Posts Tagged ‘MDS Financial’

    • Weekly Market Wrap: Bad News Finally Bites

    Friday, June 3rd, 2011

    The week started with a shaky rally into month-end, but the bears soon stepped in and sold markets off sharply on the first day of June. Investors remain cautious over soft data in the U.S. and now Asia, as well as the spectre of a debt restructure in Greece.

    The month-end rally materialised to pare the losses for May, however the rally was short-lived and a sharp sell-off was triggered in the U.S. which had been holding up quite well in comparison to other global markets.

    Many markets have been testing key resistance and support levels this week as they trade in a falling channel formation. With the exception of Wednesday night the falls have been measured.

    As we suggested last week, there are plenty of headwinds for investors to mull over as the month of June unfolds. All eyes will be on the U.S. monthly unemployment report tonight which is a key indicator of the sustainability of the global economic recovery.

    Globally markets continue to be plagued with concerns over the sovereign debt issues in Europe. Asian markets have also been hindered by reports showing Japan is in a recession and Chinese growth is slowing near-term.

    Australian Market

    The ASX All Ordinaries and the S&P/ASX 200 have experienced sustained selling this week, and no sector was spared. The Aussie market again tested key resistance and support levels and was among those trading in a falling channel formation.

    Yesterday investors were pessimistic after data showed GDP fell by -1.2% last quarter, as the economy was hit by a series of natural disasters over last summer, and giving the worst quarterly performance since 1974. This triggered a sharp sell-off where more than $33 billion was wiped from the value of the Australian share market, which fell in line with other global markets affected by renewed concerns about a global economic slowdown.

    Among the headwinds confronting investors are the poor GDP figures, the mining tax and the spectre of the carbon tax, all weighing on sentiment.

    U.S. Markets

    U.S. stock markets look set to close down for a fifth straight week. Another round of soft economic data worried investors and there was also caution ahead of tonight’s Non-Farm jobs report. On Wednesday the U.S. stock markets suffered their biggest declines since August last year, with all three major markets plunging after a series of disappointing economic reports sparked fears the economic recovery is faltering.

    The U.S. markets appear to be following the same script as this time last year. Despite the Japanese earthquake disaster throwing a spanner in the works, the other issues that are impacting the markets are similar to that of this time last year.

    The jury is out as to whether the Fed will commit to a QE3 in July. Economic data continues to disappoint with the latest reports showing weekly jobless claims exceeding 400,000 for an eighth straight week and consumer spending growth and confidence has been revised down. Moody’s Ratings Agency further dampened the mood after warning that the United States faces a credit review and potentially crippling downgrade if the $US14.3 trillion national debt limit is not raised soon. Moody’s also warned that the credit ratings at Bank of America, Citigroup and Wells Fargo could be downgraded.

    Overnight the Dow Jones closed down -0.3% at 12,248, the S&P 500 index closed down -0.1% at 1,313, the Nasdaq ended up 0.2% at 2,773, and the smaller cap Russell 2000 was down -0.1%.

    European Markets

    European stock markets look set to close lower for a fifth week as sovereign debt concerns escalate. Europe’s main markets had risen earlier in the week on the hopes that debt-laden Greece could get a second international bailout, but investors took flight after research group Markit reported that eurozone manufacturing registered its steepest fall in May since the height of the GFC in 2008.

    European stocks have sold-off this week as investors digested the weak economic data from the eurozone, China and the U.S. Investor sentiment was not helped by Moody’s again cutting the rating of Greek government debt. Energy stocks gave back some of their recent gains as crude oil prices for July delivery slipped back below $US100 a barrel.

    Overnight in London the FTSE 100 index was down -1.4% at 5,847, the German DAX was down -2.0% at 7,074, while in France the CAC was down -1.9% at 3,890.

    Asian Markets

    Asian stock markets also look set to close lower for a fifth week due to concerns over a faltering global economic recovery, as many markets have had their biggest string of consecutive losses in two years.

    These concerns have raised fears about the future demand for Asian exports. Mid-week PMI manufacturing data across Asia pointed to an easing of activity across the region. This triggered a sell-off across the region, and stocks fell across the board.

    News from the U.S. also hurt sentiment, after U.S. ADP jobs data for May fell far short of market expectations, sparking concern about the prospects of the U.S. Non-Farm Employment Report due out tonight.

    Overnight in China the SSE Composite was down -1.4% at 2,705, while in Hong Kong the Hang Seng Index closed down -1.6% at 23,254 and in Japan the Nikkei 225 Index was down -1.7% at 9,555. The South Korean KOSPI closed down -0.4%, while the Indian market was down -0.6%.

    Our View

    The Australian share market has had a sharp sell-off this week, despite the month-end rally. As the week progressed investors shunned risk and pared back their positions.

    The S&P/ASX 200 index once again failed to hold above its 200 day moving average, and the recent sell-off has pushed the index towards the lower trading range of its falling channel.

    The Aussie market managed a month-end rally, but its was over in the blink of an eye, as we had negative leads from overseas. No sector was spared this week in the sell-off, even commodities prices pulled back. The headwinds remain with a strong Aussie dollar and the proposed carbon and mining resource taxes, and the end-of-financial year clean-out all weighing on sentiment.

    The S&P/ASX 200 is currently trading at 4602 and trying to find support at these levels. Key levels for the index next week will be 4700 and 4500.

    Those who took heed of our warning last week about buying insurance when you can, not when you have to, should be comfortable with their position near-term.

    By Michael Hevern
    Head of Research

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    Stock Market Analysis – Weekly Market Wrap

    Friday, May 27th, 2011

    Month-End Rally Market Setup Is In Play

    Investors are tentatively breathing a sigh of relief with markets now set up for a month-end rally following a month of sustained selling. Many markets have been testing key levels this week with investors beginning the week with further selling. We could see some consolidation with an upward bias in the next week, but there are plenty of headwinds for investors to mull over as the month of June unfolds.

