Posts Tagged ‘gold’

ASX Company News: Mongolian Resources Corporation Acquires Mongolian Gold Projects

Wednesday, September 12th, 2012

Mongolian Resources Corporation (MUB) is focused on the Development of two historic high-grade gold deposits in Mongolia with a near term production to commence in 2012. Key projects include Blue Eyes Project and Sujigtei Project. This consolidates MUB’s position in the main gold district in Mongolia.

Mongolian Resource Corporation Limited (MUB) is pleased to announce that it has entered into an exclusive agreement with Central Asia Metals plc (CAML) for the purchase of significant gold and molybdenum assets situated in Mongolia. The projects are advanced exploration stage projects with JORC compliant resource estimates. Both projects have received long term Mining Licences, expiring between 2030 – 2040. MUB will be acquiring 100% of CAML Mongolia BV (Dutch registered company) which owns 85% of Ereen Gold Project and 80% of Handgait Molybdenum Project along with site infrastructure.

www.mongolianresourcecorporation.com

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Going For Gold: Part 2 – Stock Trading Tips for All Types of Market Environments

Friday, August 3rd, 2012

In the Olympic spirit we though it timely to investigate what is happening in the world of gold. Request our special free Golden Stock Opportunities Special Report, which provides a more detailed on analysis of specific gold stocks that are earning money, with low gearing levels and some that are even a paying dividend.

In London 2012 there appears to be a changing of the guard in relation to the competition for gold medals, with the Chinese dominating proceedings over the USA and the rest of the world. It’s amazing how this story is unfolding in the corporate world too.

The price of gold had been in a steady uptrend until mid-2011, when it went parabolic (as shown below). Typically when a market pulls back from a period of exuberance it takes a while for the market place to reset itself and this is proving the case this year. Seasonally the gold price takes a breather from June through to August, but this year we have the additional headwinds of the worsening eurozone debt crisis which is threatening the European, if not the global financial system.

The Gold Price is Adjusting
Chart 1: The Gold Price is Adjusting

The Gold chart above shows that gold traders are not expecting that there will be a coordinated global move by central banks to increase their monetary easing policies in the near-term.

Reviewing recent market performances, we can see stock prices have had a great run in the past few weeks, as traders have been buying in anticipation of European central banks taking further steps to support eurozone economic stability. Traders have also been buoyed by news in recent days that German Chancellor Angela Merkel and French President Francois Hollande have joined European Central Bank President Mario Draghi in promising to do “whatever it takes” to protect the euro.

Overnight, traders took profits on their gold positions as US Federal Reserve Chairman Ben Bernanke fell short of announcing a ramping up of the record stimulus, even as economic growth slowed. The Federal Reserve pledged to provide additional support if the economy deteriorates further, particularly unemployment, but this disappointed investors anticipating a more definitive sign of further monetary easing. The Fed will wait until at least September before acting and will have the “luxury” of assessing reports on unemployment for July and August, and the steps that the European Central Bank is proposing to take to ease the worsening eurozone debt crisis. The announcements from the ECB meeting have disappointed investors as there was no direct action plan proposed.

In today’s article I’ll show you how to identify some golden stocks that investors and traders should have on their radar, in anticipation of additional quantitative easing by central banks.

Gold Stocks

Gold stocks have been punished (down around 30 to 50 percent in the past six months), as the gold price has pulled back from mid-last year. But if the central banks do move on monetary easing in a coordinated fashion by the end of the year it may well be time to start investing in some of the downtrodden gold stocks.

The last time we highlighted gold stocks was in early March 2011 (and before that early September 2010), and both times it proved to be timely, as the gold stocks had a great run in the following couple of quarters.
The precious metal will be in for a re-rating if the central banks do move towards further easing, which is now not likely to happen until at least next month. The gold producers will be set up for a re-rating too if gold’s fortunes turnaround.

So today we’re going to show you how to review the gold mining sector, using the D2MX Trade Tool features available in the Market Analyser and Bourse platforms.

Start by setting up a User Watchlist (under the Pricing/Quote menu) and either nominating specific stocks or selecting from the GICS sector of interest.

To create a sector specific watchlist, open a watchlist, and select the “N” button to open the Navigator window. Select the “Industry” tab and drill down into the Materials/Metals/Gold sector and then highlight the stocks of interest (hold down the CTRL key for multiple selections). Then save the list by selecting “Save_As” and nominate the watchlist name, say ASX_Gold (GICS).

If you like you may reduce the list by taking advantage of our Special Golden Report which provides an abridged list deduced from some additional filters including fundamentals of the stocks.

Gold Stocks Watchlist
Menu 1: Setting up Gold Stocks Watchlist

Once you have set up the watchlist you can quickly review the stock charts by with the push of a button.

Chart 2: Weekly Chart of Northern Star
Chart 2: Weekly Chart of Northern Star

Here is a sample chart of Northern Star. In the D2MX chart you can nominate your watchlist to scroll through (using right click menu), then use the Watchlist arrow button on the chart toolbar to skip to the next chart in your watchlist.

Some simple indicators will assist in your assessment of the stocks, such as the 13 and 50 day moving averages, volume, stochastics and the parabolic SAR, which should keep you on the right side of the market trend.

Investors also need to be mindful of the liquidity of the stock.

The Trade

Gold has been in the doldrums ever since the mid-2011 peak, but if the central banks manage to orchestrate a coordinated global move on monetary easing, gold will return to favour. The US Federal Reserve is not likely to move until September, but gold and gold stocks may start to move in anticipation of central bank easing.

Keep the stocks that have been highlighted here, on your watchlist, ready for the trade setups, or request our free Golden Stock Opportunities Special Report, providing a more detailed on analysis of gold stocks that are earning money, with low gearing levels and some that are even paying dividend.

