Posts Tagged ‘market summary’

Stock Market Analysis: China Is Looking Towards Monetary Easing

Tuesday, January 10th, 2012

* US stock markets drifted higher ahead of the start of the US earnings season.
* European stock markets ended lower overnight, as the Stoxx Europe 600 index finished -0.5% lower.
* Asian stock markets rallied yesterday. Chinese and Hong Kong stocks jumped on hopes that Beijing will soon ease its monetary policies to support economic growth.
* Commodities prices traded mixed, as Gold prices traded around $US1,607 while crude-oil closed around $US101.

The SPI Futures is trading below the key pivot level of 4180, ending up 0.3% (or 23 points) at 4,095. The key levels for our index today are 4050 to 4150.

Aussie shares are expected to open flat, after mixed leads from the US and European markets. Indications that China is looking to monetary easing should help sentiment.  Retailers are facing a tough year ahead.

See below for ASX listed companies in the news today.

US Markets

US stock markets drifted higher ahead of the start of the US earnings season.

The Dow Jones Index held around 12,400, while in the broader markets the S&P500 and the tech-heavy Nasdaq rose 0.3%.

There is a view that the US economy is starting to decouple from Europe, Asia and the emerging economies, as US data in recent months has been improving, but this earnings seasion will no doubt provide the litmus test for 2012 prospects for the US.

Alcoa was the strongest Dow Jones stock, rising 2.7% as investors bought up ahead of the aluminum company’s fourth-quarter results, which were reported after market slightly better than expected.  Auto stocks also traded higher as the Detroit auto show began, and tech stocks are in focus ahead of the annual US electronics conference.

The ten company groups that make up the S&P index traded mixed with Materials up 0.1%, Energy up 0.5%, Financials up 0.5%, Industrials up 0.7%, Technology down -0.2%, and Consumer Staples up 0.1%.

The Dow Jones closed up 0.2% (or 5 points) at 12,388, the S&P 500 index up 0.2% (or 3 points) at 1,280, the Nasdaq ended up 0.2% (or 5 points) at 2,679 and the smaller cap Russell 2000 was up 0.5%.

European Markets

European stock markets ended lower overnight, as the Stoxx Europe 600 index dropped -0.5%.

Across the region the banking sector led the falls, with Italy’s UniCredit SpA plunging another -11% and leading the banking sector lower after its recent disappointing equity raising, which consisted of a EUR7.5 billion rights issue, which had to be offered at a 43% discount.

In London the FTSE 100 index fell -0.7% as banks dragged the index lower, with Barclays down -4.5% and Lloyds down -3.4%.

Investors focused on comments from German Chancellor Angela Merkel and French President Nicolas Sarkozy, who announced that progress had been made on plans to develop a pact to tighten up budget rules across the region, but reiterated that Greece must complete its debt haircut soon or it will not receive its second aid package.

In London the FTSE 100 index closed down -0.7% (or -37 points) at 5,612, the German DAX was down -0.7% (or -40 points) at 6,017 while in France the CAC was down -0.3% (or -10 points) at 3,127. Spain was up 0.6% and Italy ended down -0.6%. 

Asian Markets

Asian stock markets rallied yesterday. Japanese markets were closed for a holiday.

Chinese and Hong Kong stocks jumped on hopes that Beijing will soon ease its monetary policies to support economic growth which triggered some bargain hunters to do some strong buying across sectors. In China the Shanghai Composite Index surged 2.9% for its biggest percentage increase since mid-October.  The gains in Chinese stocks came after Chinese Premier Wen Jiabao called for efforts to boost confidence in the share market, and for rule changes to allow private capital investment in banks and insurers.  Chinese coal and metals miners led the gains up over 5% for the session.

In China the SSE Composite closed up 2.9% (or 62 points) at 2,225, while in Hong Kong the Hang Seng Index was up 1.5% (or 273 points) at 18,866 and in Japan the Nikkei 225 Index was closed. The South Korean KOSPI was down -0.9% for the session, while the Indian market was down -0.2%.

Commodities

The Dollar Index was higher at 80.98 on a lower Euro, while the Australian Dollar last traded lower at 1.024. Commodities prices traded mixed.

For the session the benchmark crude NYMEX for January delivery was down -0.2% (or -$U0.16) to settle at $US101.40.  Copper prices are seeking a support level as Copper for January delivery was down -0.5% (or -1.9 cents) at $US3.3960.  January gold was down -0.5% (or -$U8.60) at $US1,607.80.  

ASX News Today

BPT – Coal Seam Gas has begun flowing for Beach Energy (BPT) and Origin (ORG) at the Middleton Brownlow wet gas project in South Australia’s Cooper Basin.

