US stocks closed higher Friday extending its 3-day rally, despite a disappointing employment report, as other economic data continues to support the recovery story for the US. European markets ended higher for the week, as European stocks rose to their biggest 3-day rally since July, as the ECB extended an emergency loan program and strong US housing. Asian markets followed the US higher yesterday, as higher commodity prices pushed metal and mining stocks, while exporters extended gains. Commodities prices continue to rise on the promise of global recovery and as the US dollar weakens.
The SPI Futures is above its key weekly pivot level of 4700 and the ASX is set to open higher as the SPI Futures closed up 1.0% (or 45 pts) at 4,736 (up 3.5% for week). The key levels for our index today are 4830 and 4600. M&A activity continues to drive specific stocks. The ASX is set to open higher again today, with strong positive leads from overseas markets. The ASX had its first positive week in three and it is expected the momentum will follow-through this week. Expect the ASX to be driven by overseas news this week, with miners, energy and larger caps leading the way, monitor China’s repose to their PMI data last week.]
US Markets
US stocks closed higher Friday extending its 3-day rally, despite disappointing employment report showing employers only added only 39,000 jobs to non-farm payrolls last month (vs estimates of 144,000). The unemployment rate, rose unexpectedly to 9.8% last month (vs the previous 9.6%). The US markets climbed this week, boosted by a dose of better-than-expected economic reports. The November jobs report disappointed high expectations, but other economic reports cushioned the disappointment over the weak labor-market data. This jobs report could well bolster the chances of Congress extending the Bush-era tax cuts and give the Fed more reason to continue its bond buying program to boost the economy. A reading of non-manufacturing activity from the Institute of Supply Management (ISM) helped, coming in at 55, in line with expectations, while the new-orders index strengthened to 57.7 (up from 56.7). It is worth noting that Fund Managers are likely to be chasing performance in this, the last month of the quarter/year, because they have underperformed the by 12% in September and 18% in November, against the S&P500 benchmark. The sectors that outperformed were led Materials up 0.8% and Energy up 0.4%. The Dow closed up 1.0% (or 107 points) at 11,362 (up 2.4% for week), while in the broader market the S&P 500 index up 1.3% (or 15 points) at 1,222 (up 2.7% for week) and the tech-heavy Nasdaq ended up 1.1% (or 29 points) at 2,578 (up 1.7% for week).
European Markets
European markets posted their first weekly advance in four as the European Central Bank (ECB) left rates on hold and delayed its withdrawal of emergency liquidity measures and bought government bonds in Portugal, Ireland and Greece. The ECB also pledged to fight the “acute” financial market tensions. The Spanish Prime Minister went on the offensive, announcing new austerity measures aimed at cutting their sovereign debt. Bank of Ireland surged 22 percent, as the Eurozone governments agreed to hand the nation an EUR 85 billion bailout package. Steel stocks led basic-resources stocks higher, with Fresnillo Plc and ArcelorMittal rising more than 7 percent. In London the FTSE 100 index closed up 2.2% (or 125 points) at 5,768 (up 1.7% for week), the German DAX up 1.3% (or 91 points) at 6,958 (up 1.6% for week), while in France the CAC was up 2.1% (or 78 points) at 3,767 (up 1.0% for week).
Asian Markets
Asian markets ended the week mixed. Higher commodity prices lifted metal and mining stocks, while exporters extended gains. The Japanese market continues to outperform and finished at 5-month highs, as data is showing expansion in the global economy and as the yen weakened against the euro and the US dollar. Chinese and Hong Kong shares traded higher, but ended the week mixed, as resource stocks followed gains in the US as concerns over the potential for further monetary tightening moves eased. Banks, Miners and Energy stocks all edged higher. The Chinese market continues to under-perform after the strong PMI data suggests the government will need to take further measures to reign in inflation. In China the SSE Composite closed up 0.7% (or 20 points) at 2,844 (down -1.0% for week), while in Hong Kong the Hang Seng Index was up 0.9% (or 199 points) at 23,449 (up 2.5% for week) and in Japan the Nikkei 225 Index was up 1.8% (or 180 points) at 10,169 (up 1.3% for week).
Commodities
Copper rose to 3-week highs, as supply concerns into 2011 drove prices higher and as the dollar fell versus the euro. Oil prices traded around $US90 a barrel. Gold was rose to break above $US1,400 an ounce. Lead and zinc both rose again. The US Dollar Index was down -0.6% at 80.20 on higher Euro, while the Australian Dollar last traded higher at 97.56. Commodities were generally higher.
Benchmark crude NYMEX for December delivery Up 1.4% at $89.40 (up 6.6% for week). Copper prices backed-off 2-year highs, Copper for December delivery Up 0.5% at $4.006 (up 4.1% for week). Gold prices off all-time highs again, with December gold Up 0.5% at $4.006 (up 4.1% for week).
Key International News Drivers Today
US - US markets rose again overnight, as fund managers reallocated their books, despite disappointing employment report.
EU - ECB leaves rate on hold, and commits to stimulus, helping push stock prices higher.
CHINA - Chinese factories ramped up production in November (for a 21st consecutive month). China prospect of implementing further tightening measures.
JAPAN – Market holding above 10,000 at 5-month highs.