Utilise the features in the Market Analyser and Bourse platforms to select and track your trades. You will save time and potentially increase your returns by trading with the trend in sectors that are in favour.

Contact me at D2MX Trading on 1300 610 024 and I can help you trade, using a number of strategies that will give you the tools to navigate this market and help you boost your returns on investment.

Michael Hevern
Investment Adviser – D2MX Trading

This report was prepared by Michael Hevern. It represents the views and opinions of the author. It is not intended for use by any third party, without the approval of Michael Hevern. While this report is based on information from sources which are considered reliable, its accuracy and completeness cannot be guaranteed. Any opinions expressed reflect my judgment at this date and are subject to change. Contracting Hevern Pty Ltd is a Corporate Authorised Representative No. 408868 of D2MX Pty Limited ABN 98 113 959 596, AFSL No. 297950 (D2MX), and Michael Hevern has been appointed as an Authorised Representative of Contracting Hevern Pty Ltd. Opinions, conclusions and other information expressed in this report are not given or endorsed by D2MX, unless otherwise indicated. The information contained in this Report is General Advice only, as the information or advice given does not take into account your particular objectives, financial situation or needs.
Disclaimer: Using leverage to invest can be a two edged sword, as it can magnify your returns when the stock price rises, but will in turn magnify the losses if the trade does not perform as expected.

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ASX Company News: Wild Acre Metals Acquires Peruvian Copper Gold Projects

Wednesday, April 18th, 2012

Wild Acre Metals Limited (WAC) is pleased to announce the acquisition of the Sambalay (Au‐Ag‐Cu), Chaparra Iron Oxide Copper Gold (IOCG) and Yauca (IOCG) Projects located in the highly regarded Southern Peru Porphyry Copper Belt.  These acquisitions position Wild Acre in the key areas of this highly mineralised belt with projects previously untested by drilling, while exhibiting surface geochemical and geophysical anomalies that may lead to a major discovery.

Each project is positioned in close proximity to regional structures while local geology displays strong similarities to nearby discoveries and operating mines.  Planning is currently underway to commence drilling of priority targets in 2012‐13.

www.wildacre.com.au

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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 Find Tentative Support

Tuesday, August 23rd, 2011

* 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. Markets

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 Markets

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

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%.

Commodities

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
 

Ex-dividend Date

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

Market Summary

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

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: Wipeout!

Thursday, August 11th, 2011

* U.S. stock markets plunged as it was time for the bulls to be squeezed late in the session. The sell-off was sparked due to fears of further contagion among European banks and a delayed reaction to the Federal Reserve’s gloomy economic outlook.
* European stocks fell broadly as the French economy is expected to be the next country to have its credit rating downgraded.
* Asian stock markets ended higher yesterday, but they are set to give back their recent gains today.  Gains in most markets were generally not as impulsive as in the U.S.
* Commodities prices traded generally higher, and gold prices remained around record levels again closing above $US1,790 and crude oil closed above $US80.

The SPI Futures is trading around the key pivot level of 4000, ending down -2.4% (or -99 points) at 3,995. The key levels for our index today are 3900 and 4050. Australian shares are set to give back their recent gains today, following on from the sharp falls from key markets in the U.S. and Europe, as sovereign debt contagion issues resurfaced in Europe, with France reported to be the next economy to be downgraded.

Locally company reporting continues and the unemplyment rate is expected to reamin at 4.9% in the report today. See below for ASX listed companies in the news today.

Economics News Today

*  August Consumer Inflationary Expectations Survey
*  July Labour Force

U.S. Markets

U.S. stock markets plunged as it was time for the bulls to be squeezed late in the session.  The selloff was sparked due to fears of further contagion among European banks and a delayed reaction to the Federal Reserve’s gloomy economic outlook. The CBOE Market Volatility Index, known as the “fear gauge” surged 23% and has spiked to levels not seen since the GFC. 

The Dow Jones Index plunged over 500 points again, as all 30 stocks sold off, more than reversing the previous day’s sharp gains. The S&P 500 stock index and the tech-heavy Nasdaq Composite lost over 4% in the session.  Only 11 of the S&P 500 components finished in positive territory and all 10 of the S&P 500 sectors finished in negative territory.  

The financial stocks led the falls with Citigroup and Bank of America plunging over 10%, while J.P. Morgan Chase was down 5.6% and American Express sold off 7.2%. The highlights in commodities markets were gold approaching $US1,800 per ounce, crude oil above $US80 and copper around US3.9 cents per pound. 

All ten company groups that make up the S&P index traded sharply lower:  Industrials were down – 5.1%, Materials were down -3.4%, the Energy sector was down -3.5%, the Financials sector was down -7.0%, Technology sector was down -3.9%, while Consumer Staples were down -4.3%. 

The Dow Jones closed down -4.6% (or -520 points) at 10,720, the S&P 500 index closed down -4.4% (or 52 points) at 1,121, the Nasdaq ended down -4.1% (or -101 points) at 2,381, and the smaller cap Russell 2000 was down -5.2%. 

Asian Markets

Asian stock markets ended higher yesterday, but they are set to give back their recent gains today.  Gains in most markets were generally not as impulsive as in the U.S. Bargain hunters went shopping for down-beaten stocks in the financials and mining sectors, while the performance was mixed among companies with a large exposure to demand overseas.  

Early sentiment was helped by the strong rebound on Wall Street after the Federal Reserve pledged to keep rates low through mid-2013.  But the bulls looked to be running out of steam as markets could not push through the gains of the early session. The Fed’s comments about a slowing U.S. economy also made the bulls wary.  