    Globally, markets have been plagued with concerns over the sovereign debt issues in Europe. Asian markets have been hindered by reports showing Japan is in a recession, and Chinese growth is slowing near-term.

    The week started with further selling as investors were again cautious over the results of the key IMF and EU finance minister meetings which deliberated over the plight of the PIIGS economies, in particular Portugal, Greece and Spain. The spectre of a debt restructure is still hanging over Greece, but Portugal received a bailout package.

    The US markets have seen some respite after a number of positives including the very successful LinkedIn IPO and a bullish note from Goldman Sachs on the prospect of commodities in the near-to-medium term.

    In Australia the market has benefited from the recovery in resource prices but has been weighed down by the banks being downgraded by Moody’s. Commodities prices have recovered this week due to the US dollar running into key resistance, however the jury is still out on the sustainability of the global economic recovery.

    Australian Market

    The ASX All Ordinaries and the S&P/ASX 200 experienced sustained selling early this week. The Aussie markets are again testing key support levels where a potential month-end rally can be launched. Banks have been the worst hit in our ASX top 20 stocks this week because of a delayed reaction to the Moody’s downgrade of last week, and Goldman Sachs’ downgrading of ANZ and CBA coming to a hold. However, the banks are now starting to look attractive on a dividend yield basis.

    Miners have benefited from the recovery in commodities prices this week, but they still have a number of unresolved issues on the taxation front with the mining tax in focus after the WA government sharply increased the state iron ore royalties to be charged to the miners by $2 billion, and the spectre of the carbon tax is also in the background.

    The strong Aussie dollar is still weighing on company profits and forecasts and we had a number of companies foreshadowing profits downgrades this week.

    US Markets

    US stock markets are setting up for a month-end rally. The leaders this week have been the mining and energy sectors which have outperformed, after Goldman Sachs and Morgan Stanley reported a boost to their commodities forecasts for 2011 and 2012. The focus was on crude oil price forecasts for the rest of the year. Manufacturing data continues to point to a softening recovery in the US, which is particularly worrying given the FED turns off the QE2 tap shortly.

    The US dollar is at key resistance levels currently and this could be a leading indicator for the equities/commodities markets near-term.

    European Markets

    European stock markets have been under pressure this week with continued concerns over debt issues in Greece and the other PIIGS economies weighing on sentiment. Investor sentiment was buoyed mid-week with Greece announcing it had accepted an international bailout, and that it had reached a preliminary agreement with the International Monetary Fund (IMF) and European Union (EU) for a new economic adjustment plan. There is still uncertainty over the proposed bailout package and a restructure of Greek debt is looking more and more likely to be the eventual outcome.

    Late in the week the sentiment for banks improved as the Fitch Ratings agency said it does not foresee any rating action on German banks as a direct result of exposure to Greek sovereign debt. Rising commodities prices prompted traders to seek stocks aligned to global growth, however the IPO of Glencore International (the commodities trader) was subdued.

    Sovereign debt is of great concern since interest payments can often place great demands on governments and individuals. Using a debt-to-GDP ratio is one of the most accepted measures of assessing a nation’s debt. In theory, one of the criteria for admission to the European Union’s Euro currency is that a country’s debt should not exceed 60% of that country’s GDP.

    Here is some food for thought. Standard and Poor’s has released its estimates of debt-to-GDP ratios for the European majors and they are as follows:

    Greece 143%, Ireland 96.2%, Portugal 93.0%, Germany 83.2%, and Spain 60%.

    This is why the IMF and the EU finance ministers have serious difficulties in trying to reduce the sovereign debt of these nations without collapsing the global economy, and why the sovereign debt issues will be with us for some time to come.

    Overnight in London the FTSE 100 index closed up 0.2% at 5,880, the German DAX was down -0.8% at 7,114, while in France the CAC was down -0.3% at 3,917.

    Asian Markets

    Asian markets have rebounded as the week progressed, with investors going “bargain hunting” for stocks that had been beaten down in the recent sustained sell-off. The Japanese market has been under pressure after GDP data confirmed that it is in a “technical” recession after the problems resulting from the March earthquake.

    Chinese markets have also been soft with data continuing to point to slow growth and showing that a preliminary HSBC Purchasing Managers Index had slipped to a 10-month low, pointing to a slow-down in manufacturing. Resource stocks are starting to see a recovery across the region on the back of the recent rising commodities prices with gold above $US1,500 and crude oil holding above $US100 after Goldman Sachs and Morgan Stanley raised their 2011 and 2012 forecasts earlier in the week.

    Overnight in China the SSE Composite was down -0.2% at 2,736, while in Hong Kong the Hang Seng Index closed up 0.7% at 232,900 and in Japan the Nikkei 225 Index was up 1.5% at 9,562. The South Korean KOSPI was up 2.7%, while the Indian market was up 1.1%.

    Our View

    The Australian share market has again had a strong rebound this week after early weakness. As the week progressed investors added risk to their portfolio positions and took advantage of the sustained sell-off in equities prices in the past few weeks.

    The S&P/ASX 200 index is again testing resistance at its 200-day moving average and the recent recovery in commodities prices has added to support. The Aussie markets have set up for a potential month-end rally, but need to close above this month’s high before a sustained rally can be contemplated. Banks are now starting to look attractive on a dividend yield basis and the miners will have benefited from the recovery in commodities prices this week. The headwinds remain with a strong Aussie dollar and the proposed carbon and mining resource taxes simmering in the background.

    The S&P/ASX 200 is currently trading at 4655 having found support around the 4,580 level this week. Key levels for the index next week will be 4750 to 4580.

