* U.S. stock markets eked out modest gains despite an early surge higher. Bargain hunters picked up beaten down technology stocks.
* European stock markets ended higher overnight, with the energy, mining and health care sectors leading the way. The Stoxx Europe 600 index ended with a gain of 0.8%, bouncing off 2-year lows.
* Asian markets gave up early gains to end lower yesterday, as concern about the European debt crisis and global economic outlook kept investors on the sidelines.
* Commodities prices traded higher. Gold prices surged above $US1,895 and crude-oil closed above $US84.
The SPI Futures is trading around the key pivot level of 4000, ending up 0.1% (or 2 points) at 4,078. The key levels for our index today are 4150 to 4000. Overnight global stocks traded mixed but European investors stepped in to do some bargain hunting. Euro banks remained under pressure. Investors will be keenly watching the lows for any sign of support near-term. Price action in the US was unconvincing overnight as an initial surge faded by the close.
In recent times only the gold sector has been spared, as the selling pressure has come from the banks, mining and energy stocks. Traders are starting to see value elsewhere, but are nervous as they try to make sense of the recent volatility and what this means for the market direction near-term.
SuperRatings has released a report on superannuation performance and as you would expect the volatility over the past month has hit super funds. Estimates by the SuperRatings groups put losses to the common super fund at 4 percent in August (compared to a fall of 1.5 percent in July), versus a -6.1 percent plunge so far this month for the local sharemarket. They said that despite the recent volatility, the typical balanced fund is still more than 20 percent above its GFC low and over the year to July, cash returned 4.3 percent, compared to 4.9 percent for balanced growth superfunds.
Yesterday the All Ordinaries (XAO) was down -0.5% at 4151, while the S&P/ASX 200 (XJO) closed down -0.5% at 4082. Expect to see some support today.
See below for ASX listed companies in the news.
U.S. stock markets eked out modest gains despite an early surge higher. Bargain hunters picked up beaten down technology stocks after four weeks of selling.
The Dow Jones Index closed higher but is still below 11,000 and has fallen -4% in the past week. The S&P 500 stock index finished flat, while the tech-heavy Nasdaq Composite closed with modest gains. The US market indices are down over -15% since the July highs. Early in the session bargain hunters bought up telecom, technology and industrial stocks, but as the day progressed the financial and energy sectors continued their decline weighing on the market.
Financial stocks weighed on sentiment with Bank of America plunging -7.9% when Wells Fargo slashed the bank’s price target, citing a capital raising may be needed near-term. Investors remain concerned about European debt crisis contagion and the threat of a double-dip recession.
Investors will be looking to Fed Reserve Chairman Ben Bernanke’s address at Jackson Hole, Wyoming, on Friday for signs of additional measures to stimulate the economy, and some are preempting a QE3.
In commodities gold prices reached new record highs again, this time as the political instability in Libya appears to be nearing a conclusion, and crude-oil finished above $US94 per barrel.
The ten company groups that make up the S&P index traded mixed: Industrials were up 0.4%, Materials were flat, the Energy sector was down -0.8%, the Financials sector was down -1.5%, the Technology sector was up 0.5%, while Consumer Staples were up 0.3%.
The Dow Jones closed up 0.3% (or 37 points) at 10,855, the S&P 500 index closed up 0.1% (or 1 point) at 1,124, the Nasdaq ended up 0.2% (or 3 points) at 2,345, and the smaller cap Russell 2000 was down -0.1%.
European stock markets ended higher overnight, with the energy, mining and healthcare sectors leading the way. The Stoxx Europe 600 index ended with a gain of 0.8%, bouncing off 2-year lows. The conflict in Libya may be coming to an end as rebel forces have swept into the Libyan capital of Tripoli after meeting little resistance from Colonel Moammar Gadhafi’s forces.
The energy sector was in focus due the the situation in Libya, but most other sectors across Europe were also higher, with defensive stocks such as drug makers among the strongest performers.
In London the FTSE 100 index was up 1.1% (or 55 points) at 5,095 with miners leading the gains. The German DAX was down -0.1% (or -6 points) at 5,478 while in France the CAC was up 1.1% (or 34 points) at 3,051.
Asian markets gave up early gains to end lower yesterday, as concern about the European debt crisis and global economic outlook kept investors on the sidelines. In Japan the Nikkei Stock Index ended lower, as exporters continued to weigh due to the strong yen, which will hurt corporate earnings.
In Hong Kong stocks ended higher after a volatile session but in China the Shanghai Composite finished lower. In a mixed session for heavyweight shares HSBC Holdings PLC rose 2.0% to recover some recent losses, while China Mobile added 2.9% as it appealed to defensive investors, but shares of China Resources Land plunged -7.4% after first-half results disappointed.