In Japan the Nikkei Stock Index ended the day around the 9,000 level. In Hong Kong the Hang Seng Index climbed 2.3% after crashing nearly 15% over the past six days, while in China the Shanghai Composite finished 0.9% higher.

In China the SSE Composite was up 0.9% (or 23 points) at 2,549, while in Hong Kong the Hang Seng Index was up 2.3% (or 453 points) at 19,331 after crashing nearly 15% over the past six days. In Japan the Nikkei 225 Index was up 1.1% (or 94 points) at 9,039, the South Korean KOSPI was down -0.2% for the session, and the Indian market was up 1.6%.

Commodities

The Dollar Index was higher at 74.72 on a lower Euro, while the Australian Dollar last traded lower at 102.04.  Commodities prices were generally higher. 

For the session the benchmark crude NYMEX for August delivery was up 2.9% (or $US2.29) to settle at $US81.59.  Copper prices are still below key pivot level as Copper for August delivery was down -1.6% (or -6.5 cents) at $US3.9025.  August gold was up 2.9% (or $US48.90) at $US1,789.80.  

ASX News Today

CBA – CommBank of Australia reported Full Year Net profit up 13% as $6.39 billion, with earings up 12% and the fully franked dividend coming in at $1.88, but CBA forecast little improvement in credit demand and potentially higher funding costs.

BPT – Beach Energy the oil and gas producer reported a strong resource estimate for its Holdfast-1 and Encounter-1 shale gas wells in the Cooper Basin, South Australia.

CPU – Computershare’s full year profit declined by 10.4 per cent as the share registry services provider said it was cautious because of the current market volatility. Management was very cautious about the outlook and have not provided EPS guidance (they will provide an update at the AGM in November). Bloomberg consensus is factoring in US58.3 cents in EPS for FY12 and is likely to be downgrading this slightly to match FY11’s reported US55.67 cents.

DMP – Domino’s Pizza the fast food chain expects a 15 percent increase in profit in the current year.

HVN – Harvey Norman has posted a 1.7 percent increase in global sales for the year to June 30, announcing earnings of $6.18 billion.

MCC – Macarthur Coal says the European Commission does not need to review the planned takeover of Macarthur Coal by US giant Peabody Energy and the world’s biggest steel maker, ArcelorMittal.

NWS – News Corporation shares have plunged due to the ongoing UK phone hacking scandal and general market distress in recent days.

SGP – Stockland the property developer has posted a 58 percent rise in annual profit, and says it expects to maintain earnings in the current year.

TLS – Telstra is tipped to report a double-digit decline in net profit today, as its year-long bid to capture more customers eats into the bottom line.

WDC – Westfield Group the shopping centre owner is making its first new market entry in 11 years, acquiring 50 per cent of Almeida Junior, a Brazilian operation which does much the same as Westfield elsewhere.

WOR – WorleyParsons shares surged after the company announced it had won two new overseas contracts.

Local Corporate Reporting

TLS – Telstra Corporation Ltd full year results
SGT – Singapore Telecommunications Ltd and Optus first quarter results
AWC – Alumina Ltd first half results
AQP – Aquarius Platinum Ltd full year results

Ex-dividend Date

None

Market Summary

ASX – to open sharply lower
US & UK/Europe – sharply lower
US ADRs – Sharply Lower
BHP down -5.2% & RIO down -6.9%; AWC down -5.5%
ANZ down -3.5% & NAB down -2.6%
NEM  up 0.7%, JHX down , NWS down -4.7%

Commodities Stock Index down -2.3%
Gold Stocks Index up 2.6%
Oil Stocks Index down -3.8% 

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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Stock Market Analysis: Global Stock Markets Surge As Bulls Charged Into Bargains

Wednesday, August 10th, 2011

* U.S. stock markets ended sharply higher in a volatile session as the Fed Reserve commits to its zero rate policy until at least mid-2013.
* European stock markets rose for the first time in seven sessions.
* Most Asian stock markets ended sharply lower yesterday joining the U.S. markets which had their biggest selloff in two years. Australia bucked the trend.
* Commodities prices traded generally higher, and gold prices remained around record levels again closing above $US1,735.

The SPI Futures is trading around the key pivot level of 4000, ending up 2.9% (or 117 points) at 4,118. The key levels for our index today are 4000 and 4150.  Australian shares staged the greatest intraday recovery on record yesterday after selling off heavily (down -5.5%) in the morning session, bargain hunters and fund managers went shopping pushing the market up 7.2% up from the lows of the day. Australian shares are set to open sharply higher today after the SPI finished higher overnight at its key level of 4000 following on from the sharp rally in key markets in the U.S. and Europe, where investors started bargain hunting.

The structure of financial markets as we know them is facing a seismic shift as a result of the US credit rating downgrading.  Overnight the US Federal Reserve reiterated that its zero rate policy will continue into 2013, but fell short of announcing a QE3.  At the start of August the PE ratio for the market was 14 but that fell to as low as 11 yesterday.

See below for ASX listed companies in the news today.

Economics News Today

*  August Westpac Melbourne Institute Consumer Sentiment Survey
*  June Lending Finance

U.S. Markets

U.S. stock markets ended sharply higher in a volatile session, as the Federal Reserve pledged to keep interest rates near zero at least through mid-2013, but failed to commit to a QE3. The central bank also sharply downgraded its view of the U.S. economy.  This news was initially greeted by a sell-off which turned around late in the session to stage a staggering recovery from the worst 3-day selloff since the GFC.