Markets Overview
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Market
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Movement
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The Dow Jones Industrial Average
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Up 1.0% (or 107 pts) at 11,362 (up 2.4% for week)
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The S&P 500
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Up 1.3% (or 15 pts) at 1,222 (up 2.7% for week)
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The Nasdaq
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Up 1.1% (or 29 pts) at 2,578 (up 1.7% for week)
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The FTSE 100
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Up 2.2% (or 125 pts) at 5,768 (up 1.7% for week)
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The German DAX
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Up 1.3% (or 91 pts) at 6,958 (up 1.6% for week)
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The Fench CAC
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Up 2.1% (or 78 pts) at 3,767 (up 1.0% for week)
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The Dollar Index
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Down -0.63% at 80.20
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The Australian Dollar
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Last traded at 97.56
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The Commodities Index
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Up 1.0% at 312.1
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Crude Oil Futures
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Up 1.4% at $89.40 (up 6.6% for week)
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Gold Futures
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Up 1.2% at $1,413.80 (up 3.7% for week)
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Copper Futures
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Up 0.5% at $4.006 (up 4.1% for week)
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SPI Futures
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Up 1.0% (or 45 pts) at 4,736 (up 3.5% for week)
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Market
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Movement
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SSE Composite (China)
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Up 0.7% at 2,844 (down -1.0% for week)
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Hang Seng Index (Hong Kong)
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Up 0.9% at 23,449 (up 2.5% for week)
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Nikkei 225 Index (Japan)
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Up 1.8% at 10,169 (up 1.3% for week)
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ASX News Today
The SPI Futures is above its key weekly pivot level of 4700 and the ASX is set to open higher as the SPI Futures closed up 1.0% (or 45 pts) at 4,736 (up 3.5% for week). The key levels for our index today are 4830 and 4600. M&A activity continues to drive specific stocks. The ASX is set to open higher again today, with strong positive leads from overseas markets. The ASX had its first positive week in three and it is expected the momentum will follow-through this week. Expect the ASX to be driven by overseas news this week, with miners, energy and larger caps leading the way, monitor China’s repose to their PMI data last week.
AAD- Ardent Leisure Group says it has closed a $240 million debt facility with two banks.
ALL- Aristocrat Leisure the gaming machine maker, has flagged a fall in FY11 operating profit as it struggles in North America and Japan. ALL shares
have fallen to 7-year lows.
BHP- BHP and Rio Tinto Ltd have agreed they will integrate their Pilbara iron ore activities and will make a $350 million one-off payment to the WA government for state approval.
BOQ- The ACCC plans to begin legal action against several domestic banks in seeking compensation for investors following the collapse of Storm Financial Ltd. Other banks include: CommBank (CBA), and Macquarie Bank (MQG).
CWN- Crown Ltd the casinos operator, says revenue from its Australian gaming and hotels operations since the start of the FY11 are up on year ago.
LEI- Leighton Holdings’ subsidiary, John Holland, has been selected as the preferred proponent for the management of the Country Regional Network by the NSW Government’s Country Rail Infrastructure Authority, under a contract worth $1.5 billion over ten years.
ORI- Orica the chemical company has been forced to halt a shipment of toxic waste from its Botany Bay facility to Denmark.
QAN- Transport investigators say the leaking of oil into the engine of a Qantas-operated Airbus A380 caused a major incident last month.
SHL- Sonic Healthcare will borrow $US250 million on the US bond market to repay bank loans and fund future growth.
LEI- Germany’s regulatory agency says it has approved Spanish construction and services giant ACS’s EUR 2.7 billion takeover bid for Germany’s largest builder, Hochtief AG.
PEM- Perilya Ltd has extended its takeover bid for Canada’s GlobeStar Mining Corporation by 10 days to cleanup the remaining shares in its target.
NAB- Millions of National Australia Bank customers left cashless by a massive computing failure have had their accounts restored.
RIO- Rio Tinto Ltd is pouring more money into expanding its WA iron ore operations amid buoyant prices for the steel making commodity.
RFG- Retail Food Group Ltd, owner Of the Donut King and Michel’s Patisserie brands, expects 1H11 profit to rise by between 10-15 percent.
RMS- Ramelius Resources the gold producer has made a high grade gold intersection beneath a pit at its Mt Magnet project.
NUF- Nufarm has arranged a new $900 million loan that will refinance the ag company’s existing debts due to expire on 15 December 2010.
SFR- Sandfire Resources has increased its estimated resources fivefold for its DeGrussa copper-gold project in WA.
WPL- Woodside has confirmed costs for its Pluto LNG project have blown out by $900 million (total cost is now up 7% to $13.5 billion) and it will take another 6-months to begin production while it rebuilds equipment that falls short of design specifications.
Economic Reports :
SEEK Employment Index for November
TD Securities Monthly Inflation Gauge for November
ANZ Job Ads for November
Companies:
None
Ex-Dividends
Asia Liver Trans Ltd (AJL)
Murchison Holdings (MCH)
Ramelius Resources (RMS)
Skywest Airlines Ltd (SXR)
Market Summary
ASX – to open higher
US & UK/Europe – Higher
US ADRs – Generally Higher
BHP up 1.4% &
RIO up
AWC up 0.5%
ANZ up 1.5% &
NAB up 1.5%
NEM up 3.1%
JHX up 6.9%
NWS up 0.6%
Commodities Stock Index up 0.9%
Gold Stocks Index up 3.1%
Oil Stocks Index up 0.4%
By Michael Hevern
Head of Research
