000 was down -3.1%.

European Markets

European stock markets pulled back overnight, after the president of the European Central Bank made it clear that the ECB will not ramp up purchases of government bonds. The Stoxx Europe 600 index dropped -1.5%.

The Italian stock market plunged -4.3% suffering heavy losses across the board, while the German and French markets fell over -2%.

The ECB made it clear that the EU treaty prohibits the ECB from “monetary financing” and the bank is constrained by its institutional guidelines, most particularly in the form and amount of assistance it can deliver to the troubled PIIGS economies.  These guidelines limit the ECB’s ablity to move on speculation that the ECB could pursue a more aggressive bond-buying program to stem the eurozone debt crisis.

Central banks acted as expected overnight. The ECB central bank lowered its main refinancing rate 25 basis points to 1%, in an attempt to ramp up the liquidity within the eurozone. The Bank of England (BoE) kept interest rates and its bond-buying program unchanged, there was a muted reaction in the UK equities market.

The summit of EU leaders in Brussels tonight has a number of heavy issues to consider, especially after the European Banking Authority said that European banks need to raise a total of EUR114.7 billion in new capital by June 2012, in order to shore up the financial system, while the ECB is under increasing pressure to boost their bond-buying program to support the eurozone financial system, but they have rejected such a move.

Also under consideration is the news that the EU is close to a deal to lend EUR200 billion to the IMF, which the IMF could use to shore up the eurozone debt issues.

In London the FTSE 100 index closed down -1.1% (or -63 points) at 5,483, the German DAX was down -2.0% (or -120 points) at 5,874 while in France the CAC was down -2.5% (or -80 points) at 3,095. Spain was down -2.1% and Italy ended down -4.3%.

Asian Markets

Asian stock markets ended mostly lower yesterday, as investors were cautious ahead of a number of key EU meetings.  

Asian investors will be monitoring the release of the Chinese economic CPI data for November with inflation and industrial production figures for further indication on whether China continues to engineer a soft landing. Across the region financial and growth-sensitive resource stocks were under pressure in the trading session. Traders continue to be held hostage to the news out of Europe and most importantly the EU summit tonight.

In China the SSE Composite was down -0.1% (or -3 points) at 2,329, while in Hong Kong the Hang Seng Index was down -0.7% (or -133 points) at 19,108 and in Japan the Nikkei 225 Index was closed down -0.7% (or -58 points) at 8,665. The South Korean KOSPI was down -0.3% for the session, while the Indian market was down -2.3%.

Commodities

The Dollar Index was higher at 78.73 on a lower Euro, while the Australian Dollar last traded lower at 1.0177. Commodities prices also traded lower.

For the session the benchmark crude NYMEX for December delivery was down -2.1% (or -$US2.05) to settle at $US98.44.  Copper prices are seeking a support level as Copper for December delivery was down -1.3% (or -4.9 cents) at $US3.4960.  December gold was down -1.8% (or -$U32.00) at $US1,709.

ASX News Today

ANZ – ANZ Bank was the first of the big four banks to cut interest rates in the wake of the Reserve Bank’s decision. All four big banks have now passed on the full 25 basis point rate cuts to mortgage holders.

AWE – AWE the oil and gas producer has sold down its interests in the Tasmanian Bass Basin joint venture and will pay a special dividend to its shareholders.

BOQ – Bank of Queensland was the first bank to announce the passing on of the RBA’s interest rate cut.

ILU – Iluka Resources the minerals sands miner has secured higher prices for the supply of rutile and synthetic rutile in the first half of 2012.

ORI – Orica says another leak has occurred at the Orica chemical plant near Newcastle, saying there was a small overflow of weak ammonium nitrate solution from a tank bund on the site.

SUN – Suncorp-Metway S&P issuer credit rating remains steady.