BNO – Bionomics has signed a $345 million deal with US company Ironwood Pharmaceuticals to develop a potential anti-anxiety drug.

MIR – Investment firm Mirrabooka expects share market volatility to continue for the next six months before a return to some normality later in 2012.

SPT – Spotless Group, the industrial services company, has requested its private equity suitor increase its takeover bid to $743 million.

RETAILERS – HVN, MYR, WOW, BBG, DJS and Woolworths are facing a tough year ahead for Australian retailers, as official data showed a slowing in consumer spending for November.

WRG – Water Resources Group, the water treatment company, says its subsidiary signed a $US95 million deal to supply water in Africa, last week.

Ex-dividend Date

None

Market Summary

ASX – to open higher
US & UK/Europe – mixed

Commodities Stock Index up 0.4%
Gold Stocks Index up 0.6%
Oil Stocks Index up 0.7% 

US ADRs – Broadly Higher

BHP up 0.3% & RIO up 0.2%; AWC down -1.1%
ANZ up 0.1% & NAB up 0.5%
NEM  down -0.7%, JHX up 0.1%, NWS down -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: US Earnings Give ASX a Positive Lead Today

Wednesday, July 21st, 2010

Stock Market Analysis

US Earnings Give ASX a Positive Lead Today

Overseas markets were mixed with the US reporting season helping US markets to continue to rise, while Europeans were cautious ahead the European bank “stress tests” results due Friday.

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the SPI Futures closed up 0.9% (or 41 pts) at 4,423.  The RBA minutes were released yesterday saying that the uncertainty over the European debt issues have helped keep our interest rates on hold, however the future direction of interest rates will be driven by the inflation figures due out on 28 July.  Our market should continue to trade firmer again today after good performances from the U.S. and our mining and industrial sectors yesterday.  M&A activity continues to drive specific stocks.  Key levels to watch today are 4500 and 4350, with pivot around 4400.

US Markets

Investors chose to concentrate on the good news overnight as earnings reports were mixed.  Apple, the key NASDAQ stock, once again exceeded expectations with a 78 percent surge in 3Q profits, and sales were up 61 percent. This result indicates that the consumer is still alive in the U.S., however on the flip side Yahoo disappointed with revenue falling and sales down 8 percent (YoY) as they face competition from Facebook and Google. Also disappointing were IBM, Texas Instruments, Johnson & Johnson and Goldman Sachs. Goldman Sachs reported its 2Q profit plummeted 83% to its lowest level since late 2008, as trading revenues declined 36%, which was much more than forecast. Traders sentiment improved late in the day on speculation that the U.S. may be considering a new stimulus package. The Fed chairman Ben Bernanke will address the Senate tonight. The Materials and Energy sectors continued higher up 3% and 2.3% respectively.

The Dow closed up 0.7% (or 76 points) at 10,230, while in the broader market the S&P 500 index up 1.1% (or 12 points) at 1,083 and the tech-heavy Nasdaq ended up 1.1% (or 24 points) at 2,222.

European Markets

European markets finished the session lower for a fourth session. The weaker-than-expected US housing data continued to weigh on sentiment, also Goldmans disappointing results hurt. The results of the European bank stress tests are due 23 July.  In London the FTSE 100 index closed down marginally -0.2% (or -9 points) at 5,139, the German DAX down -0.7% (or -42 points) at 5,967, while in France the CAC was down -0.50% (or 18 points) at 3468.

Asian Markets

Most Asian markets rose yesterday, with the exception of Japan. The Shanghai Composite appears to be holding support at current levels and jumped another 2.2% as banking, property and consumer stocks rose on hopes that the government may not introduce more restrictive policies after several indicators showed last week the economy was cooling. This helped our mining sector.  In China the SSE Composite closed up 2.2% (or 53 points) at 2,529, while in Hong Kong the Hang Seng Index was up 0.9% (or 174 points) at 20,265 and in Japan the Nikkei 225 Index returned from a holiday and was down -1.2% (or -108 points) at 9,300.

Commodities

The Dollar Index up 0.3% at 82.79 on lower Euro, while the Australian Dollar last traded higher at 88.30 The Commodities were generally higher.

Crude oil prices rose as traders eye potential tropical storms in the Caribbean and falling US stockpiles.  The benchmark crude NYMEX for August delivery was up $US0.90 (or 1.2%) to settle at $US77.44. Copper prices are trading above the key $US3.00 a pound, Copper for September delivery delivery was up marginally 2.1% (or 6.4 cents) at 3.0015  a pound.  Gold was higher, with August gold up $US9.80 to settle at $US1,191.70 an ounce.