The Dow Jones Index finished near session highs, back above 11,000 in a wild ride.  The S&P 500 stock index closed just below 1,200 and the tech-heavy Nasdaq outperformed the major indices up over 5% in the session.  In the broader market financials and materials stocks surged as investors went shopping for bargains.  Commodities prices generally rose and gold remains near record levels as Gold futures reflected continued extreme investor concerns finishing above $US1,735.  However crude-oil futures settled around $US80 a barrel for the first time in almost 10 months, while the U.S. dollar lost ground against both the euro and the yen.

All ten company groups that make up the S&P index traded sharply higher:  Industrials were up 5.0%,  Materials were up 6.2%, Energy was up 5.1%, the Financials sector was up 7.8%, Technology was up 4.6%, while Consumer Staples were up 2.1%.

The Dow Jones closed up 4.0% (or 645 points) at 11,240, the S&P 500 index closed up 4.7% (or 53 points) at 1,173, the Nasdaq ended up 5.3% (or 124 points) at 2,483, and the smaller cap Russell 2000 was up 6.9%.

European Markets

European stock markets rose for the first time in seven sessions. The Stoxx Europe 600 index ended 1.4% higher in a volatile session, having plunged -4.1% in the previous session. In London the FTSE 100 index rallied 2.1% as the U.S. Fed Reserve reaffirmed its commitment to its zero-rate policy.  In Germany, where the markets closed before the U.S. staged its remarkabke recovery, the DAX finished flat for the session.  These markets will likely follow the lead from the U.S. when they resume trading tonight.

In London the FTSE 100 index was up 1.8% (or 94 points) at 5,917, the German DAX was down -0.1% (or -6 points) at 5,917, while in France the CAC was up 1.6% (or 51 points) at 3,176.

Asian Markets

Most Asian stock markets ended sharply lower yesterday, joining the U.S. markets which had their biggest selloff in two years.

In Japan the Nikkei Stock Index closed below 9,000. In Hong Kong the Hang Seng Index plunged -5.7% to close below the 20,000 level, while in China the Shanghai Composite Index ended flat for the session.  Both Hong Kong and Chinese markets are now in bear market teritory, having lost over 20% from their 52-week highs recorded in November.

However expect Asian markets to surge higher today given the solid finishes in European and U.S. markets after the U.S. Fed’s commentary, as fund managers go shopping for bargains.

Australian traders led the world in a volatile session yesterday where they saw early losses of -5.5% on the market, but in the afternoon session surged to finish 7.3% off its lows, as there was speculation that the Fed would be announcing a QE3 sooner rather than later.

In China the SSE Composite was flat at 2,526, while in Hong Kong the Hang Seng Index was down -5.7% (or -1,159 points) at 19,331 and in Japan the Nikkei 225 Index was down -1.7% (or -153 points) at 8,944. The South Korean KOSPI was down -3.7% for the session, while the Indian market was down -0.8%.

Commodities

The Dollar Index was lower at 74.03 on a higher Euro, while the Australian Dollar last traded higher at 103.62.  Commodities prices were generally higher.

For the session the benchmark crude NYMEX for August delivery was down -0.5% (or -$US0.42) settle at $US80.90.  Copper prices are still below the key pivot level, with copper for August delivery was up 0.2% (or 1.0 cents) at $US3.9300.  August gold was up 1.5% (or $US25.70) at $US1,735.90.

ASX News Today

BKN – Bradken the mining and rail equipment maker has reported a decline in full year net profit but flagged strong earnings growth in 2011/12.

CBA – Commonwealth Bank of Australia has cut interest rates on its fixed rate home loans by up to 60 basis points.

CCL – Coca-Cola Amatil, the soft drink supplier, will consolidate three SPCA Ardmona manufacturing sites in Victoria into two, after reporting a 27.8 percent fall in first half net profit.

COH – Cochlear has increased full year profit 16 percent to a record, and the company says there will be ongoing demand for its hearing implant products from both developed and emerging markets.

CNP – Centro Properties Group, the embattled property group, will consolidate its complicated funds structure into a new, publicly listed $7 billion shopping centre owner and manager.

GCL – Gloucester Coal has upgraded its full year net profit forecast by 14 to 18 per cent.

LEI – Leighton Holdings intends to sell a mining services provider based in WA’s Pilbara region to BHP Billiton for about $705 million.

NAB – National Australia Bank has reported cash earnings for the June quarter of $1.4 billion in what it described as “challenging operating conditions”.

ORG – Origin Energy Ltd and ConocoPhillips have finalised an agreement so China’s Sinopec can take a 15 percent interest in the Australia Pacific LNG project in Queensland.

TLS – Telstra is tipped to report a double-digit decline in net profit on Thursday, as its year-long bid to capture more customers eats into the bottom line.

VBA – Virgin Australia and Air New Zealand have been granted permission to fly fewer seats across the Tasman in response to Chilean volcanic ash cloud.

WBC – Westpac Bank has cut the interest rate on its three-year fixed rate home loan by 20 basis points.

Local Corporate Reporting

CBA – Commonwealth Bank of Australia Ltd full year results
CPU – Computershare Ltd full year results
SGP – Stockland full year results

Ex-dividend Date

None

Market Summary

ASX – to open sharply higher
US & UK/Europe – sharply higher
US ADRs – sharply higher

BHP down -7.3% & RIO 14.1%; AWC 13.9%
ANZ up 11.3% & NAB up 10.6%
NEM up 2.4%, JHX up 6.7%, NWS up 6.4%

Commodities Stock Index up 5.2%
Gold Stocks Index up 4.5%
Oil Stocks Index up 4.7%

By Michael Hevern
Head of Research

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Stock Market Analysis: U.S. Debt Ceiling Still Overshadows Global Markets

Monday, August 1st, 2011

* U.S. stock markets fell Friday and posted their biggest weekly decline in a year, as the debt ceiling negotations remained dealocked.
* European stocks markets traded lower on Friday.
* Asian stock markets ended lower Friday due to the stalemate on the progress in resolving the U.S. debt ceiling crisis.
* Commodities prices traded generally mixed, but Gold prices remained around record levels again closing above $US1,626.