    Remember the old adage that “it is best to buy insurance when you can, not when you have too”. You can use options to protect your positions.

    By Michael Hevern
    Head of Research

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    Ubiquity and Trading Financial Markets

    Friday, May 20th, 2011

    I recently read an excellent book that has interesting application to the financial markets. The book is titled Ubiquity, Why Catastrophes Happen. This is not a book review; instead I will build on one of the key concepts in the book as it relates to trading any market.

    Imagine dropping a single grain of sand onto a table, followed by another grain of sand and another and so on and so on. Initially a few grains of sand will form a small pile on the table and the addition of a single grain of sand will have very little impact on the pile. As the pile builds, the grains of sand will start to build up and the slope of the pile will become steeper. Now a single grain of sand falling on to the pile may trigger an avalanche. The new grain of sand may dislodge one grain of sand or a whole lot of grains of sand and the sand will continue to move until the pile becomes stable again. As the pile gets very steep it is possible that a single grain of sand falling onto the pile will result in a complete collapse of the pile.

    There are a few things to note from this simple experiment:

    * the triggering condition for any avalanche is always exactly the same, a single grain of sand being dropped onto the pile.
    * the size of the avalanche can vary dramatically from a single grain of sand moving, to total collapse of the sand pile.
    * the steeper the pile the more unstable the pile becomes.

    Translating this experiment into a trading context we can get a few things from it.

    Consider that each trading day in the market is like adding a grain of sand to the sand pile. Then any trading day could trigger a decline, with a down day being the primary trigger. You cannot tell the difference between one trigger and the next trigger as you cannot distinguish between two grains of sand. It is a human tendency to look for reasons why an event occurred, however the why is always exactly the same, another trading day.

    A one-day drop could then rebound the next day or result in a multi-day decline or even the next bear market. Any down day could be a suitable trigger and the size of the subsequent move is unpredictable. The author did find a core relationship between the size of the event and the frequency that it occurs at. While one event was not predictable in size, the larger the collapse the less frequently it occurred and this was governed by a power law. As the number of grains of sand doubled, the avalanche was less likely to occur by a factor of 2.14. As the size of an earthquake doubles it is four times less likely to occur. Amazingly this power law holds for earthquakes, extinctions, storms and many other natural phenomena, with different numbers governing the relationship.

    But the most important thing to get from this study is that when the market is set up for a fall it is far more likely to occur and any collapse is likely to be larger. The steeper the pile of sand the bigger the avalanches tend to be because of the inherent instability. Michael produced an excellent article recently on divergence and showed the current situation in a range of markets. The set up for instability exists. When you add to that the precarious financial situation of many governments, most noticeably Greece, high unemployment in the US, political unrest in the Middle East, the end of Quantitative Easing in the US and high commodity prices the sand pile certainly appears to be unstable.

    The author notes that it is not possible to predict the size or timing of events, but it is possible to observe the steepness of the sand pile at any time. The death of one species could lead to mass extinctions, a small spark in the forest could lead to massive bush fire, or a wrong turn could start a world war. But for these devastating effects to occur the sand pile must be steep enough to be unstable.

    Focus your study on the set up criteria, the events that determine whether the market is currently stable or reaching a critical state where the next down day could be the start of something big.

    By Jeff Cartridge
    Education Manager

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    Stock Market Analysis: Weekly Market Wrap

    Friday, May 13th, 2011

    Commodity Volatility Creeps Into Equities

    The markets have continued to be dragged down this week by the increasingly volatile commodities markets. Yesterday the Australian share market closed at a 7-week low after a slump in commodities prices, particularly oil and copper, weighed on the resources sector.

    European investors have been plagued by the resurfacing concerns over the Greek debt crisis, which have added to the selling pressure.

    The US stock markets are still trading around their multi-year highs, but the US dollar has been the big story of the past week, finding support at current levels and adding to the havoc in the commodities market.

    Investors need to exercise caution near-term as discussed in last week’s Analyst’s Eye, Leading Indicators – Divergence.

    Australian Market

    The ASX All Ordinaries and the S&P/ASX 200 continued to sell-off this week as commodities pulled back sharply, led by silver. Mining and energy stocks have driven the indices lower with the strong Aussie dollar weighing on company profits and forecasts. Banks have also contributed to the weakness.

    US Markets

    Volatility is picking up as US stock markets have managed to hold around their multi-year highs. The market was buoyed by a larger-than-expected increase in monthly non-farm payrolls, with the employment report showing that the private sector has posted the strongest employment gain in 5years. We also had the anniversary of the “flash crash” and losses in commodities-related stocks have been offset by a rebound in defensive stocks. These are now finding some support, as they are seen to be independent of broader economic activity.

    Overnight the Dow Jones closed up 0.5% at 12,696, the S&P 500 index closed up 0.5% at 1,349, the Nasdaq ended up 0.6% at 2,863, and the smaller cap Russell 2000 was up 0.8%.

    European Markets

    European markets are finishing lower for a second week following a broad sell-off in energy, commodities and financials, while concerns over the Greek debt crisis and ratings downgrade added to the selling pressure. Crude oil prices slumped further overnight after the International Energy Agency cut its global demand outlook. Investor sentiment was hit further after China announced it would raise its bank reserve requirement ratio, stoking concerns about slower economic growth in the world’s second largest economy.

    The Euro has fallen sharply following last week’s report indicating Greece was considering bailing out of the euro zone. It has now plunged from above $1.49 last Thursday, its highest level since December 2009, to finish below $1.42.

    Overnight in London the FTSE 100 index closed down -0.5% at 5,944, the German DAX was down -0.7% at 7,444, while in France the CAC was down -0.8% at 4,023.