Key News International Drivers Today

US – Fed Chairman Ben Bernanke to address the Senator tonight. 129 S&P 500 companies will report earnings this week.

EU – M&A activity. Bank “stress test” results on the 23 July.  .

CHINA – Bargain hunting continues, on speculation the government may ease policies.

Markets Overview

Overseas Markets Give Negative Lead for the ASX

Market

Movement

The Dow Jones Industrial Average

Up 0.7% (or 76 pts)  at 10,230

The S&P 500

Up 1.1% (or 12 pts)  at 1,083

The Nasdaq

Up 1.1% (or 24 pts)  at 2,222

 

 

The FTSE 100

Down  Marginally -0.2% (or -9 pts)  at 5,139

The German DAX

Down -0.7% (or -42 pts)  at 5,967

SSE Composite (China)

Down -0.5% (or 0 pts)  at 36.0

 

 

The Dollar Index

Up 0.33% at 82.79

The Australian Dollar

Last traded at 88.30

The Commodities Index

Up  Marginally 0.12% at 261.5

 

 

Crude Oil Futures

Up 1.2% at $77.44

Gold Futures

Up  Marginally 0.01% at $1,191.70

Copper Futures

Up  Marginally 0.02% at $3.0015

SPI Futures

Up 0.9% (or 41 pts) at 4,423.0

 

 

 

 

Market

Movement

SSE Composite (China)

Up 2.2% at 2,529

Hang Seng Index (Hong Kong)

Up 0.9% at 20,265

Nikkei 225 Index (Japan)

Down -1.2% at 9,300

 

 

ASX News Today

The SPI Futures is above the key level of 4400 the ASX is set to open higher as the as the SPI Futures closed up 0.9% (or 41 pts) at 4,423.  The RBA minutes released yesterday saying that the uncertainty over the European debt issues have helped keep our interest rates on hold, however the future direction of interest rates will be driven by the inflation figuures due out on 28 July. Key levels today are 4500 and 4350, with pivot around 4400.  Our market should continue to trade frimer again today after good performances from the U.S. and our mining and industrials sectors yesterday.  M&A activity continues to drive specific stocks.
AQP- Aquarius Platinum dispels fears it will be forced to change mining methods at its operations in South Africa after it was sold-off on concerns that any changes could involve higher costs.
 

BHP- will release its June quarter production report today.

BNB – the liquidator’s examination of Babcock & Brown continues in the Federal Court.

CEY- Centennial says Banpu which has made a $2.5 billion takeover offer for Centennial, has received approval from the Bank of Thailand for it to remit foreign currency to pay for deal.

CTY – Country Road the embattled fashion retailier expects a 20% drop in annual profit due to aggressive discounting in the retail sector and the startup costs of its new 40 plus brand.

CWN- Crown the gaming firm has government support to expand the number of pokie machines at Perth’s Burswood casino.

ILU_ Iluka the mineral sands miner reported its June quarter production fell following the closure of its WA operations, but sales volumes were up strongly in 2H10

MTU- Shareholders of the telecommunication services provider M2 Telecomm can expect healthy returns, according to the company’s earnings guidance for 2010/11. Shares rose 20 cents to $1.92.

PDN- Paladin the uranium producer is considering taking over NGM Resources.

POS – Andrew Forrest’s nickel explorer Poseidon Nickel is in a trading halt pending a capital raising.
SDL- Sundance the iron ore explorer reports that a definitive feasibility study for its Mbalam project in Cameroon is on track for completion this year. Shares were up 3 cents to $0.15.

WOW- Woolworths will release its fourth quarter sales result today.

Economic Reports :

Westpac-Melbourne Institute reports the May Indexes of Economic Activity
Expect to see our market trade firmer today. M&A is picking up.

Market Summary

Westpac-Melbourne Institute reports the May Indexes of Economic Activity
Expect to see our market trade firmer today. M&A is picking up.

Market Summary

ASX – to open higher
US & UK/Europe – mixed.

US ADRs –  Broadly higher!!!…

BHP up 4.7%  & RIO up 5.6%; AWC up 6.2%
ANZ up 4.1% & NAB up 4.0%
NEM up 1.7%, JHX up 5.0%, NWS up 1.8%
Commodities Stock Index up 2.8%
Gold Stocks Index up 2.2%
Oil Stocks Index up 1.4%
By Michael Hevern
Head of Research

 

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Stock Market Analysis: Gold at Record Again; U.S. Markets up for the second week

Monday, June 21st, 2010

Stock Market Analysis

Gold Record Again; U.S. Markets up for the second week

U.S. stocks ended the day flat but are up for a second week. Across in Europe, Spain successfully auctioned off it’s debt to refresh it’s funds and plans to publish banks’ stress test results in the next few weeks, this lead to improved investor confidence. Our market is likely to open flat with Telstra and Gold stocks to provide support.

