Posts Tagged ‘spi’

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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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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Stock Market Analysis: Weekly Market Wrap

Friday, February 11th, 2011

Markets Track Higher Despite Unrest in Egypt

Global markets continued to track higher this week. In the US the Dow Jones average capped a run of 8 sessions of gains trading above 12000, and the S&P500 is still trading above 1300. Markets have generally ignored the unrest in Egypt, but China’s rise in interest rates has hit markets in the Asian region.

The Australian market is trading above the key resistance level that has been in place since November, with the ASX All Ordinaries reaching the 5000 level and the S&P ASX200 looking set to test 5000 in the near-term. The RBA set the tone for the week by raising its end-2011 growth forecast from 3.75% to 4.25%. In north Queensland the damage caused by tropical cyclone Yasi was not as severe as first feared, which was a relief to investors.

The earnings reporting season began in earnest this week and reports have been surprising to the upside, giving investors confidence to start looking for high yielding stocks in anticipation of companies raising earnings forecasts, and in turn their dividends.

The local reporting season continues next week and investors will be looking for more solid corporate reports.

US Markets

The US markets continued their melt-up this week, with the Dow Jones and the S&P500 continuing to trade above the key threshold levels of 1200 and 13000 respectively and above two and half year highs. Corporate earnings have been mixed, but M&A activity continues to push stock prices higher. The US volatility index (.VIX) known as the fear gauge, remains at low levels as markets stay above key milestones.

The concerns over the unrest in Egypt has been largely ignored this week, but the situation has still not been resolved. We may see investor nervousness next week as traders assess the possible impacts on the stability of the region and what this could mean to other oil-rich countries throughout the Middle East like Saudi Arabia, Jordan and Syria. Crude oil backed off the $US91 level this week, but copper reached record highs again.

Overnight the Dow closed down -0.2% at 12,229, the S&P 500 index was down -0.1% at 1,319 and the tech-heavy Nasdaq ended down -0.1% at 2,785.

European Markets

European equities have been drifting higher this week, trading at two year highs. The unrest in Egypt was generally ignored, but investors started to worry about the cost of refinancing Portuguese debt and the ECB has had to step in in an attempt to stabilise the situation.

Economic data out of Germany continues to surprise to the upside and Europe’s largest economy continues to outperform in the Euro-zone.

Overnight in London the FTSE 100 index closed down -0.6% at 6,020, the German DAX was up 0.3% at 7,340, and in France the CAC was up 0.1% at 4,095.

Asian Markets

Asian markets have generally sold-off this week after the much anticipated announcement from the Chinese Central Bank saying it will raise interest rates by a further 0.25 percentage points, for the third time since October. Inflation remains a concern in the region.

Despite the rate rise Chinese traders returned from the week of Lunar New Year celebrations with optimism. Commodities prices held around record levels this week, though they are now trading off their highs.

Yesterday in China the SSE Composite closed up 1.6% at 2,818, while in Hong Kong the Hang Seng Index was down -2.0% at 22,708 and in Japan the Nikkei 225 Index was down marginally -0.1% at 10,605.

Our View

Next week we should see the S&P ASX200 track towards 5000, particularly if the earnings reporting season continues to surprise to the upside.

The S&P ASX200 is trading at 4905, above its key weekly resistance level (4840) which had been in place since November. The focus for next week will be on the Egyptian unrest, Asian concerns over inflation, European debt concerns and locally on the earnings reporting season. Key levels for next week will be 5000 to 4800.

Be prepared to hedge your positions, particularly since the unrest in Egypt is yet to be resolved and European debt concerns may resurface. The current low options volatility provides investors with long term portfolios opportunity to hedge their positions cheaply.

By Michael Hevern
Head of Research

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Stock Market Analysis: Escalation of Tensions in Korea Discounted By The Markets

Thursday, November 25th, 2010

US stocks rose sharply overnight, as investors went shopping before “Black Friday”, buying up retail stocks and erasing almost all of sharp declines of the previous session, as the latest economic data indicated US growth is improving. European stock markets advanced overnight as markets recovered from the heavy losses from earlier in the week.  Asian markets ended mixed, as Hong Kong and Chinese investors went bargain hunting, as they discounted the impact of geopolitical risks of the Korean tensions. Commodities prices recovered overnight.

The SPI Futures is below its key support level of 4600 and the ASX is set to open higher as the SPI Futures closed up 0.8% (or 38 pts) at 4,624.  The key levels for our index today are 4685 and 4600. M&A activity continues to drive specific stocks.  The ASX is set to open higher today, with positive leads from overseas markets. The gains should be broad-based as bargain hunters step in, with commodities prices recovering overnight.