    Asian Markets

    Asian markets are generally lower this week, led by China. Japanese stocks have suffered as the government demanded more nuclear power reactors shut down until safety concerns were addressed. The market fell sharply for its biggest 1-day fall in a month with economic data showing that the Japanese current account surplus in March shrank 34.3 percent year on year because of the impact of the devastating March 11 quake and tsunami.

    China has been the focus and investors initially were buoyed when Chinese trade data showed the export sector was powering ahead, despite government efforts to cool overall growth. This sentiment did however turn around when the Chinese decided to lift the ratio of funds domestic banks must set aside as reserves for the fifth time this year, as the country continues to battle against inflation.

    Yesterday in China the SSE Composite was down -1.4% at 2,844, while in Hong Kong the Hang Seng Index closed down -0.7% at 23,073 and in Japan the Nikkei 225 Index was down -1.5% at 9,716. The South Korean KOSPI gained 2.1%, while the Indian market was down -1.3%.

    Our View

    The S&P/ASX 200 index has again been sold off heavily in the past week, and is down 6% from its April peak. The market has been weighed down by the strong Aussie dollar, weakening economic data from the eurozone and the US and the sharp sell-off in commodities.

    The S&P/ASX 200 is currently trading at 4690 having again found resistance at the 4,800. The focus near-term will continue to be on corporate earnings reports, the Aussie dollar and commodities prices, particularly copper, gold and crude-oil. Key levels for the index next week will be 4800 to 4600.

    Investors who have taken the opportunity to buy protection through options to hedge their long positions near-term should be comfortable with the current pullback.

    By Michael Hevern
    Head of Research

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    Stock Market Analysis: Weekly Market Wrap

    Thursday, April 21st, 2011

    Markets Back at Post-GFC Highs

    Investors continued to shrug off bad news this week, and with a focus on corporate earnings pushed markets higher to around post-GFC highs.

    Reports that the Standard & Poor’s ratings agency cut its outlook on US government debt prompted investors to head for the exits, but once again fund managers turned the markets around as they went bargain hunting after the short sharp sell-off.

    Commodities prices were again in focus as they approached record levels. The US dollar’s decline has pushed the US currency to near its lowest levels since before the financial crisis of 2008 against a trade-weighted basket of its rivals. Gold futures extended their record-breaking rally, settling just below the $US1,500 level as investors chose to lock in profits. Crude oil prices rose for a second straight session after the Department of Energy said US oil supplies unexpectedly fell last week, while gasoline supplies tumbled more than expected as oil futures rose above $US111 a barrel. Copper prices closed sharply higher, supported by strong equities and a weaker US dollar, with further gains expected in coming days with traders predicted to cover short positions ahead of a string of public holidays.

    Investors need to exercise caution ahead of the Easter break and at the very least take some profits or take out protection through options. The forthcoming Easter holiday period and Anzac Day means that there are only four trading days left for April.

    Australian Market

    The ASX All Ordinaries and the S&P/ASX 200 are again back at their 12 month highs and are searching for some catalyst to push through these levels. Mining and energy stocks have driven the index this week with commodities back near record levels. The US dollar has continued to sell off and the Aussie dollar remains at record levels of post-float highs around $US1.07. Expect to see some profit-taking today ahead of the Easter weekend.

    US Markets

    US stock markets have been volatile this week but are finishing higher due to investors focusing again on improving corporate earnings, particularly in the technology sector.

    Investors were rattled at the beginning of the week with the markets suffering their biggest falls in a month. Investors headed for the exits after Standard & Poor’s cut its outlook on US government debt from stable to negative, to account for budget deficits and the rising government indebtedness. The ratings agency said it believes there is a “material risk that US policy makers might not reach an agreement on how to address medium and long-term budgetary challenges by 2013″. However, improving corporate earnings continue to support stock prices, and traders saw the sharp sell-off as a chance to buy on the dips once again, as they look to add risk to their portfolios with commodities prices continuing to surge.

    Overnight the Dow closed up 1.5% at 12,454, the S&P 500 index closed up 1.4% at 1,330 and the tech-heavy Nasdaq ended up 2.1% at 2,802.

    European Markets

    European markets are finishing higher this week, after a nervous start. Early in the week, investors reacted nervously to Moody’s Investors Service downgrading Ireland’s foreign- and local-currency government bond ratings by two notches to junk status, and comments from Germany that Greece might have to restructure its debt, stoking fresh fears over the eurozone. This put the PIIGS economies in focus again as the Greek money market rates jumped sharply.

    As the week unfolded, European markets took their lead from US corporate earnings as stock prices pushed higher. Economic data showed the German economy is now expected to grow 2.6% this year and 1.8% in 2012, while inflation is set to remain low at 2.4% and fall to 1.9% in 2012, according to government forecasts. The German market dominates Europe and looks set to remain robust, which is essential for the European economies’ recovery to remain on track.

    Overnight in London the FTSE 100 index closed up 2.1% at 6,022, the German DAX was up 3.0% at 7,249, while in France the CAC was up 2.4% at 4,023.

    Asian Markets

    Asian markets are trading higher this week and China and Japan have been the main focus. Japan continues to address the problems at the Fukushima nuclear power plant, while China has reacted to higher-than-expected inflation figures with the central bank raising the reserve requirement by 0.5 of a percentage point to drain more money from the banking system. This is the fourth such increase this year.

    All the major markets traded higher with Japan, China and Hong Kong all rising as traders looked to add risk to their portfolios. Miners rose as commodities prices rebounded, while technology stocks rose sharply after Intel and IBM reported better-than-expected earnings and positive 2Q guidance lifted the regional technology sector.

    Yesterday in China the SSE Composite closed up 0.3% at 3,007, while in Hong Kong the Hang Seng Index was up 1.6% at 23,890 and in Japan the Nikkei 225 Index was up 1.8% at 9,607. The South Korean Kospi rose 2.2%, and Indian shares also rose 1.8%.