The SPI Futures is above the key level of 4500 the ASX is set to open flat as the SPI closed up 6 points (or 0.1%) at 4,566. Key levels this week are 4450 and 4650. Expect our market to trade flat today with gold stocks again in focus as the precious metals reaches record highs, also expect to see some action in Telstra after progress on the $11 billion NBN deal.

U.S. Markets

Miners, and in particular gold miners, lead again the U.S., as the precious metal again closed at new highs. Friday in the U.S. also saw the options and futures contract expire which bought about an increase in trading volumes but market volatility overall decreased. In the U.S. the index of leading indicators, a key gauge of the outlook for growth over the next three to six months, rose 0.4 per cent in May, while other data showed the cost of living dropped and the claims for jobless benefits unexpected increased to the highest level in a month. The data is confirming that even though the U.S. economy will keep expanding in the second half of 2010, it will be with begin with inflation and little job growth.

The Dow  rose 16 points, or 0.2 per cent, to 10,450 (up 2.2% for week),   while in the broader market the S&P 500 index gained 1 points, or 0.1 per cent, to 1,117 (up 2.4% for week), and the tech-heavy Nasdaq ended flat at 2,310 (up 2.9% for week).

European Markets

In Europe markets ended flat but have had positive moves in the past two weeks, as the German market continue to perform well. The primary focus has been on Spain and successful bond issues and plans to publish its banks’ stress test has resulted in improving investor confidence. The International Monetary Fund (IMF) are “very confident” over Spain’s efforts to shore up it banks and reduce its budget gap. Spain is the fourth-largest of the 16 country EU economies behind: Germany, France and Italy.

In the U.K. the London FTSE 100 index added 3 points, or 0.06 per cent, to 5,251 points (up 1.8% for the week). The German DAX gained 6 points, or 0.1 per cent, to 6,217 points (up 2.2% for week), while in France, the CAC 40 rose 4 points, or 0.1 per cent, to 3,687 points (up 3.9% for the week).

Asian Markets

China has made a move on its currency ahead of this weeks’ G20 meeting, by announcing it will be removing its two year yuan peg to the US dollar, not in a one-off revaluation but will be appreciated in an orderly manner. This is potentially good news for our miners because a strengthening in Chinese currency will make our resources cheaper.

In Asia the Nikkei index of the Tokyo Stock Exchange eased 0.1% to end at 9,995 (up 2.7% for the week). The benchmark Hang Seng Index was up 0.7% at 20,286 (up 2.2% for the week), and China underperformed down 1.8% at 2513 (down 2.2% for the week).

Oil prices finished the week above US$77 a barrel overnight as U.S.  The benchmark crude NYMEX for July delivery up US$0.39  to settle at US$77.18 a barrel.  Copper prices finished down again but remains around the critical $US3.00 a pound. Copper for July delivery fell 2.1 cents to settle at $US2.882 a pound. Gold closed at a record on concerns about the pace of the U.S. recovery, with August gold jumped  $U9.60 to settle at $US1,258.30 an ounce.

Key News Drivers Today

G20 – meeting to be held in Toronto this week.

IMF – are “very confident” over Spain’s efforts to shore up it banks and reduce its budget gap. Spain is the fourth-largest of the 16 country EU economies behind: Germany, France and Italy.

YUAN – China to end its twp-year yuan peg to the US dollar.  China has signalled a “more flexible yuan” currency policy, which will allow its currency appreciate in an orderly manner against the US dollar.  The yuan has been pegged at 6.83 against the US dollar since mid-2008.  It will not be a one-off revaluation.

RSPT Tax – is based on a “flawed” economic theory according to a new study commissioned by the mining industry. They also said the tax will extensively impact job losses and lead to increased volatility in Austalias tax revenue base.