Local Corporate Reporting

Ten Network (TEN)   Full year AGM

Ex-dividend Date

Metcash Limited (MTS) 
Troy Resources NL (TRY)
 

Market Summary 

ASX – to open lower

US & UK/Europe – sharply lower

Commodities Stock Index  down -3.5%
Gold Stocks Index down -3.5%
Oil Stocks Index  down -2.9% 

US ADRs – Sharply Lower

BHP down -3.2% & RIO down -0.6%; AWC down -7.6%
ANZ down -3.4% & NAB down -1.5%
NEM  down -2.4%, JHX down -2.0%, NWS down -2.9%

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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Stock Market Analysis: U.S. Markets At 3-Week Highs

Wednesday, December 7th, 2011

* US stock markets push to finish at 3-week highs, as the three major indices finished modestly higher again.
* European stock markets traded lower overnight after the Standard & Poor’s Ratings Agency announced it may downgrade the ratings of Germany, France, the Netherlands, Austria, Finland and Luxembourg.
* Asian stock markets ended lower yesterday as traders reacted negatively to the S&P Rating announcement of “credit watch negative” for 15 eurozone nations.
* Commodities prices traded higher, as Gold prices moved higher to $US1,729 and crude-oil closed around $US101. 

The SPI Futures is trading above the key pivot level of 4280, ending up 0.7% (or 32 points) at 4,300. The key levels for our index this week are 4350 to 4250. 

Yesterday Australian shares finished lower despite a Christmas present from the Reserve Bank of Australia, which cut interest rates by 25 basis points to 4.25%.  The much anticipated interest rate cut did little to enthuse investors yesterday, perhaps because interest rate futures which had clearly predicted the cut, are indicating that the RBA’s cash rate will drop to 3 per cent by June.  This would mean that the economic situation is forecast to deteriorate significantly into the new year, as an RBA rate of 3% would require the RBA to cut interest rates by 25 basis points for each of its meetings for the first half of the year.  

The big question for mortgage holders is whether the banks will pass on the full 25 basis point cut to their customer, and so far only Bank of Queensland has done so.  Rumours doing the rounds in the past week have suggested that none of the banks intend to pass on the rate cut in full.  

Shares in the All Ordinaries (XAO) generally eased again yesterday, closing down -1.5% at 4316, while the S&P/ASX 200 (XJO) closed down -1.5% at 4257.

Aussie traders are expected to trade cautiously again today, after the modest leads from the US and European markets, but traders will be cautious ahead of the EU summit on Friday.

See below for ASX listed companies in the news today. 

Economics News Today

*   Nov     Australian PCI
*   Q3      GDP
*   Dec     DEEWR Monthly Leading Indicator of Employment
*   Nov     Official Reserve Assets Reserves (US dollars)

US Markets 

US stock markets push to finish at 3-week highs.  The three major indices finished modestly higher again, with the materials sectors outperforming up 0.9% for the session, while the rest of the sectors ended flat.  

Traders accepted the surprise move by Standard & Poor’s Rating Agency to put Germany, France, the Netherlands, Austria, Finland and Luxembourg on “credit watch negative” which signals the chance of a downgrade within the next 90 days.  Obviously this will put more pressure on the EU leaders to come up with a concerted action plan at this week’s EU summit.  

The S&P also placed the long-term credit rating of the European Financial Stability Facility (EFSF) on credit watch negative. Trader sentiment is very much Euro-focussed and could turn on the next news headline, but in saying this the VIX “fear guage” has been easing over the past couple of weeks, indicating that traders are becoming more accustomed to the current macro enviroment.  The German and French leaders are sending the right message in saying that they will propose altering European Union treaties in order to bolster fiscal discipline. 

The Dow Jones closed up 0.4% (or 5 points) at 12,150, the S&P 500 index closed up 0.1% (or 1 point) at 1,258, the Nasdaq ended down -0.2% (or -6 points) at 2,649, and the smaller cap Russell 2000 was up 0.1%.

European Markets

European stock markets traded lower overnight after the Standard & Poor’s Ratings Agency announced it may downgrade the ratings of Germany, France, the Netherlands, Austria, Finland and Luxembourg. The Stoxx Europe 600 index fell -0.3%.  

