* US stock markets advanced overnight after another roller coaster ride. After early losses in stocks prices, traders cheered the planned resignation of Italian Prime Minister Silvio Berlusconi.
* European stock markets closed higher overnight, after Italian Prime Minister Silvio Berlusconi had won a budget vote but lost his parliamentary majority. The market closed before news of the Italian PM’s impending resignation.
* Asian stock markets ended mixed overnight, as traders remained cautious over the European debt concerns, as the crisis rolled on to Italy.
* Commodities prices traded higher, as Gold prices eased to $US1,785 and crude-oil closed up around $US97.
The SPI Futures is trading around the key pivot level of 4250, ending up 1.3% (or 56 points) at 4,338. The key levels for our index today are 4280 to 4380.
Yesterday the Australian stock market edged higher, following on from the mid-session rebound in the US markets, after reports that the new Greek unity government would commit to the European Union-International Monetary Fund bailout. Resource stocks took the news that the Senate has passed the carbon tax bills in their stride, generally finishing higher. The NAB monthly survey of more than 400 firms showed its measure of business confidence rose to 2 in October, (up from -1 in September, and up from a two-year low of -9 in August). The survey found that Australian business conditions softened slightly in October, but firms grew more confident on the future as speculation swirled about a possible cut in interest rates.
The Australian Bureau of Statistics has reported that the balance on goods and services was a surplus of $2.564 billion in September, seasonally adjusted, compared with a downwardly revised surplus of $2.953 billion in August, as the trade balance narrowed on softer commodity prices. During September, exports were down 3.0 percent in adjusted terms and imports fell 1.0 percent. The RBA Commodity Price Index (CPI) showed commodity prices have fallen 4 percent in the past quarter.
Aussie traders are expected to show optimism today, following the positive leads from the US and European markets, as traders cheered the news that the Italian PM will stand down after the parliament passes the austerity measures bill. We continue to have a busy week for AGMs and production reports – see below for details.
See below for ASX listed companies in the news today.
Economics News Today
* November Westpac Melbourne Institute Consumer SentimentSurvey
* September Housing Finance Approvals
* November DEEWR Monthly Leading Indicator of Employment
U.S. Markets
US stock markets advanced overnight after another roller coaster ride. After early losses in stocks, traders cheered the planned resignation of Italian Prime Minister Silvio Berlusconi.
The Dow Jones Index has made gains in four of the past five days. In the broader markets the S&P 500 and the tech-heavy Nasdaq rose 1.2%. Financials, materials and energy sectors led the gains.
The developments in Italy drove market sentiment overnight, as Italian bond yields were sharply higher due to fears of contagion of the European sovereign debt crisis as it rolls on to Italy. PM Berlusconi has agreed to step down once the Italy’s 2012 budget vote is approved.
European markets had closed higher, due to better-than-expected corporate earnings reports from European banks Societe Generale and Lloyds Banking Group. Commodities rose again as the US dollar lost ground against the euro and the yen and gold rose to around $US1,800 and crude-oil up over $US96 per barrel (up for a fifth straight session).
All ten company groups that make up the S&P index traded higher with the Materials up 1.2%, Energy up 1.6%, Financials up 1.9%, Technology up 1.1%, Industrials up 1.1%, and Consumer Staples up 1.0%.
The Dow Jones closed up 0.8% (or 101 points) at 12,170, the S&P 500 index closed up 1.2% (or 15 points) at 1,276, the Nasdaq ended up 1.2% (or 32 points) at 2,727, and the smaller cap Russell 2000 was up 1.4%.
European Markets
European stock markets closed higher overnight, after Italian Prime Minister Silvio Berlusconi won a budget vote but lost his parliamentary majority. Markets closed before news of the Italian PM’s impending resignation. The Stoxx Europe 600 index rose 0.9%.
In London the FTSE 100 index added 1%, while the German DAX-30 rose 0.3% and the French CAC-40 pushed 1.3% higher. Italy and Greece were the primary focus for traders overnight. Italian borrowing costs continued their recent climb, with the yield on the 10-year government bond hitting a euro-era high of 6.7%.