The SPI Futures is trading below the key pivot level of 4600, ended  down -0.1% (or -3 points) at 4,427. The key levels for our index this week are 4500 and 4300.  Australian shares is set to open lower today following on from the negative leads from key markets in the U.S. and the Europe, and this will likely pressure stock prices as the day unfold.  Trading volumes are likely to remain subdued today as investors choose caution until the U.S. resolves their debt-ceiling issue.

In Australia the S&P/ASX 200 finished -0.9% lower Friday as the U.S. debt shadow weighed on sentiment,  the Aussie dollar surging to a fresh high above $US1.10.  Australian shares have hit a near 11-month low as investors headed into what has been a most crucial weekend in history for financial markets, but there is still no decision.  However the protagonists are hinting that a deal is in sight, but the devil will be in the detail on how and when the spending cuts will be achieved.  There is a bank holiday in Australia today, so trading volumes will be down.

See below for ASX listed companies in the news today.

Economics News Today

*     July Australian PMI
*     July TD Securities Monthly Inflation Gauge.

U.S. Markets

U.S. stock markets fell Friday and posted their biggest weekly decline in a year, as the debt ceiling negotations remained dealocked.

The Dow Jones Index for a sixth straight session, with on 2 of the DOW 30 in the greeen. The index fell 4.5% for the biggest weekly decline since May 2010, and is down -1.6% for July.

In the braoder market the S&P 500 fell 4.1% for the week, led by energy and materials stocks, while the tech-heavy Nasdaq fell -3.7% for the week.  The S&P 500 index was down -2.2% for July but has bounced of its 200-day moving average, will be be a key level for next week, while the Nasdaq was only down -0.6% for July, which is surprising given all the concens expressed around the impasse over the raising of the debt ceiling.

In economic news the Commerce Department reported that the economy grew by only 1.3% in the second quarter and a sharp downward revision to 0.4% for the first quarter, confirming the econmic recovery is faltering, despite what happens over the debt ceiling.  The primary focus this week is the 2 August deadline for rasing of the debt ceiling, Congress and the White House have been in discussions over the weekend but still have found no consensus over how to prevent the government from breaching its statutory borrowing limit.

All ten company groups that make up the S&P index traded lower:  Energy sector was were down -1.0%, the Materials were down -1.1%, Industrials were down -0.5%,  Financials sector was down -0.3%, Technology sector was down -0.2%, while the  Consumer Staples were down -0.5% .

The Dow Jones closed down -0.8% (or -97 points) at 12,143, the S&P 500 index closed down -0.7% (or -8 points) at 1,292, the Nasdaq ended down -0.4% (or -10 points)  at 2,756, and the smaller cap Russell 2000 was down -0.2%.

European Markets

European stocks markets traded lower on Friday.  The Stoxx 600 fell -2.5% and was down -2.8% for July and is down -8.9% from if February peak.

In London the FTSE 100 index ended lower below the psychological 6,000 level, as banks and mining stocks led the falls with Lloyds Bank the Uk’s largest mortgage lender down -3.7% and BHP down -2.3%.  The FTSE was down -2.2% for July.

In Germany the DAX 30 fell for a third session and was down -2.3% for the week and was down -3% in July.  Stocks pared their losses on news from President Obama saying that the Republicans and Democrats were in “rough agreement” on their plan to raise the debt ceiling.

In London the FTSE 100 index was down -1.0% (or -58 points) at 5,815, the German DAX was down -0.4% (or -31 points) at 7,159,  while in France the CAC was down -1.1% (or -41 points) at 3,671.

Asian Markets

Asian stock markets ended lower Friday due to the stalemate on the progress in resolving the U.S. debt ceiling crisis.
In Japan the Nikkei Stock Average ended lower for the session and flat for the month, as stock prices were hit by a number of weak earnings reports and profit outlooks.
In Hong Kong the Hang Seng Index fell, but was flat for the month.  In China the Shanghai Composite edged higher but was -2% for the month.  However financials have weighed due to the ongoing issues oiver debt in  Europe and the U.S.  Investor sentiment will be dominated over the outcome of the U.S. debt ceiling negotiations this week.

In China the SSE Composite was down -0.3% (or -7 points) at 2,702, while in Hong Kong the Hang Seng Index was down -0.6% (or -130 points)  at 22,440 and in Japan the Nikkei 225 Index was down -0.7% (or -68 points) at 9,833, South Korean KOSPI was down -1.0% for the session, while the Indian market was  down -0.1%.
Commodities