Markets Overview

U.S. Markets Up for Second Week; Gold Shines

SP500: flat at 1,117 – Above 200 day Moving Average  (up 2.4% for week)
DOW up 0.2% at 10,450 – Above 10,000   (up 2.2% for week)
NASDAQ: up 0.1% at 2,310  (up 2.9% for week)

Dollar Index: lower at 85.33 on Higher Euro
A$ higher at 87.96

FTSE: flat at 5,250 – Financials Weigh  (up 1.8% for week)
DAX down 0.1% at 6,217 – Still in Outperforming  (up 3.0% for week)

CHINA: down 1.8% at 2,513 (down 2.2% for week)
HSI  up 0.7% at 20,286 (up 2.2% for week)

Oil: up 0.2% ($77.18)
BP Faces Off Congress

Gold: up .9% at ($1,256)
Commodities Mixed

SPI: Above key Level 4500 ASX
SPI up 0.1% at 4,566

ASX News

The SPI Futures is above the key level of 4500 the ASX is set to open flat as the SPI closed up 6 points (or 0.1%) at 4,566.   Key levels this week are 4450 and 4650. Expect our market to trade flat today with gold stocks again in focus as the precious metals reaches record highs, also expect to see some action in Telstra after progress on the $11 billion NBN deal.

AUD – higher at 87.95

AMU – Amadeus Energy has revealed it’s the target of takeover moves by U.S. companies.

ALS – Alesco will post a $126 million net loss in FY10 and suspend its dividend until March 2011, due to impairments and one-off expenses.

ANZ – has signed a memorandum of understanding (MoU) with China Development Bank (CDB) to drive trade and investment  flows between China and NZ.

BXB – may lose business to its U.S. rival iGPS, as the U.S. company has told investors it is close to
winning more business from Brambles. This news added to the concern that BXB could miss earnings expectations when it reports in  August. Shares were down 4.8%.

CFE – An ASX trading ban on two companies connected to controversial Romanian entrepreneur Frank Timis has been overturned on appeal. The ban on International Petroleum (IPO) and Global Iron (GFE) from trading was “infected by error”, an appeal by the companies to the ASX found. CFE could be indirectly affected by the decision.

GRR – Grange Resources the iron ore miner says a rock slide at its Savage River mine in Tasmania on Thursday is not expected to affect the operation.

CSD – Consolidated Tin Mines, the junior tin exploere says it will begin talks with potential Chinese customers and joint venture partners for its Mt Garnet project in northern Queensland.

DJS – management will meet with its biggest shareholder (Ausbil) this week to discuss its plan to defend its brand as a result of last weeks’ surprise resignation of CEO Mark McInnes.

ELD – in a trading halt as Elders the rural services provider Elders is expected to issue a trading
and operational update next Tuesday morning.

GFF – Goodman Fielder says it has raised $350 million worth of unsecured notes in the U.S. to help repay bank debt.

MAP – has experienced strong growth in passenger numbers at its three Australian and European airports in May, with operations returning to normal after the volcanic ash
cloud over Europe in April.

SDL – likley to be in a trading halt as six mining execs including Ken Talbot (formerly of MacArthur Coal) are missing, reared dead, in the Congo, West Africa on missing plane.

TLS - to receive $11 billion from the government in exchange for sharing its infrastructure with the NBN and migrating customers to the new fibre network.  This is a huge step in resolving issues between the government and Telstra re the NBN roll out.

Economic Reports out today:

ABS – reports on international merchandise imports and motor vechiles sales data for May

KEN – Henry to address the Institue of Chartered Accountants tax reform conference today

Market volatility will continue near term, some speculative accumulation is underway.

We the suggest trading strategy is to tighten stops. Be prepared to take profits, remember we are trading into the end of the financial year.  Trade gold and Telstra stocks today.

Market Summary

ASX – to open flat
US & UK/Europe – flat
US ADRs – Generally Positive!!!…

BHP up 1.2% & RIO up 0.6%; AWC 2.6%
ANZ up 2.1% & NAB up 1.4%
NEM up 2.6%, JHX down 0.9%, NWS down 0.3%

Commodities Stock Index up 0.7%
Gold Stocks Index up 1.4%
Oil Stocks Index up 0.7%

By Michael Hevern
Head of Research

Make the most of the trading tips and market analysis provided in this blog – take advantage of our low brokerage rate of $19.50 and trade shares with Trader Dealer. Also get FREE live ASX Data until December 2010 with our online trading platform Rapid Trader.

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Stock Market Analysis: Thursday 17th June 2010

Thursday, June 17th, 2010

Stock Market Analysis

Markets flat as Europe’s Spanish banks undergo “Stress Tests”

US stocks ended the day flat. The big news of the day was that BP have agreed to put $US20 billion into a fund for the victims of the Gulf Oil Spill. Across in Europe the Spanish banks have agreed to “Stress Testing”.

The SPI Futures is above the key level of 4500 the ASX is set to open flat as the SPI closed up 6 points (or 0.1%) at 4,566. Key levels today are 4500 and 4650. Expect our market to trade flat. The government remains steadfast on the 40% RSPT tax.