The Italian market closed up 0.7%. In Greece the market rose 2.4% as the new national unity government is expected to receive EUR8 billion in international aid and begin work on a new rescue deal if the Greek leaders commit to the terms of the deal.
Financials rose after a number of earnings reports. In the UK Lloyds Banking Group was the standout gainer up 4.4% after reporting a reduction in bad debts for the third quarter and saying its exposure to weak eurozone countries has fallen. The French BNP Paribas rose 1.8% and Credit Agricole added 0.8%, while Societe Generale rose 7.3% after saying it does not need fresh capital and despite cancelling its 2011 dividend and posting a 31% drop in 3Q net profit as it wrote down the value of Greek government-bond holdings.
In London the FTSE 100 index closed up 1.0% (or 56 points) 5,567, the German DAX was up 0.6% (or 33 points) at 5,961 while in France the CAC was up 1.3% (or 40 points) at 3,143.
Asian Markets
Asian stock markets ended mixed overnight, as traders remained cautious over the European debt concerns, as the crisis rolled on to Italy.
In Japan the Nikkei Stock Index fell -1.3%, after Olympus Corp plunged -29% after the company admitted covering up huge investment losses for decades. Nomura Holdings also plunged -15% as investors worried over the brokerage house’s possible involvement in past M&A deals with Olympus, where Nomura was the principle underwriter. Toyota Motor fell 1.7% and after the market close: the company reported its net profit for the 2Q fell 19% year-on-year and it declined to give a full-year earnings forecast.
In Hong Kong the Hang Seng Index ended flat, while in China the Shanghai Composite fell -0.2%, but gold stocks were higher after M&A activity with gold producer Zijin Mining.
In China the SSE Composite was closed down -0.2% (or -6 points) at 2,503, while in Hong Kong the Hang Seng Index was flat at 19,678 and in Japan the Nikkei 225 Index closed down -1.3% (or -111 points) at 8,655. The South Korean KOSPI was down -0.8% for the session, while the Indian market was up 0.1%.
Commodities
The Dollar Index was lower at 76.59 on a higher Euro, while the Australian Dollar last traded higher at 1.0391. Commodities prices traded higher.
For the session the benchmark crude NYMEX for December delivery was up 1.6% (or $US1.46) to settle at $US97.00. Copper prices are seeking a support level as copper for December delivery was up 0.2% (or 0.8 cents) at $US3.5415. December gold was down -0.3% (or -$US4.60) at $US1,785.70.
ASX News Today
CBA – CommBank expects subdued credit growth to continue into next year, and says gains in productivity will drive improvements in its performance.
FXJ – Fairfax Media will raise $A280 million in equity from the initial public offer of NZ auction and classifieds site Trade Me Group.
NAB – A NAB survey shows economic activity softened in contrast with increased confidence in October.
NCM – Newcrest Mining will borrow $US1 billion ($A966 million) in 10 and 30 year bonds to repay existing debt and fund some of the gold miner’s major projects.
QAN – Federal Transport Minister Anthony Albanese says there is no reason why Qantas and its warring unions cannot reach an agreement within their 21-day deadline.
WDC – Westfield Group says its business is in solid shape despite a mixed sales performance in the three months to 30 September.
Local Corporate Reporting
Computershare Ltd (CPU) Full year 2011 AGM
Seven Group Holdings (SVW) Full year 2011 AGM
Lend Lease Corp (LLC) Full year 2011 AGM
Downer EDI Ltd (DOW) Full year 2011 AGM
CSR Ltd (CSR) Interim 2011 Results
Fortescue Metals (FMG) Full year 2011 AGM
Ex-dividend Date
BOQ – Bank of Queensland
TEN – Ten Network Holdings
Market Summary
ASX – to open higher
US & UK/Europe – traded higher
Commodities Stock Index up 1.5%
Gold Stocks Index down -0.8%
Oil Stocks Index up 2.0%
US ADRs – Broadly Higher
BHP up 1.2% & RIO up 2.7%; AWC up 2.2%
ANZ up 2.4% & NAB up 2.4%
NEM down -0.7%, JHX up 3.1%, NWS up 1.6%
By Michael Hevern
Head of Research