The Dollar Index was lower at 73.90 on a higher Euro, while the Australian Dollar last traded higher at 110.00. Commodities prices were generally mixed.
For the session the Benchmark crude NYMEX for July delivery was down -1.8% (or -$US1.74) to settle at $95.86. Copper prices are still below 2-year highs as Copper for July delivery was up 0.1% (or 1.0 cents) at $US4.4795.  July gold was up 0.9% (or $US14.90) at $US1,626.40.
ASX News Today
AUN – Austar United Communications reported a four-fold increase in 1H11 net profit and expressed confidence a proposed merger with Foxtel would proceed.
BHP – BHP Billiton has announced a $254 million expansion of its manganese operations in the Northern Territory.
CBA – CommBank says funds under administration at June 30 were $197 billion, down -1.3 percent for the quarter because of a higher Aussie dollar and falls in investment markets.
FMG – Fortescue Metals Group executive director Andrew Forrest says emerging miners and even some states could launch legal action to fight the Mineral Resource Rent Tax.
FGL – Foster’s Group has relaunched its iconic beer business and renamed its Carlton & United Breweries (CUB) business as Carlton United Brewers.
MMX – Murchison Metals, the Pilbara iron ore miner has at least posted positive production and shipping results, after a disasterous few months.
NZO – New Zealand Oil and Gas reported $27 million of operating revenue for the June quarter from its two offshore Taranaki developments, while for the year to June the figure was $84 million.
ORG – Origin Energy has posted record full year production and sales revenues as well as boosting production in the latest June quarter.
OST – OneSteel says its Whyalla blast furnace has returned to normal operations following maintenance and modification work which will extend its design life beyond 2020.
SCR – Scandinavian Resources the Perth-based has announced a dramatic jump in its Swedish iron ore resource from 200-250 million tonnes to 412.1 million tonnes.
SGH – Slater & Gordon the law firm says it has settled the last of its Storm Financial client claims against the National Australia Bank (NAB).
WDC – Westfield will manage the new shopping centre at New York’s World Trade Centre, as the company returns to the site after the terrorist attacks almost 10 years ago.
WES – Wesfarmers says sales at the Coles supermarket chain, rose 6.7 percent to $31.8 billion in financial 2011 amid declining prices and consumer confidence.
Local Corporate Reporting
RIO quarterly production.
Ex-dividend Date
None
Market Summary

ASX – to open lower
US & UK/Europe – lower

US ADRs – Broadly Lower!!…

BHP down -0.7% & RIO flat; AWC down -1.1%
ANZ down -0.9% & NAB down -0.9%
NEM down -3.7%, JHX down 2.8%, NWS down -0.5%

Commodities Stock Index down -1.3%
Gold Stocks Index down -2.2%
Oil Stocks Index down -1.1%
By Michael Hevern
Head of Research
For Buy and Sell recommendations on ASX listed companies register for a FREE trial of MDS Financial Research.

Written on 1 August, 7:15am

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Stock Market Analysis: Global Markets Sell-off Sharply

Thursday, July 28th, 2011

* US stock markets fell sharply overnight, as the possibility of a U.S. debt default looms if the raising of the federal government’s $US14.3 trillion debt ceiling is not approved by August 2nd. At any rate the U.S. will likely suffer a downgrade because of its debt issues.
* European stock markets fell sharply overnight, as financials weighed on sentiment and the U.S. still remains deadlocked over their debt ceiling issue.
* Asian stock markets ended mixed yesterday, with investors remained wary as the U.S. debt ceiling issue weighed on sentiment.
* Commodities prices traded generally lower, but Gold prices remained around record levels again, closing above $US1,617.

The SPI Futures is trading below the key pivot level of 4600, ending down -1.4% (or -64 points) at 4,448. The key levels for our index today are 4520 and 4420.  Australian shares are set to open sharply lower today following on from the sharply negative leads from key markets in the U.S. and Europe, and this will likely pressure stock prices as the day unfolds.  Trading volumes were light again yesterday and are likely to remain low today as investors choose caution until the U.S. resolves their debt-ceiling issue.

In Australia the S&P/ASX 200 finished -0.8% lower after news that inflation had exceeded expectations raised the possibility of another interest-rate increase, sending the Aussie dollar surging to a fresh high above $US1.10.

See below for ASX listed companies in the news today.

U.S. Markets

US stock markets fell sharply overnight, as the possibility of a U.S. debt default looms if the rasing of the federal government’s $US14.3 trillion debt ceiling is not approved by August 2nd. At any rate the U.S. will likely suffer a downgrade because of its debt issues.

U.S. stocks sold-off for a fourth straight session due to report showing economic softness and the stalemate over the debt crisis in Washington, D.C. 

All three major indices fell sharply and the Dow Jones has now shed nearly 400 points over the course of its losing streak in the past four sessions. Even the Nasdaq succumbed to the selling after Juniper Networks plunged 21% after reporting weak second-quarter results and forecasting a downbeat forecast.  In the broarder market the technology, materials, financial and industrial sectors were all down significantly. 

In economic news durable-goods orders disappointed, suggesting continued weakness in manufacturing as durable goods orders dropped -2.1% in June. 

On a positive note there were some strong corporate earnings with Boeing, the aerospace and defence company, gaining 1.2% after reporting higher-than-expected 2Q earnings and raising its full-year outlook. Meanwhile Amazon rallied 3% as the online retailer reported better-than-expected 2Q earnings results.

All ten company groups that make up the S&P index traded lower:  Industrials were down -2.7%, Materials were down -2.3%, the Financials sector was down -2.4%, the Technology sector was down -2.7%, while Consumer Staples were down -1.7%, and Energy was down -1.9%.

The Dow Jones closed down -1.6% (or -199 points) at 12,303, the S&P 500 index closed down -2.0% (or -27 points) at 1,305, the Nasdaq ended down -2.7% (or -75 points) at 2,765, and the smaller cap Russell 2000 was down -3.0%.

European Markets

European stock markets fell sharply overnight, as financials weighed on sentiment and as the U.S. remains deadlocked over their debt ceiling issue. 

Across the region banks were hit by Goldman Sachs lowering its outlook for the sector, poor results from Spanish giant Santander (with 1H11 profits down 21%) and concerns surrounding the second bailout for Greece dragging on sentiment. Also, borrowing costs remained high for Italy as fears of debt contagion simmer. 