The Dow rose 4 points, or 0.1 per cent, to 10,409,  while in the broader market the S&P 500 index lost 0.6 points, or 0.06 per cent, to 1,114, and the tech-heavy Nasdaq ended flat at 2,306. Better than expected May data for the output at factories, mines and utilities rising 1.2 per cent (vs 0.7 per cent in April) offset a 10 percent fall in Housing starts last month. The industrial production data did provide further confirmation that the manufacturing sector continues to recover, in the U.S. BP was again in focus agreeing to set up a $US20 billion fund and at the same time suspending its $US10 billion dividend.

European markets ended the day higher following an agreement by Spanish banks to undergo “Stress Testing”, the results of which will be reported in the next couple of weeks. The Stress testing of the US Banks marked the turnaround in the recent GFC, and governments are looking for this to mark a “line in the sand” for European banks. There is a concern though that the results will be delivered over a number of days, which will cause speculation on those banks that have not reported their “Stress Test” results, but it is definitely a step in the right direction.  This saw the euro above $US1.23.

In the U.K. new financial service regulation is being implemented as a result of the now largely nationalised banking system as a result of the GFC. The Bank of England (BoE) is now the new regulator. In the U.K. the London FTSE 100 index added 20 points, or 0.4 per cent, to 5,237 points. The German DAX gained 15 points, or 0.3 per cent, to 6,190 points, while in France, the CAC 40 rose 14 points, or 0.1 per cent, to 3,676 points.

IMF has confirmed that Asia’s regional economy is growing so fast that it will rival long-standing economic powers of the U.S. and Europe in the next five years, they went on to say Asia is set to expand 50 per cent in the next five years. In Asia the Nikkei index of the Tokyo Stock Exchange gained 2% to end at 10,067. The benchmark Hang Seng Index was flat at 20,062, and China was closed again for a public holiday.

Oil prices rose above US$77 a barrel overnight as U.S. gasoline inventories fall and on a stronger euro bolstered investor confidence. Benchmark crude NYMEX for July delivery rose US$0.73  to settle at US$77.67 a barrel. Copper prices finished a six day gain but remains around the critical $US3.00 a pound. Copper for July delivery fell 9 cents to settle at $US2.9955 a pound. Gold fell with August gold down $US3.90 to settle at $US1,230.50 an ounce.

Markets Overview

US Markets End Flat; Spanish Banks to be “Stress Tested”

SP500: flat at 1,115 – Above 200 day Moving Average
DOW up 0.1% at 10,409 – Above 10,000
NASDAQ: flat at 2,306

Dollar Index: lower at 86.17 on Higher Euro
A$ lower at 86.31

FTSE: up 0.4% at 5,238 – Financials Weigh
DAX up 0.8% – Still in Outperforming

CHINA: was closed
HSI  flat at 20,06

Oil: up 0.5% ($77.76)
BP $US20 billion Fund

Gold: down 0.2% at ($1,231)
Commodities Lower

SPI: Above key Level 4500 ASX
SPI up 0.1% at 4,566

ASX News Today

The SPI Futures is above the key level of 4500 the ASX is set to open flat as the SPI closed up 6 points (or 0.1%) at 4,566.   Key levels today are 4500 and 4650. Expect our market to trade flat. The government remains steadfast on the 40% RSPT tax.

AUD – lower at 86.31.

AMC – Amcor has bought a US plastic packaging business for $326 million as the company targets health care and food related industries for growth.  UBS has downgraded Amcor to Neutral from Buy, target $6.75, saying “AMC faces considerable macroeconomic headwinds in Europe which, despite being defensive now, represents 40% of earnings”.

BHP – BHP Billiton Ltd, Rio Tinto Ltd and Xstrata all say the federal government is yet to indicate whether their key concerns with a proposed new tax will be reviewed.

CEY – Thai-based Banpu increased its stake to just below the takeover threshold, in the miner to become its largest shareholder.

CPL – Coalspur Mines announced a deal to acquire new coal leases next to its Hinton project in Canada.

GPG- Guinness Peat Group is planning a restructure throuth a demerger of GPG Australia from the parent group.

NWS- British Sky Broadcasting has rebuffed a buyout offer from News Corp, that values the company at $20.6 billion, but
is open to a sweetened bid.

POS- the nickel explorer said it had identified seven new targets at its Windarra project in WA.

QBE- says FY10 has been tough with tight insurance margins and higher than usual larg losses.