US Markets

US stocks rose sharply overnight, as investors went shopping before “Black Friday”, buying up retail stocks, erasing almost all of sharp declines of the previous session, as the latest economic data indicated U.S. growth is improving.  “Black Friday” is the Friday after Thanksgiving and often sets the tone in retail through to Christmas.  Economic reports encouraged investors that the US economy is improving.  The Reuters/University of Michigan consumer sentiment index rose to 71.6 in November (up from 67.7), better-than-expected.  Americans earned more (with incomes rose 0.5 percent last month) and spent more (with spending rising 0.4 percent) in October, both were slightly better than expected September.  The number of people applying for unemployment benefits dropped (by 34,000) last week to the lowest level in more than two years.  However on the flip side manufacturing orders fell and new home sales in the US tumbled in October while the median home price dropped to the lowest point in seven years.  The market recovery came as the global response to the tensions on the Korean Pennisular was muted, after the exchange of artillery fire between North and South Korea on Tuesday.  Defensive stocks moved lower as investors became more willing to take on risk.  The dollar and gold both fell, while Treasury prices were lower, pushing their yields higher.  The gains were broad based and the best sectors in the market included: Industrial up 2.1%, Consumer Discretionary up 1.8%, while Materials and Energy were each up 1.7%.  US stock and bond markets will be closed Thursday for the Thanksgiving holiday. They will reopen for half-day sessions on Friday.  The Dow closed up 1.4% (or 151 points) at 11,187, while in the broader market the S&P 500 index up 1.5% (or 18 points) at 1,198 and the tech-heavy Nasdaq ended up 1.9% (or 48 points) at 2,543.

European Markets

European stock markets advanced overnight.  Markets recovered from the heavy losses from earlier in the week, as strong data from Germany helped offset continuing sovereign-debt fears.  The German market continues to outperform, after the Ifo Institute released the closely watched business climate index rose to its highest level since the reunified og Germany.  The promising reports from the U.S. also helped the European markets.  In the U.K. markets rose, as the Irish government revealed the details of its EUR15 billion austerity plan.  However the Bank of Ireland slumped again down 11% on reports that the Irish government will take a majority stake as part of the bailout package.   In London the FTSE 100 index closed up 1.4% (or 76 points) at 5,657, the German DAX up 1.8% (or 119 points) at 6,824, while in France the CAC was up 0.6% (or 24 points) at 3,766.

Asian Markets

Asian markets ended mixed. Sentiment took a hit initially as many Asian investors got their first chance to react the North Korean artillery attack on a South Korean island, but buying quickly picked as fears of a rapid escalation in the conflict abated. The Korean market finished lower, but staged a recovery from the earlier losses, on hopes that tensions on the Korean Peninsula will be short lived and as foreigners went bargain hunting for beaten down stocks.  The Japanese market opened sharply lower in reaction to tensions in Korea, but trimmed its losses by the close.  Exporters weighed on the market as the euro earlier fell sharply, on continuing concerns Irish debt problems may spill over to other euro-zone countries.  In Hong Kong and China bargains hunters stepped in.  The banks led gains in China, with the successful capital raising by the Industrial & Commercial Bank of China.  In China the SSE Composite closed up 1.1% (or 32 points) at 2,860, while in Hong Kong the Hang Seng Index was up 0.6% (or 128 points) at 23,024 and in Japan the Nikkei 225 Index was down -0.8% (or -80 points) at 10,030.

Commodities

The Dollar Index up marginally 0.1% at 79.76 on a flat Euro, while the Australian Dollar last traded higher at 98.12.

Benchmark crude NYMEX for December delivery was up sharply 3.6% (or $US2.90) to settle at $US84.15. Copper prices backed-off 2-year highs, Copper for December delivery was up 1.5% (or 5.5 cents) at $US3.7630. Gold prices off all-time highs again, with December gold was down -0.3% at $US1,377.80.

Key International News Drivers Today

US - Tensions between North and South Korea fear recede, as traders focus on “Black Friday”.
EU - Investor go shopping in the euro zone.
CHINA – Government stands firm on access to credit. China prospect of implementing further tightening measures.
JAPAN – Market closes above 10,000, still outperforming.