    Our View

    The S&P/ASX 200 index looks set to hold on to its gains into next week as the post-GFC highs are tested. It’s currently trading at 4888, having backed off the 5,000 level. Key levels for next week will be 4750 to 5000. The focus near-term will continue to be on end-of-month, US earnings reports, the Aussie dollar and commodities prices, particularly gold and crude oil.

    Investors should use protection through options to hedge their long positions near-term.

    By Michael Hevern
    Head of Research

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    ASX Company News: MDS Financial Group Acquires MINC Financial Services

    Wednesday, April 20th, 2011

    MDS Financial Group Limited (MWS) announces that an agreement has been reached between MINC Financial Services Pty Ltd and MDS Financial for the acquisition of certain assets of MINC.  The agreement provides for the acquisition of the online trading business of MINC in its entirety including its current national client lists, the private client business and advisors in Townsville, Bunbury, Gold Coast and Melbourne. The acquisition does not include MINC’s debts, liabilities and infrastructure.

    This acquisition will ensure continuity for MINC clients, all trades in place will be able to be settled and open positions will be closed with clients able to resume trading as normal.

    This acquisition marks another exciting step forward for MDS Financial following the recent purchase of stockbroker D2MX, cementing its role as a genuine competitor in both the wholesale stock broking and online trading spaces. D2MX recently entered into a 5 year exclusive agreement with Penson to provide clearing services for equities and exchange traded options with Penson and this relationship has enabled all stakeholders to work together to provide the best solution in what was a critical environment.

    “This acquisition continues MDS’s push into the share broking industry and introduces some very capable people to the MDS business,” said Mr. Damian Isbisiter, CEO Corporate and Trading.  “We have the experience to handle the integration of this purchase with our existing broking business to provide the existing clients of MINC with a similar or even better trading experience.”

    MDS Financial Group Ltd is one of Australia’s premier suppliers of online trading, charting and analysis software, share market data, wholesale trading and corporate advisory services. MINC Financial Services was a full service financial advisory and stock broking firm offering personal financial advice, online trading and wealth management solutions.

    www.mdsfinancial.com.au

    http://www.traderdealer.com.au/fundamentals/mws

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    Stock Market Analysis: Weekly Market Wrap

    Friday, April 8th, 2011

    Markets Drift Higher

    Markets drifted higher this week as investors held their nerve, and a number of global markets are now at key levels.

    The international market drivers this week have been:

    * Interest rates
    * Geopolitical unrest in the Middle East and North Africa
    * The simmering European sovereign debt concerns
    * Continued work towards resolving the Japanese nuclear crisis

    Commodity prices were again in focus this week with copper near 2-year highs, and the price of crude oil rising above the crucial $US110 a barrel for the first time in two and a half years, amid concerns about war in Libya and as the dollar weakens against the euro. Silver is at a 31-year peak and gold rose to an all-time high. The US dollar fell to a 14-month low against the euro ahead of the expected interest rate rise from the European Central Bank (ECB).

    Investors will need to monitor their positions next week as markets trade at key levels. Be prepared to protect positions through options.

    Australian Market

    The ASX All Ordinaries and the S&P/ASX 200 are now trading near 12-month highs and are searching for some catalyst to push through these levels. Next week we expect to see a test of these critical levels as the markets attempt to push to new YTD highs.

    This week the Australian RBA left rates on hold, as expected, while unemployment figures fell to 4.9% from 5% for the month. M&A activity has been in focus, with the ASX and Singapore exchanges’ “merger” being knocked back by the Foreign Investment Review Board, and with Equinox Minerals receiving an unsolicited $6.3 billion all-cash takeover offer from Minmetals Resources Ltd. Meanwhile Rio Tinto’s takeover bid for Riversdale has gone unconditional as their stake is nearing 50%.

    Commodities prices will again be a focus next week as they are at record levels, and as the bid for Equinox shows there is still plenty of interest in Aussie resource stocks.

    US Markets

    US stock markets remain at key levels as the Dow Jones is holding above 12,400 after a positive start to the week. The Non-Farm Payrolls report came in better than expected showing US unemployment is now at its lowest level since March 2009 (the unemployment rate fell to 8.8% from 8.9%), while Institute for Supply Management (ISM) data showed manufacturing is in expansion mode.

    Technology stocks have been volatile this week and need to be monitored next week. The Nasdaq has led on the way up, and if it starts to show weakness this may be a leading indicator.

    Financials were strong this week as European financial stocks announced plans to raise fresh capital. These raisings are seen as positive for the sector as they will improve their capital position and are designed to lead to improvements similar to those seen in US banks, after they underwent massive capital boosts of their own in recent years.

    News overnight of a 7.1 magnitude Japanese earthquake and tsunami warning prompted a 100 sell-off on the Dow Jones but the markets recovered to close down modestly. The Dow Jones finished over 12,400 and the S&P 500 finished above 1,330 for the session.

    Crude oil reached $US110 per barrel as the Libyan crisis appears to be reaching a stalemate. If energy prices remain at these elevated levels then the global economic recovery will be in jeopardy. The reporting season starts next week and will give an insight into the impact of higher input prices resulting from higher commodities prices.

    Overnight the Dow closed down -0.2% at 12,409, while in the broader market the S&P 500 index was down -0.2% at 1,333 and the tech-heavy Nasdaq ended down -0.1% at 2,796. Three stocks fell for every two that rose on the New York Stock Exchange.

    European Markets

    European markets have been trading flat this week. There have been a number of key drivers for the week including interest rates, bank stress tests and the Portuguese bailout.

    Early in the week results of the bank stress tests did not throw up any major surprises, but as expected European banks will be doing another round of capital raising to boost their balance sheets. Markets reacted well to the much anticipated financial bailout request from Portugal. Bank stocks in Portugal managed to retain their gains after the debt-laden country said it will join Greece and Ireland in requesting international financial assistance. European banks with the most exposure to the PIIGS countries also gained.