RIO- plans to invest $US550 million developing its Kennecott Eagle nickel and copper mine in the U.S., after it received environmental approvals for the project.  The S&P’s Ratings Services lifted its outlook on Rio to positive now BBB+), saying metals and minerals prices have rebounded
after a severe downturn in 2008, and noting the company had reduced its debt.

Economic Reports out today:

ANZ – CEO of Asia is to speak in Melbourne.
ACC – Australia Chamber of Commerce to release data for industrial trends.
Melbourne Institute to  report on June Household Savings and Investment

Market volatility will continue near term, some speculative accumulation is underway.
We the suggest trading strategy is to tighten stops. Be prepared to take profits as we are trading into the end of the financial year.

Market Summary

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

US ADRs – Broadly Negative!!!…

BHP down 0.5% & RIO down 0.7%; AWC down 0.9%
ANZ flat & NAB up 2.2%
NEM up  3.6%, JHX down 2.1%, NWS down 2.4%

Commodities Stock Index down 0.3%
Gold Stocks Index up 1.2%
Oil Stocks Index down 0.2%

By Michael Hevern
Head of MDS Financial Research

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Friday, 11th June 2010 Morning Wrap

Friday, June 11th, 2010

Morning Market Wrap

A broad recovery overseas gives positive lead for the ASX!

U.S. and U.K. markets surged higher overnight. The surge was sparked by China’s report that exports are up 48% and the British press reported that the Australian Government is close to compromising on on the Resources Tax. The sell-off in the previous session hinted of the liquidation of a hedge fund, though not confirmed at this stage. Volumes overnight were below average which may indicate that much of the move overnight was driven by short covering.

The SPI Futures is above the key level of 4500 the ASX is set to open sharply higher as the SPI closed up 68 points (or 1.6%) at 4,509. Key levels today are 4350 and 4550. Expect our market to trade higher, take this opportunity to hedge long positions ahead of the long weekend.

Note that both the prime minister and BHPs CEO have refuted the overnight British reports of a RSPT compromise, saying the dispute over the resource rent tax is ongoing and the government is not about to offer a compromise. The better than expected unemployment report yesterday (rate is now down to 5.2%), will be an added bonus for our markets today.

US stocks surged overnight on a short covering rally as hopes rose that the global economic recovery is still on track, boosted by returning a recovering euro and positive economic news in Asia. The Dow Jones industrial average vaulted 273 points, or 2.8 percent to 10,172, while in the broader market the S&P 500 index rose 31 points, or 3 per cent, to 1086 and the tech-heavy Nasdaq index climbed 59 points, or 2.8 percent, to 2218. The S&P energy sector gained 4.9 per cent, as BP shares jumped 12.3 percent to $US32.78 a day after posting a near 16 per cent decline.

In London, the FTSE 100 closed up 46 points, or 0.9 percent, at 5,132 points, while across in Germany the DAX 30 closed up 71 points, or 1.2 percent, at 6,056 points and in France the CAC 40 closed flat. The Euro bounced overnight to $US1.2105 and the Australian dollar rose more than 1 US cent higher  at over $US0.85, as Asian economic data buoyed investor sentiment on the global economic recovery.

China’s exports surpassed forecasts, unemployment rates fell in South Korea and Australia. Japan reported its economy expanded more than previously estimated in the first quarter. Chinese exports jumped 48.5%, the most in six years, but property prices also rose at a record pace up 12% last month.  Investors took the view that the data is confirming the economy is weathering the sovereign debt crisis in Europe. However it should be noted that there is a still a risk of the Chinese economy overheating, which will force the government to impose more stringent monetary tightening measures.

Asian markets were mixed with Japan’s Nikkei 225 index ended up 1.2 percent, at 9,542, off its lowest close since late November, key support is at 9,400 points. In Hong Kong stocks closed flat at 19,632. In China, the Shanghai Composite Index ended down 21 points, or 0.8 percent, to 2,562 points.

Oil prices rose for a third day buoyed by strong Chinese exports data and an upbeat energy demand outlook from the International Energy Agency (IEA). The NYMEX main futures contract, light sweet crude for delivery in July, rose $US1.10 to settle at $US75.48 a barrel.  Gold fell 1 per cent, as a sharp Wall Street rally and recovering risk appetite prompted investors to switch funds out of precious metals and into assets perceived as risker. Spot gold closed lower at $US122.80 o the NYMEX.

Key International Drivers

The US government reported that the number of new filings for unemployment benefits fell less than expected last week, while the international trade deficit widened slightly in April, pointing to a moderate economic recovery.

US markets regulator the Securities and Exchange Commission has approved new circuit-breaker rules on stocks trading in response to last month’s ‘‘flash crash’’.

