* US stock markets held their ground overnight, after early weakness.
* European stocks markets dropped the most in 10 months overnight.
* Asian stock markets plunged yesterday, recording there biggest falls since September 2011.
* Commodities prices mixed, Gold prices are trading up around $US1,391, while crude-oil closed around $US94.
The Aussie market backed off sharply from 5-year highs, testing the 5050 and is looking to open modestly higher today, as stock prices closed dropped sharply in Europe, but held in the US. The precipitous fall in the Aussie dollar has triggered a wave of selling from overseas investors as they look to repatriate their hard earned profits of recent times.
SPI Futures is trading just above the key level of 5050, ended up 0.3% (or 16 points) at 5,086. The key levels for the ASX200 index today are 5040 to 5120. The Aussie dollar was slammed yesterday down towards US96c, but managed to rebound overnight.
Testing times for the Aussie Market as the SPI Futures hold critical support.
See below for ASX listed companies in the news today.
US stock markets held their ground overnight, after early weakness, but recorded their first consecutive falls in a month.
The three benchmark indexes all ended down around -0.2% for the session. The Dow Jones remained around the 15,300 level. The S&P500 again held above the 1650 level around all-time highs. Markets are testing the 13-day support level at this time, and the “buy-on-the-dip” mentality will be tested.
The ten S&P sectors primarily ended lower with falls led by the Utilities sector down -2.4% in the past 2-days, while Financial and Consumer discretionary sectors all down -0.5% overnight, closely followed by Industrials and Consumer Staples down -0.2%, while Materials and Energy ened flat for the session. The S&P index of homebuilders added 1 percent as 10 out of its 11 members gained.
US stocks held despite a contraction in China manufacturing and as investors weighed Federal Reserve stimulus comments, and the American housing data. Traders are trying to digest the comments from the Fed Chairman Ben Bernanke who in prepared remarks to Congress that a premature withdrawal of quantitative easing would put the economic recovery at risk, but in further remarks revealed the Fed could “step down” the pace of asset purchases in the next few meetings if the labour market continues to improve and “we have confidence that that is going to be sustained”.
The S&P 500 has risen for past 6-months without a 5% pullback but yesterday’s the 2.5% turnaround may portend further weakness/profit-taking in the near-term.
For the session Dow Jones closed down -0.1% at 15,295, the S&P500 closed down -0.3% at 1,651, and the NASDAQ closed down -0.1% at 3,459.
European stocks markets dropped the most in 10 months overnight, backing off 5-year highs, after data showed Chinese manufacturing shrank.
The Europe Stoxx 600 ended plunged -2.1% for the session, after all but 26 of the 600 stocks ended in the red and volumes surged to 24% more than the monthly average. All 19 industry groups in the Stoxx 600 fell, with sectors in the automotive and mining companies posting the worst performances. The index is now up 8% for the year, backing off its highest level since June 2008. It remains clear that the ECB will remain supportive of equities going forward. The index has rallied 97 percent since March 2009 as European Central Bank President Draghi pledged to preserve the euro and the Fed embarked on three rounds of stimulus.
The German market fell the most in over a month, due to investor concern that the Federal Reserve will reduce its stimulus measures if the US economy improves and as manufacturing data showed Chinese manufacturing is contracting. The market is still around all-time high though, having risen twelve straight day, its longest winning streak since July 2005 (the market is up around 12% for the year). In London traders took profits as the FTSE fell from 13 year highs, after last week the Bank of England (BoE) voted to keep quantitative easing at GBP375 billion ($US568 billion) this month.
In the UK the FTSE 100 closed down -2.1% at 6,697, the German DAX 30 closed down -2.1% at 8,352, the French CAC 40 closed down -2.1% at 3,967, while the Italian market closed down -3.1% at 17,008.
Asian stock markets plunged yesterday, recording there biggest falls since September 2011 and backing off 5-year highs, as the financial sector weighed again.
The MSCI Asia Pacific Index fell -3.4% for the session. Paring the index gains for the year back to below 7%. Sellers stepped in after Chinese manufacturing data confirmed contraction and there is a spectre of reising interet rates in Japan.
In Japan the market plummeted over -7% as 12 stocks fell for every one that rose. Traders were looking for an excuse to take profits as the index pushed above the 15,600 at its highest level since December 2007. The index fell the most since the aftermath of the March 2011 tsunami and nuclear disasters and triggered a trading halt in Nikkei 225 Stock Average futures trading in Osaka at one point.
The Chinese market fell for a second session, falling away after it recorded its longest winning streak in 3-months. The Shanghai Composite is now flat for the year (having fallen as much as -9% from its February peak), and yesterday the market fell. Traders sold after the HSBC “Flash PMI” release from China that showed manufacturing in the world’s second largest economy is contracting for the first time in seven months. The preliminary reading of a purchasing managers’ index declined to 49.6 in May from 50.4 in April. A reading below 50 marks contraction.
For the session the Chinese Shanghai Composite closed down -1.2% at 2,276, the Hong Kong Hang Seng closed down -2.5% at 22,670, and the Japanese Nikkei closed down -7.3% at 14,484, while the South Korean KOSPI closed down -1.2% at 1,969.
The Dollar Index was higher at 83.75 on a lower Euro, and the Aussie Dollar closed down at 0.9744. Commodities prices traded mixed.
Overnight the COMEX WTI Crude for MAY13 delivery closed down 0.0% at $US94.25, the COMEX Copper for May 13 delivery closed down -2.3% at 3.304, the COMEX Gold for JUN13 delivery closed up 1.8% at $US1,391.80.
ASX News Today
AAC – Agricultural Company he cattle farmer Australian is continuing to negotiate the sale of a major piece of land in Queensland after it was passed in at auction.
BANKs – Banks have sold off heavily as foreign investors take profits as the Aussie dollar crumbles, falling below US96c today.
BTU – Bathurst Resources; conservation group Forest & Bird and the Greens have slammed the government’s decision to allow an Australian company to develop a new open-cast coal mine on conservation land near Westport in exchange for $22 million.
CWN – Crown, the casino company controlled by billionaire James Packer, has sold its entire 10% stake in rival Echo Entertainment Group for about $264 million around 3.20/share, a 7% discount.
DLX – DuluxGroup has stopped supplying its premium paint and woodcare products from Masters and Danks corporate stores to work more closely with other partners.
JHX – James Hardie’s full year net profit has fallen significantly because of changes to its asbestos liabilities and the impact of legal battles with the tax office.
MYR – Myer says sales have grown slightly, but the department store remains cautious about the future for the retail industry.
SWM – US private equity firm KKR is to sell its entire 12 percent stake in Seven West Media, worth about $265 million, cutting its ties to Seven after an almost seven-year partnership.
TLS – Telstra is not saying how many jobs may be lost as part of a major restructure of its internal operations.
ASX – to open lower
US & UK/Europe – US flat, EU lower.
US ADRs – Broadly flat!!…
ANZ -2.8%, NAB -1.9%
BHP -1.2%, RIO -1.6%, NEM 0.8%
By Michael Hevern
D2MX Investment Advisor
For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email email@example.com.