    Markets also accepted the news of the well-signaled rate hike from the ECB, which lifted its key interest rate to 1.25% from 1%. In the medium term rate hikes are generally seen as a positive indicator because of the economic strength they signal.

    In London the market traded flat as the Bank of England said it would leave its key interest rate unchanged at 0.5% for another month.

    Overnight the FTSE 100 index closed down -0.6% at 6,007, the German DAX was down -0.5% at 179, while in France the CAC was down -0.5% at 4,028.

    Asian Markets

    Asian markets generally ended higher this week, though trading volumes were down due to a number of markets being closed for public holidays. Aside from Japan, the big news in the region was China again using a public holiday to surprise markets when it announced it will raise interest rates for the fourth time in seven months.

    In Hong Kong and China markets have traded higher, with the Shanghai Composite holding above 3,000. The Chinese central bank has raised its one-year lending rate by a quarter point to 6.31%. Many investment houses are now rating China as a “Buy”, with HSBC, Macquarie Group, Goldman Sachs Group and Deutsche Bank all issuing bullish forecasts. They see that the Chinese government is succeeding in controlling inflation without derailing growth in an economy forecast by the World Bank to expand 9% in 2011. Bloomberg data shows the Hang Seng China Enterprises Index price-earnings ratio is 19% below its five-year average after profits surged 32% last year.

    News of the earthquake in northeastern Japan yesterday came after Asian markets had closed, so Asian investors will no doubt react as nerves are tested.

    In China the SSE Composite closed up 0.2% at 3,008, while in Hong Kong the Hang Seng Index was flat at 24,282 and in Japan the Nikkei 225 Index was flat at 9,590.

    Our View

    The S&P/ASX 200 looks set to test key resistance levels next week. The index is currently trading at 4926, testing its key level. The focus near-term will be on US earnings reports, the Aussie dollar and commodities prices, particularly crude-oil. Key levels for the index next week will be 4850 to 5025.

    By Michael Hevern
    Head of Research

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    Pre-Alert Indicators in Market Analyser

    Friday, April 8th, 2011

    Pre-Alerts are custom indicators designed specifically by the Market Analyser team to highlight aspects of share price and volume behavior that are likely to lead to a continuation of, or a reversal in the share price movement. These indicators have stood the test of time and have been rigorously tested to verify their performance. Pre-Alerts are exclusively available in the Platinum version of Market Analyser.

    The Pre-Alerts have been performing very well lately. Looking at the Westpac chart below you can see clusters of dots at each of the turning points in the market. The dots are symbols indicating when the Pre-Alerts have occurred.

    Pre-Alert indicators have triggered in this Market Analyser - Westpac chart

    The black dots with an ‘A’ are the Accumulation indicator, showing an increase in volume which often occurs near the end of a downtrend. The grey dots with a ‘D’ are the Distribution indicator which shows strong breakouts that are accompanied by high volume. As can be seen here a reversal often eventuates soon after.

    The red or green dots with a ‘C’ show the Conductor indicator. This identifies turning points as these occur in real time and can work very well to identify short term reversal points. And the symbol ‘TP’ shows reversal points in red or green identifying when a significant peak or trough forms.

    The Market Analyser Pre-Alert indicators are based on a unique pattern-recognition concept that has proven to be one of the most effective charting and analysis tools available. The Pre-Alert indicators are designed to alert you to trading opportunities prior to conventional charting indicators and therefore give you a greater chance of profiting from market trends.

    To apply the Pre-Alerts, select the Pre-Alert you wish to use from the Pre-Alert menu located at the top of your charts. Type in the parameters or use the default settings and click OK.

    Pre-Alert Indicators in Market Analyser Platinum

    Pre-Alerts are even more powerful when combined and utilised as part of an overall trading strategy, as each Pre-Alert indicator helps assist in supporting alerts from the others. Pre-Alerts are designed to assist you in building a much clearer picture when reading the charts. There is no question that the Pre-Alerts are a superior way of assisting you to trade the market.

    By Jeff Cartridge
    Education Manager

    Sign up for a free trial of Market Analyser Gold, then call us to upgrade to Platinum to view the Pre-Alerts in action!

    For more on Market Analyser take a tour of the software.

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    Stock Market Analysis: Global Growth Trumps Global Chaos

    Friday, March 25th, 2011

    Globally stock markets have rebounded strongly this week as bargain hunters stepped into the stocks that had been sold-off heavily following the Japanese earthquake and tsunami. Many world markets are now back at pre-earthquake levels.

    Chaos? What chaos? Investors have chosen to ignore the geopolitical unrest in the Middle East and North Africa, the Portuguese sovereign debt issues and the Japanese nuclear crisis, and have instead concentrated on the positive reports about global economic growth remaining intact. The troubles at the Fukushima Daiichi nuclear plant are yet to be resolved however, with fears of radiation contamination still front of mind for Japanese civilians. Across the region energy stocks jumped higher as crude oil futures climbed after the UN Security Council approved a no-fly zone over Libya and authorised “all necessary measures” to protect civilians in the nation.

    Commodities continued their recovery and metal prices are back at record levels, as traders viewed the rebuilding in Japan as yet another factor that will push demand in the foreseeable future. April NYMEX crude oil futures remain above $US105 a barrel, due to the potential for disruptions to supplies, while the gold price is back at record levels and is trading around $US1,440.

    Also providing positive momentum near-term is the impending end-of-quarter, which is encouraging fund managers to deploy capital in order to match/beat benchmark performances.