The new rules will trigger when stocks move 10% up or down in a short period and in an attempt to smooth market volatility,  trading will be paused to enable the markets to settle.

The European Central Bank (ECB) kept its main interest rate at a record low of 1.0 per cent, while the Bank of England  (BoE) left its base interest rate at a record low of 0.5 per cent for the 16th consecutive month as the economic recovery remains fragile and public spending cuts are expected to hamper future growth

BP finally bounced despite fears that President Barack Obama will exact a heavy price from the British energy giant for the Gulf of Mexico oil spill.

The United States trade deficit expanded a notch in April, led by a surge in goods imports from China, government data showed amid a rising US outcry over Chinese monetary policy. New claims for US unemployment benefits fell to 456,000 last week, according to government data, in the latest sign of a slowly improving job market.

China is taking steps towards imposing its own resources tax, undermining the miners case against the RSPT tax here.

Markets Overview

Markets surged higher lead by Miners, Financials and Energy

SP500: up 2.9% at 1,087 – Above “Flash Crash” Lows
DOW up 2.8% at 10,172 – Above 10,000
NASDAQ: up 2.8% at 2,219

Dollar Index: lower at 87.01 on Higher Euro
A$ lower at 87.10 (above 10-month Lows)

FTSE: up 0.9% at 5,132 – Energy & Financials Lead Recovery
DAX up 1.2% – Still in Uptrend

CHINA: down 0.8% at 2,563 – 13-month Lows as Suport becomes Resistance
HSI up 0.1% at 19,632

Oil: up 2.1% ($75.48)
Short Covering Rally in Energy

Gold: down 1.0% at ($1,220)
Commodities Higher

SPI: At key Level 4500 ASX
SPIup 1.6% at 4,509

ASX News

The SPI Futures is above the key level of 4500 the ASX is set to open sharply higher as the SPI closed up 68 points (or 1.6%) at 4,509. Key levels today are 4350 and 4550. Expect our market to trade higher, take this opportunity to hedge long positions ahead of the long weekend.

Note that both the prime minister and BHP’s CEO have refuted the overnight British reports of a RSPT compromise, saying the dispute over the resource rent tax is ongoing and the government is not about to offer a compromise.  The better than expected unemployment report yesterday (rate is now down to 5.2%), will be an added bonus for our markets today.

AUD – higher at 84.84, above 10 months lows.

APK – Australian Power & Gas has secured a wholesale electricity supply agreement for its entry into the Queensland market, raised
its forecasts for customer growth and announced a convertible note facility to raise funds. Shares were up 24%.

ASX – the Stock exchange operator has committed approximately $32 million to the construction of a new data centre.

CTX – upgraded to Buy by UBS, expecting better-than-expected profit. Shares up 4.9%.

CWT – Challenger Wine Trust has forecast a 9% drop in the value of its vineyard properties as an oversupply of wine impacts grape prices.

MQG – has been named as one of the underwriters for the Agricultural Bank of China’s proposed IPO, which received approval from Chinese regulators on Wednesday and could raise between $24.72 and $37.08 billion.

OEC – shelves a planned capital raising because of volatile conditions on global equity markets.

SUE – Australian hedge fund Basis Capital has filed a $US1 billion lawsuit against Goldman Sachs and its Australian offshoot, saying it was misled after one if its funds bought a security packed full of US subprime mortgages that eventually contributed to its collapse.

WDC – preparing to launch a Australia’s first virtual shopping centre.

TCL – the tollroad operator said it completed its $542.3 million equity raising Thursday, however retail investors largely shunned the offer to help fund its $630.5 million acquisition of Sydney’s Lane Cove Tunnel with only 5% uptake from eligible retail investors. TCL said the 27.8 million new securities not taken up by retail investors in the 1-for-11 entitlement offer, failed to achieve the A$4.60 clearance price under a book build and will be taken up by underwriters UBS and sub-underwriters to the issue.

Economic Reports out today:- None

Market volatility will continue near term, some speculative accumulation is underway.
We the suggest trading strategy is to tighten stops. Be prepared to take profits, look for value stocks.

Market Summary

ASX – to open higher, giving opportunity to take profits ahead of the long weekend
US & UK/Europe – Positive Leads

US ADRs – Broadly Higher!!!…

BHP up 6.4% & RIO up 7.6%; AWC down 1.9%
ANZ up 6.6% & NAB up 6.9%
NEM up 0.8%, JHX up 1.9%, NWS up 4.5%

Commodities Stock Index up 4.1%
Gold Stocks Index up 1.1%
Oil Stocks Index up 5.3%

By Michael Hevern
Head of Research

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