Presented by Michael Hevern
Click here to watch the presentation.
Click here to download the mp3 audio recording (1429Kb).
Good morning and welcome to Cube Wrap on Wednesday the 15th of October. I am Michael Hevern for Cube Financial.
The information provided within this presentation is general advice only and you should consult the services of a financial professional in order to ascertain whether the information is applicable to your investment strategies and risk profile. Again, this is general advice only.
Well the DOW trading at 800 point trading range after 2 days of trading in 1000 points trading ranges. We saw the US government came up with a 250 dollar bank bailout package which will benefit stocks like Citigroup, JP Morgan, WellFargo, and Goldman Sachs and that is where the market jumped 3% on the back of that news. However, the Rewords started to resurface and again as investors become increasingly concerned about the recession developing in the world economies. In fact, this will be on earnings in the next 2 to 3 weeks and PepsiCo won the first companies of the rank reported up the markets with disappointing earnings and it is biggest fall since 1987.
The other stocks in the News in the US included JP Morgan, Bank of America, and Citigroup all benefiting from the 200 billion dollars government capital injection plan and the weakest groups in the DOW were the consumer discretionary stocks. We saw that SP500 with that index down 0.5%, the DOW was down 0.8% and the NASDAQ most fairly it was down 3.5%.
So, stocks like Apple, Microsoft, and Cisco were all down around about at least 5% on the session. We have seen that our interest in the US is a fact that is going to launch an investigation of study on how the banning of short selling impact in the financial sector and it will be interesting to see what are the results of those survey are.
The NASDAQ said testing was at more loss. It is up Friday that still not very convincing there. It ranges to at least close above the 2150 level before you see any follow-through. In the UK, we saw that market up which was the biggest price. It ended up 3% on the session and again that was due to government helping to re-capitalize all of the banks. The banks were mixed in the UK with the bank index rising 3% on the session. However, the stocks being hit slightly were down again. We saw the Royal Bank of Scotland and Lloyds and HBOS well down between 1% and 6% on the session extending losses on Monday.
The energy stocks continued that their recovery with weekly Shell pricing between 6% and 7% and we also saw for the first time since March, the biggest fall in each bank cost or borrowing and the biggest fall this year in 3 months euro rates which is the killer at the moment, the fact that banks companies can’t get financing and banks only had to raise shorter capital and not to be willing to trade between one another.
We saw the bank prices from the day is highs in the UK with Xstrata along with BHP and Anglo all hitting higher, but that was some follow through in the US. European stocks were generally higher as well with CAC up 3% and the DAX up 2.7% on the session. France’s Society raised up 8% on the session as it released the report expected positiveness and profit for the third quarter and it rated it has not experienced significant losses on the structured product activities like other banks. So, that was seen as a very good report.
The Nikkei was slight up on Monday, but back yesterday and due to the catch up there, a huge amount of catch up actually, it was up 14% on the session lead by financials and exporters got into the action there as well. We can see that is a weekly chart there and these testing of the 3 lows and still has a long way to get levels even a month ago.
We can see on the left hand side there that there it can be considerable with resistance as it moves its way up. So these things are carried down throughout the elevator shaft some would say. We saw Mitsubishi up 14%, Mitsui Financial Group up 17%, Nmura holdings the biggest Japanese brokerage was short of 16% and the exporters, Toyota, Honda and these were all up between 15% and 18% on the session. Canon was up 16% and the number of advancing stocks appeared to declining was 67 to 1 and I believe I did a shift to close the market as some stages through the day in order to keep up with the buying orders and that was closing up.
In Hong Kong, we saw that market close up 3.2% and shares in China was down 2.7%. Oil sold up again after being up early close to 78 dollars, 75 dollars, this was the key level there and that it closed above 85 dollars before you see any sort of buying pressure there. You can say that pretty well trending the moving average there that you needed to close at least one or two days above that level, it looks like it is pulled back from the 78.6% retracement level there to up being 100%at the 85 dollar level 27% retracement level around 70 dollar mark which is far across from the 125 dollars. It was only 3 weeks ago.
In the metal exchange there, we saw gold down went through fairly volatile at 15 dollar trading range there plus just below the close of the previous day, not very much inputs there. We saw all the metals down after a fairly good session to previous session.
We saw silver was actually up 2.5%, copper up 3.5%, lead up 4.7%, but zinc was down 5%, and nickel flat with aluminum up 1.5%.
In our market we saw these likely to follow US taking a breather with a session of Friday as far as this is down 100 points. So we expect our market to follow negatively. We had a couple of stocks in US today, the auctions prices; it has been trying to get on the way for the last few weeks. Harvey Norman has came out and said that it expects profit to drop by 20% of next year and Harvey Gerald the CEO is saying that he has not seen economic situation like this before over 20 years so that doesn’t bode well going forward. Coles is due to cut the pressure line by 30% and also increasing the home brands by 20% So it is obviously the margins on the home brand are a lot better than normal and also simplifying the production lines obviously reduce the cost in the bank and as well.
The Australian government came out with a 10.4 billion dollars stimulus package yesterday, 4.8 billion down payments to the pensioner’s payable in December 3.9 billion in spot payment for families and 1.5 billion packages for first time buyers, also 187 million to grade your training pattern positions. They also say that the steel price is still intact for the budget for next year at this stage. The ASX is likely to open lower again today, fundamental is the key.
Should you have any questions about the information provided within this presentation, please call the equities options desk on the numbers provided or the CFD advising desk, and as always, trade carefully.