Traders reacted to the S&P downgrade warning by selling. In moving to put 15 eurozone nations on “credit watch negative” S&P cited the implications of the high risk of recession, the high debt levels of these nations, the soaring debt funding costs and the lack of political will to address the debt crisis.

The German market stayed above 6,000, while in London the FTSE bucked the trend ending up for the session above 5,500. The big event of the week is on 9 December at the Eurozone summit where all 27 European Union leaders will get together to address the worsening eurozone crisis.  

Overnight the FTSE 100 index closed up 0.2% (or 10 points) at 5,578, the German DAX was down -0.6% (or -38 points) at 6,067, while in France the CAC was down -0.1% (or -4 points) at 3,197. Spain was up 0.1% and Italy ended down -0.4%.

Asian Markets

Asian stock markets ended lower yesterday as traders reacted negatively to the S&P Rating announcement of “credit watch negative” for 15 eurozone nations.  

Banks across the region generally traded lower, with HSBC Holdings falling -1% after the lender received a large fine from UK regulators over the sales of some securities to retail investors. Resource stocks were also weaker.  

The Chinese market performance is of particular concern, as it hovers around 2-year lows again, while markets across the region were lower by over -1%.  Chinese-listed property firms were weaker again with mixed signals from the government about fiscal easing into the new year.

In China the SSE Composite was closed down -0.3% (or -7 points) at 2,326, while in Hong Kong the Hang Seng Index was down -1.2% (or -237 points) at 18,942 and in Japan the Nikkei 225 Index was closed down -1.4% (or -120 points) at 8,575. The South Korean KOSPI was down -1.1% for the session, while the Indian market was down -0.3%.

Commodities

The Dollar Index was lower at 78.52 on a higher Euro, while the Australian Dollar last traded lower at 1.0243. Commodities prices traded flat.

For the session the benchmark crude NYMEX for December delivery was up 0.1% (or $US0.02) to settle at $US101.03.  Copper prices are seeking a support level as Copper for December delivery was down -1.1% (or -3.9 cents) at $US3.5840.  December gold was down -0.1% (or -$U1.40) at $US1,729. 

ASX News Today

AZT- Aston Resources’s billionaire owner Nathan Tinkler says the coal explorer and coal miner Whitehaven Coal have entered into talks about a $5 billion potential merger that analysts say would create a powerful entity. 

CLR – Carabella the Queensland coal explorer has raised $24 million from institutional shareholders to continue developing its coking coal project in the Bowen Basin.

DJS – David Jones says there has been a heavy investment in Christmas advertising as the department store owner braces for a difficult festive trading season.

ORI – Orica, the chemical giant, will resume some of its Newcastle operations after a committee lifted a prevention notice issued after a leak in November.

PDN – Paladin and uranium stocks were up after Labor’s national conference has backed the Prime Minister Gillard’s plan to remove the party platform’s ban on uranium exports to India.

RBA – The RBA has delivered a Christmas present, cutting interest rates by 25 basis points to 4.25%.  

STO – Santos says the Devil Creek gas processing plant in WA has produced first gas, boosting WA’s gas supply by up to 20 percent.

SVW – Seven Group Holdings has finalised its takeover of equipment hire company National Hire after a major shareholder accepted the offer.

Local Corporate Reporting

TPG Telecom (TPM)   Full year AGM

Ex-dividend Date

Campbell Brothers (CPB)

Market Summary 

ASX – to open modestly higher
US & UK/Europe – consolidated gains
Commodities Stock Index up 1.1%
Gold Stocks Index down -0.4%
Oil Stocks Index up 1.2% 

US ADRs – Broadly Lower

BHP down -0.8% & RIO down -0.6%; AWC down -2.9%
ANZ up 0.5% & NAB down -0.5%
NEM  up 1.8%, JHX down -2.5%, NWS up 0.8%

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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