In London the FTSE 100 index was down -1.2% (or -73 points) at 5,857, the German DAX was down -1.3% (or -97 points) at 7,253, while in France the CAC was down -1.4% (or -54 points) at 3,734 and the Italian market slumped -2.8%.

Asian Markets

Asian stock markets ended mixed yesterday, with investors wary as the U.S. debt ceiling impasse weighs on sentiment.   In Japan the Nikkei Stock Average closed the session down but was still above the 10,000 level, with exporters suffering due to the strong yen. 

The Hang Seng Index finished lower as exporters dragged on sentiment, while in China the Shanghai Composite index bucked the trend ending higher again, as bargain hunters stepped in after the sharp 3% sell-off earlier in the week.

In China the SSE Composite was up 0.8% (or 20 points) at 2,724, while in Hong Kong the Hang Seng Index was down -0.1% (or 30 points) at 22,552 and in Japan the Nikkei 225 Index was down -0.5% (or -50 points) at 10,047. The South Korean KOSPI was up 0.3% for the session, while the Indian market was down -0.4%.

Commodities

The Dollar Index was lower at 74.09 on a higher Euro, while the Australian Dollar last traded higher at 110.25. Commodities prices were generally lower.

For the session the benchmark crude NYMEX for July delivery was down -2.4% (or -$US2.39) to settle at $97.20. Copper prices are still below 2-year highs as Copper for July delivery was down -0.8% (or -3.4 cents) at $US4.4405.  July gold was down -0.1% (or -$US1.60) at $US1,617.00.

ASX News Today

AGO – Atlas Iron has entered into an alliance with Brazilian iron ore explorer Centaurus Metals which will see Atlas hold a 19.9 percent stake in Centaurus.

ALK – Alkane has signed a MOU with Mintech for DZP Zirconium valued at $US40-48 million per annum.

ALS – Alesco the construction, mining and home products provider has returned to profit, and is in a good position to counter challenging market conditions over the next year.

ALZ – Australand Property Group says it is well-placed to deliver guidance in fiscal 2011 after posting a 17 percent 1H11 profit in a cautious environment.

AMC – Amcor has completed the sale of a glass tubing business to Nipro Corporation for $US161 million.

AQA – Aquila Resources is still pursuing legal action against its Issac Plains coal mine joint venture partner, Brazil’s Vale, but the parties have resolved a dispute that threatened to close the operation.

BTA – Biota the anti-infective drug developer has received $6.6 million in royalties for its Relenza flu drug from global pharmaceuticals firm  GlaxoSmithKline (GSK) in the 2011 financial year.

DML – Discovery Metals, a mineral exploration company, says that Boseto Construction is on schedule for commissioning and commencement of production in the 1H12, adding that construction of the Boseto project remains within Budget. 

GCL – Gloucester Coal increased its 4Q sales by 16 percent from a year earlier by taking advantage of the available port capacity.

MBN – Mirabela Nickel the Perth-based miner boosted nickel production at its flagship Brazilian mine by 20 per cent during the June quarter.

OMH – OM Holdings has hit back at attacks from its largest shareholder, Consolidated Minerals (ConsMin), by announcing record quarterly production at its flagship manganese mine.

ROC – ROC Oil Company has trimmed its full year exploration and capital spend as it continues to seek new projects in Malaysia.

Local Corporate Reporting

Legend International (LGD)      Full year 2010 AGM
Macquarie Group Ltd (MQG)    Full year 2011 AGM
Wesfarmers Ltd (WES)             Q4 2011 Sales conference call 

Ex-dividend Date

Alcoa Inc (AAI)
Cellnet Group (CLT)

Market Summary

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

BHP down -1.5% & RIO down -2.0%; AWC down -0.2%
ANZ down -1.9% & NAB down -1.8%
NEM  down -1.8%, JHX down -0.7%, NW down -0.4%

Commodities Stock Index down -2.5%
Gold Stocks Index down -2.6%
Oil Stocks Index down -2.3% 

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: U.S. Debt Ceiling Stalemate Weighs On Markets

Wednesday, July 27th, 2011

* US stock markets fell overnight as negotations over the U.S. debt-ceiling remain at a stalemate, but trading volumes remain light.
* European stock markets fell overnight await a decision from the US politicians over the debt ceiling, and ponder their own sovereign debt issues.
* Asian stock markets generally recovered to ended higher yesterday, but trading volumes remain light as investor sentiment remains cautious over the U.S. debt ceiling brinkmanship.
* Commodities prices traded generally higher, but Gold prices closed at record levels again closing above $US1,618.

The SPI Futures is trading below the key pivot level of 4600, ended  down -0.4% (or -19 points) at 4,526. The key levels for our index this today are 4580 and 4480.  Australian shares are set to open modestly lower today and negative leads from key markets in the U.S. and the Europe, will likely pressure stock prices as the day unfold.  Trading volumes were light again yesterday and are likely to remain low today as investors choose caution until the U.S. resolves their debt-ceiling issue.

CPI figures are due for release today and are expected to show inflation is on the rise at around 3.4% pa, but the RBA is unlikely to move on interest rates given the global concerns over debt.   The RBA said yesterday that consumer spending will return.

See below for ASX listed companies in the news today.

Economics News Today

*  Q2 CPI data (YoY 3.3%).

U.S. Markets

US stock markets fell overnight as negotations over the U.S. debt-ceiling remain at a stalemate, but trading volumes remain light.  The U.S. are still facing a credit downgrade due to the problems with debt.  The 2 August deadline for raising the government’s debt ceiling looms large and negotiations show no sign of a resolution over the raising the U.S. $US14.3 billion debt ceiling, due to fundamental disagreements over tax increases and spending cuts. 