In China the SSE Composite was down -0.7% (or -18 points) at 2,635, while in Hong Kong the Hang Seng Index was up 0.5% (or 87 points) at 19,487 and in Japan the Nikkei 225 Index was down -1.0% (or -91 points) at 8,628. The South Korean KOSPI was down -2.0% for the session, while the Indian market was up 1.2%.
The Dollar Index was higher at 74.13 on a lower Euro, while the Australian Dollar last traded lower at 103.57. Commodities prices were higher.
For the session the benchmark crude NYMEX for August delivery was up 2.3% (or $US1.86) settle at $US84.30. Copper prices are still below the key pivot level as Copper for August delivery was down -0.7% (or -2.7 cents) at $US3.9315. August gold was up 2.2% (or $US39.80) at $US1,894.70.
ASX News Today
AMC – Amcor closed up 2.6% after reporting better than expected results, with net profit for the year rising 95%, earnings per share up 84%, and revenue up 26% for the year. The packaging manufacturer said it expected to achieve more cost benefits from its takeover of the Alcan Packaging business.
BOW – Coal seam gas producer Bow Energy was the standout performer today after Arrow Energy, now owned by Shell and PetroChina, said it had made a preliminary, indicative and non-binding proposal to acquire Bow via a scheme of arrangement. The bid price is $1.48 cash per share, valuing Bow Energy at $520 million. Bow’s shares closed up 60%.
BSL – BlueScope Steel, the nation’s biggest steelmaker, considered shutting down its entire manufacturing operations, but opted for a rationalisation plan that will axe more than 1000 jobs. The company reported an underlying loss of $118 million for the year to June, which ballooned to $1.054 billion once asset writedowns are included. The Government has rushed to provide a $100 million advance to BlueScope Steel, but it may be a case of too little too late. Bluscope closed down -5.7%.
CTX – Caltex Australia reported it has almost doubled its first-half profit as the fuel refiner and supplier benefited from higher oil prices.
GFF – Goodman Fielder, the breads and spreads maker, plunged -9.1% after it lowered its profit expectations for the year. The company said it will take a $300 million impairment charge on its baking division in its FY11 financial results. Net profit for FY11 was expected now to be “slightly below” guidance given in April of $140 million to $150 million, but trading has remained subdued due to continued unfavourable external and market conditions.
JHX – James Hardie had some rare good news yesterday, with three Federal Court judges handing down a favourable tax case decision for James Hardie and the asbestos compensation trust it funds. James Hardie initially lost the case in which the Australian Taxation Office claimed $368 million was owing in unpaid capital gains tax, penalties and interest from a 1998 corporate restructure. James Hardie will be refunded $242.4 million and its shares jumped 4.8% on the news.
QAN – Qantas has gained tentative approval from the competition regulator for a deeper alliance with American Airlines for flights between Australia and the US. The decision may offer Qantas a brief respite from a backlash to its decision last week to axe 1000 jobs (pilots, engineers and cabin crew). Qantas closed down -2.1%.
TWE – Foster’s spin-off Treasury Wine Estates (TWE) has reported a $64 million profit in its first full year as an independent company and says it is aiming to grow earnings through cost efficiencies. CEO David Dearie said it was a solid result, but that earnings had been impacted by currency and an uncertain consumer environment in many of its key markets. TWE shares finished flat for the session, while Fosters closed down -0.6%.
Local Corporate Reporting
ORG – Origin Energy Ltd full year results
MGR – Mirvac Group full year results
SHL – Sonic Healthcare Ltd full year results
CMJ – Consolidated Media Holdings Ltd full year results
FGL – Foster’s Group Ltd full year results
TTS – Tatts Group Ltd full year results
OSH – Oil Search Ltd first half results
EHL – Emeco Holdings Ltd full year results
ANN – Ansell Limited
BLD – Boral Limited
IRI – Integrated Research
OZL – OZ Minerals
PTM – Platinum Asset
RCO – Royalco Resources
SAI – SAI Global Limited
SUL – Super Ret Rep Ltd
TWO – Talent2 Internation
WES - Wesfarmers Limited
WTP – Watpac Limited
ASX – to open higher
US & UK/Europe – sharply higher
US ADRs – Broadly Mixed
BHP up 0.2% & RIO down -0.5%; AWC up 0.9%
ANZ down -0.1% & NAB down -0.4%
NEM up 4.6%, JHX up 5.7%, NWS down -0.8%
Commodities Stock Index up 0.3%
Gold Stocks Index up 3.5%
Oil Stocks Index up 0.1%
By Michael Hevern
Head of Research
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