    Australian Market

    The ASX All Ordinaries and the S&P/ASX 200 are trading below their 50-day moving averages, having found support around their 200-day moving averages last week. The indices have recovered 50 percent of their falls from the February peak. The recent sell-off in the miners has provided trading opportunities in our resource stocks, while the financials have been trying to find support at current levels. Next week we have the end-of-quarter which should be positive for stocks.

    US Markets

    US markets bounced this week, led by energy, mining and technology stocks. Traders focused on the progress of the US economic recovery and corporate earnings, rather than the worsening debt crisis in Portugal or geopolitical unrest.

    Overnight the Dow closed up 1.3% at 11,678, while in the broader market the S&P 500 index was up 1.3% at 1,274 and the tech-heavy Nasdaq ended up 0.7% at 2,642. The S&P 500 has broken above the 1,300 level.

    European Markets

    European markets have recovered, bouncing off their 200-day moving averages where they found support near-term. The key markets have now recovered 50 percent of their falls from the February peak. The main European news for the week has been the EU/IMF bailout that Portugal is likely to need near-term, having now voted down austerity plans. European Union leaders are convening overnight for a summit on tackling the debt crisis.

    M&A activity in the Telcoms sector has also boosted sentiment in the region during the week, and mining and energy stocks have been the beneficiaries of rising commodities prices.

    Overnight in London the FTSE 100 index closed up 1.5% at 5,796, the German DAX was up 1.9% at 6,933, while in France the CAC was up 1.4% at 3,968.

    Asian Markets

    Asian markets have recovered this week on news that the Japanese currency interventions were to be backed by the G-7, which helped to relieve investor worries over the Japanese economy. Investor optimism over progress in resolving the Japanese nuclear crisis also helped sentiment, with investors looking past the disaster and seeking companies that will participate in the country’s massive rebuild. Traders chose to ignore the heightened geopolitical concerns in the Middle East and North Africa, which have driven energy stocks higher as crude oil prices continue to rise. The South Korean market jumped higher, while Hong Kong and Chinese markets have traded relatively flat for the week.

    Yesterday in China the SSE Composite closed down -0.1% at 3,087, while in Hong Kong the Hang Seng Index was up 0.4% at 22,915 and in Japan the Nikkei 225 Index was down -0.2% at 9,435.

    Our View

    The S&P/ASX 200 index looks set to hold on to gains as we trade into the end-of-quarter next week. Investors need to continue to monitor the Japanese nuclear crisis and the geopolitical issues in the Middle East.

    The S&P/ASX 200 is currently trading at 4750, having broken through its key pivot level around 4700. The focus is now on the end-of-quarter and commodities prices. Key levels for the index next week will be 4650 to 4830.

    Investors can to use protection through options to hedge their long positions near-term. The fear that global assets will need to be sold-off to repatriate funds to pay for the rebuilding in Japan has still yet to be realised.

    By Michael Hevern
    Head of Research

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    Stock Market Analysis: Pivotal Week Ahead For Traders

    Monday, March 21st, 2011

    *  U.S. stock markets climbed higher Friday, as fears of increased violence in Libya eased and currency interventions backed by the G-7 helped to relieve investor worries over the Japanese economy.
    *  European markets rallied for a second session, but posted their biggest weekly drop since July.
    *  Asian markets traded higher Friday, led by Japan.  The Japanese markets rose after the G-7 FX intervention.
    *  Commodities were generally higher, as gold and crude oil prices again jumped higher.

    The SPI Futures is trading below the key pivot level of 4650, closing down -0.4% (or -18 pts) at 4,629.  The key levels for our index this week are 4750 and 4450.  

    The ASX is set to trade nervously today.  We had positive leads from overseas markets as Japanese authorities are reportedly making progress on closing down damaged nuclear plants, but the Japanese market is closed today.  Investors are set to begin the week nervously, with little economic news to guide.  The focus will remain on the devastation in Japan, the unrest in the Middle East and the European sovereign debt issues.

    See below for stocks in the news today.

    Economics News Today

    *   International Merchandise Imports for February.

    U.S. Markets

    U.S. stock markets climbed higher Friday, as fears of increased violence in Libya eased and currency interventions backed by the G-7 helped to relieve investor worries over the Japanese economy. 

    The Dow Jones finished higher Friday after a volatile week of trading that briefly sent major U.S. indices into negative territory for the year. It was the Dow Jones’s second straight losing week and third down week in the last four.  The S&P 500 rose as it closed out its worst week since November. The Nasdaq Composite went negative for the year, and had its worst week since mid-August, due to losses over the recent Japanese disaster. 

    On Friday the Nasdaq climbed back above break-even for the year, while the Dow Jones is up 3% year-to-date and the S&P 500 is up 2.4% year-to-date.  Stocks pulled back from their highs of the day on Friday as traders squared their positions ahead of a potentially turbulent weekend after the declaration of the Libyan no-fly zone. 

    The Financials sector led gains as banks announced they will be boosting dividends in the future.  The Federal Reserve intervened in the currency market Friday, buying US dollars and selling yen as part of a coordinated effort by the G-7 nations to weaken the Japanese currency. 

    For the week bargain hunters again stepped in after the heavy selling earlier in the week.  Geopolitical tensions continue to keep crude oil prices around $US101 a barrel, and investors braced for further developments in North Africa.

    The Dow closed up 0.7% (or 84 points) at 11,858, while in the broader market the S&P 500 index was up 0.4% (or 5 points) at 1,279 and the tech-heavy Nasdaq ended up 0.3% (or 7 points) at 2,644.

    Of the 10 company groups that make up the S&P index outperformers included Financials, up 1.4%, Consumer Discretionary up 0.8%, Industrials up 0.6%, Materials up 0.5%, while Energy was down -0.5%.