Investors appear to factor in a resolution to the political posturing as U.S. markets remain close to multi-year highs.  The corporate reporting season has also been robust with over 50% of the companies that have reported have beat analyst forecast. 

The US dollar remained under pressure, driven down by the continued failure of President Barack Obama and Republican leaders to cut a deal to raise the U.S. debt ceiling. The US dollar has reached an all-time low against the  Swiss franc, a 4-month low against the yen and a 6-week low against the British pound. 

Commodities were generally higher with gold still at reord levels as it is considered to be a safe-haven.

All ten company groups that make up the S&P index traded generally mixed:  Industrials were down -1.9%,  the Materials were down -1.1%, Financials sector was down -0.1%, Technology sector was up 0.5%, while the  Consumer Staples were down -0.2% , and Energy sector was were down -0.5%.

The Dow Jones closed down -0.7% (or -91 points) at 12,501, the S&P 500 index closed down -0.4% (or 6 points) at 1,332, the Nasdaq ended down -0.1% (or -3 points) at 2,840, and the smaller cap Russell 2000 was down -0.8%.

European Markets

European stock markets fell overnight await a decision from the US politicians over the debt ceiling, and ponder their own sovereign debt issues.  The Stoxx Europe 600 index fell -0.4%. 

In London the FTSE 100 index traded flat, BP fell -2.6% after its second-quarter results missed estimates on lower production volume and GlaxoSmithKline ended higher.  In Germany the DAX rose as SAP jumped 3.6% after saying it expects to reach the high end of its forecast for full-year revenue and operating profit.

In London the FTSE 100 index was up 0.1% (or 5 points) at 5,930, the German DAX was up 0.1% (or 5 points) at 7,350,  while in France the CAC was down -0.7% (or -25points) at 3,787.

Asian Markets

Asian stock markets generally recovered to ended higher yesterday, but trading volumes remain light as investor sentiment remains cautious over the U.S. debt ceiling brinkmanship. 

Across the region financial stocks were broadly higher, recovering some of their losses from the previous session, these gains came despite the possibility credit-rating firms might downgrade U.S. sovereign debt. 

In Japan the Nikkei Stock Index ended higher again above the 10,000 level.  In Hong Kong the Hang Seng Index rose, while in China the Shanghai Composite recovered some of the 3% fall from the previous session.  However the Chinese railway sector remained weak after the deadly collision two high speed rail trains from the weekend.

In China the SSE Composite was up 0.5% (or 14points) at 2,703, while in Hong Kong the Hang Seng Index was up 1.3% (or 279 points)  at 22,572 and in Japan the Nikkei 225 Index was up 0.5% (or 47 points) at 10,097, South Korean KOSPI was up 0.9% for the session, while the Indian market was  down -1.9%.         

Commodities

The Dollar Index was lower at 73.50 on a higher Euro, while the Australian Dollar last traded higher at 109.56. Commodities prices were generally higher.

For the session the Benchmark crude NYMEX for July delivery was flat to settle at $99.20. Copper prices are still below 2-year highs as Copper for July delivery was up 1.6% (or 7.1 cents) at $US4.4725.  July gold was up 0.3% (or $US4.600) at $US1,618.50.
   
ASX News Today

ALK – Alkane has signed a MOU with Mintech for DZP Zirconium valued at $US40-48 million per annum.

ALS – ALesco the construction, mining and home products provider has returned to profit, and is in a good position to counter challenging market conditions over the next year.
AMC – Amcor has completed the sale of a glass tubing business to Nipro Corporation for $US161 million.
DML – Discovery Metals, a mineral exploration company, says that Boseto Construction is on schedule for commissioning and commencement of production in the 1H12, adding that construction of the Boseto project remains within Budget. 
ILU – Iluka Resources Ltd the mineral sands miner will restart work at its Eneabba project in WA later this year as prices for its products rebound sharply. The Eneabba operations, had been suspended in mid-2010 due to declining ore grades and low margins.
LLC – Lend Lease Group says it has secured approval from the US Department of the Army for the modification and development of a residential project in Hawaii, worth $157 million.
MTN – Marathon Resources the uranium explorer has requested a meeting with the SA government over the proposed ban on mining in the Arkaroola region in the Flinders Ranges.
OSH – Oil Search says 2Q operating revenue jumped 42 percent from the preceding quarter because of higher oil sales and prices.
RMD – ResMed has signed up US medical technology company, CareFusion, to distribute the company’s ventilators to US hospitals.
TEL – Telecom NZ in it split-up, the two entities resulting from the proposed structural separation of Telecom NZ will use some of the same assets, but no assets will be jointly owned.
WHC – Whitehaven Coal has bounced back from extreme weather earlier this year by boosting coal production by 47 percent in the June quarter.

Local Corporate Reporting
AGO – Atlas Iron Ltd     June Quarterly Report 
ALZ – Australand Property Group first half results
BDR – Beadell Resources Ltd          June Quarterly Report 
CFU – Ceramic Fuel Cells Ltd         Trading statement 
MBN – Mirabela Nickel Ltd June Quarterly Activities Report 
ROC – Roc Oil Company Ltd second quarter activities results
 
Ex-dividend Date
None
 
Market Summary

ASX – to open lower
US & UK/Europe – lower

 
US ADRs – Broadly Higher!!…

BHP up 0.5% & RIO up 1.1%; AWC up 0.1%
ANZ up 2.1% & NAB up 1.8%
NEM  down -0.1%, JHX up 2.1%, NWS down -0.3%

Commodities Stock Index down -0.8%
Gold Stocks Index up 0.1%
Oil Stocks Index down -0.5% 

By Michael Hevern
Head of Research

 
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