    European Markets

    European markets rallied for a second session on Friday, as investors went shopping for bargains by buying insurers and industrial firms on speculation that many stocks have been oversold in the wake of the Japanese disaster.  However markets posted their biggest weekly drop since July. 

    The Stoxx Europe 600 index fell 2.8% for the week, its biggest weekly drop since July, and after rebounding from its lowest close since late November.  Since reaching a two and a half year high in mid-February the index has now retreated 8%. 

    Insurers and nuclear-related stocks were sold-off for a second week, as the Japanese earthquake bill runs to $US35 billion.  Stocks pared their weekly losses as the G-7 nations jointly intervened in the FX market for the first time in a decade as the yen surged to a post-World War II high against the US dollar. 

    For the week the London FTSE fell 1.9 percent, the German DAX slumped 4.5 percent and the French CAC dropped 3 percent.  The Japanese nuclear crisis remains critical near-term, as does the unrest in the Middle East and North Africa.

    In London the FTSE 100 index closed up 0.4% (or 22 points) at 5,718, the German DAX was up 0.1% (or 8 points) at 6,664, while in France the CAC was up 2.7% (or 24 points) at 3,310.

    Asian Markets

    Asian markets traded higher Friday, led by Japan.  The Japanese markets rose after the G-7, comprising some of the world’s largest economies, agreed to put their weight behind the Japanese effort to interrupt the yen’s surge.  Among the big stock movers were Tepco, up 15%, Taiheiyo Cement Corp. climbed 15%, Japan Petroleum Exploration Co. climbed 7.4%, while exporters rebounded with Toshiba Corp. up 7.5%. 

    However the Nikkei Stock Average ended down more than 10% for the week, ahead of a 3-day weekend.  Japanese authorities continued to make efforts to control the damaged Fukushima Daiichi nuclear power plant amid global fears of a full-blown nuclear disaster. 

    In China the Shanghai Composite and Hong Kong’s Hang Seng Index rose for the session, but were down -0.9% and -4.2% respectively for the week. PetroChina rose 1.3% after it reported higher-than-expected profit growth for 2010.

    Across the region energy stocks jumped higher as crude oil futures climbed after the UN Security Council approved a no-fly zone over Libya and authorised “all necessary measures” to protect civilians in the nation.  The Indian Sensex bucked the trend, declining 1.5% on worries the central bank will introduce further interest rate increases and political concerns after a leaked U.S. diplomatic cable suggested the bribes were used to win a crucial vote in Parliament on the U.S. India nuclear deal in 2008.

    In China the SSE Composite closed up 0.3% (or 10 points) at 3,044, while in Hong Kong the Hang Seng Index was up 0.1% (or 16 points) at 22,300 and in Japan the Nikkei 225 Index was up 0.6% (or 244 points) at 9,200.

    Commodities

    The Dollar Index was lower at 75.72 on a higher Euro, while the Australian Dollar last traded below parity at 99.61. Commodities were generally higher.

    For the session the Benchmark crude NYMEX for April delivery was down -0.4% (or $US0.35) to settle at $US101.62.  Copper for April delivery was down -0.2% (or 0.7 cents) at $US4.3375.  April gold was up 0.9% (or $US11.90) at $US1,419.30.

    ASX Market News

    ANZ – ANZ has updated its strategy for international growth, targeting around 30 percent of its profit to be driven by its divisions in Asia, Europe and the Americas by 2017.

    ASB – Austal Ltd the shipbuilder has won a second contract with the US Navy, this time for $US368 million.

    CLR – Carabella Resources Ltd, the coal explorer, has raised $29 million via a significantly oversubscribed placement to insto and sophisticated investors.

    ORG – Origin Energy has completed the institutional component of its $2.3 billion equity raising, with a 95 percent take up.

    QAN – Qantas says has reached a settlement with the NZ Commerce Commission in relation to price fixing in its freight division and is set to pay a $4.8 million price fixing fine.

    SLX – Solar Systems, a wholly owned subsidary of Silex, has announced the commencement of work on Australia’s largest solar power station, in Midura, Victoria scheduled for completion in late 2012.

    TLS – Telstra will not be able to hold an extraordinary general meeting (EGM) on July 1 for a vote on an agreement with NBN Co., but NBN Co., who is building the $36 billion national broadband network, insists its relationship with Telstra is good.

    U308 – Australian uranium stocks rebounded on Friday but not enough to claw back the heavy weekly losses (for the week ERA -14%, EXT -34% and PDN -25%) also explorers were hard hit DYL -18% & TOE -23% for week.


    Local Corporate Reporting     
    Premier Investments Ltd (PMV)        Interim 2011 Results
    Cockatoo Coal Ltd (COK)                Interim 2011 Results
     
    Ex-dividend Date
     
    APD – Apn Property Group (1.25 cents)
    BBL – Brisbane Broncos (0.5 cents)
    EMB – Embelton Limited (12.5 cents)
    JMB – Jumbuck Entertainmnt (0.5 cents)
    LGD – Legend Corporation (0.8 cents)
    NCM – Newcrest Mining (10 cents)
    PPK – PPK Group Limited (1 cents)
    PRY – Primary Health Care (3 cents)
    REA – REA Group (10 cents)
    TFS – Tranzact Fin.Service (0.25 cents)
    VTG – Vita Group Ltd (2 cents) 
    Market Summary    

    ASX – to open lower
    US & UK/Europe – higher 
     
    US ADRs –  Broadly mixed
     
    BHP up 1.4% & RIO up  ; AWC up 1.8%
    ANZ up 0.6% & NAB up 1.7%
    NEM  up 0.2%, JHX up 1.6%, NWS up 0.2%
     
    Commodities Stock Index up 0.4%
    Gold Stocks Index up 1.1%
    Oil Stocks Index up 0.3%

     

    By Michael Hevern
    Head of Research
     
    Written on 21st  March, 7:15am

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