Markets Overview

Market

Movement

The Dow Jones Industrial Average

Up 1.4% (or 151 pts)  at 11,187

The S&P 500

Up 1.5% (or 18 pts)  at 1,198

The Nasdaq

Up 1.9% (or 48 pts)  at 2,543



The FTSE 100

Up 1.4% (or 76 pts)  at 5,657

The German DAX

Up 1.8% (or 119 pts)  at 6,824

The Fench CAC

Up 0.6% (or 24 pts)  at 3,766



The Dollar Index

Up  Marginally 0.10% at 79.76

The Australian Dollar

Last traded at 98.12

The Commodities Index

Up 1.6% at 302.3



Crude Oil Futures

Up Sharply 3.6% at $84.15

Gold Futures

Down -0.3% at $1,377.80

Copper Futures

Up 1.5% at $3.7630

SPI Futures

Up 0.8% (or 38 pts) at 4,624





Market

Movement

SSE Composite (China)

Up 1.1%  at 2,860

Hang Seng Index (Hong Kong)

Up 0.6%  at 23,024

Nikkei 225 Index (Japan)

Down -0.8%  at 10,030


ASX News Today

The SPI Futures is below its key support level of 4600 and the ASX is set to open higher as the SPI Futures closed up 0.8% (or 38 pts) at 4,624. The key levels for our index today are 4685 and 4600. M&A activity continues to drive specific stocks. The ASX is set to open higher today, with positive leads from overseas markets. The gains should be broad-based as bargain hunters step in, with commodities prices recovering overnight.

AGO- Atlas Iron has started discussions with BHP Billiton about co-operating on iron-ore haulage and port access in Australia’s Pilbara region. This move could open up the region for other small producers.

BOW- Bow Energy the gas and oil explorer is on track to deliver commercial gas flows and increased gas reserves by the end of 2011.

CGT- Castlemaine Goldfields will reopen the Ballarat mine it purchased from the former Lihir Gold in central Victoria, with production possibly within a year.

FRS- FerrAus has held talks with a subsidiary of BHP Billiton after BHP has taken the emerging producer to court over failed negotiations for a rail haulage deal.

FXJ- Fairfax Media says combining the company’s metropolitan newspapers and online properties under the one roof will yield $10 million in annual savings.

FMG- Fortescue Metals Group has defended itself against the allegations of misleading and deceptive conduct by the corporate watchdog.

GNS- Gunns says it will close several northern Tasmanian woodchipping sites as part of a major operational restructure of its forest products division.

FPH- Fisher & Paykel Healthcare has reported a 54 percent fall in 1H11 net profit to $13.2 million, citing unfavorable exchange rate movements and a one-off non-cash deferred tax charge.

HGL- HGL has reported a 67.5 percent rise in annual net profit and says it’s optimistic about the coming year.

LYC- Lynas Corp in talks to secure additional supplies of rare earths products for the Japanese market by accelerating the expansion of its Rare Earths Project.

MAK- Minemakers the exploration company plans to spin off its Tasmanian assets and list a new company in a $10 million initial public offer.

NZO- New Zealand Oil and Gas is in a trading halt after confirmation all 29 miners trapped in the Pike River Coal Mine had perished.

PRG- Programmed Maintenance Services has reported a $3.07 million 1H11 loss but says earnings will improve in the second half.

TEN – Lachlan Murdoch has finalised the purchase of the half stake form James Packer’s recent purchase

VBA- Virgin Blue will add a further two wide-body Airbus A330 aircraft to its domestic fleet by 2012.

Economic Reports :

RBA Gov Glenn Stevens Speaks
ABS private new capital expenditure and expected expenditure for September quarter.
NAB – National Bank CEO Cameron Clyne to address Trans-Tasman Business Circle luncheon.

Companies:

Beach Petroleum (BPT) Full year 2010 AGM
Goodman Fielder Ltd (GFF) Full year 2010 AGM
Gunns Ltd (GNS) Full year 2010 AGM
GrainCorp Ltd (GNC) Full year 2010 Results
Peak Oil and Gas Lists on the ASX today
Tower Australia Ltd (TAL) Full year 2010 Results

Ex-Dividends

TFS Corporation Ltd (TFC)

Market Summary

ASX – to open higher
US & UK/Europe – higher
US ADRs –  Broadly Higher

BHP up 2.2% &
RIO up
AWC up 3.6%
ANZ up 2.1% &
NAB up 2.3%
NEM up 1.0%
JHX up 2.6%
NWS up 1.4%

Commodities Stock Index up 1.7%
Gold Stocks Index up 0.3%
Oil Stocks Index up 1.6%

By Michael Hevern
Head of Research

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Stock Market Analysis: Sentiment Positive in Anticipation of QE2

Wednesday, November 3rd, 2010

Sentiment Positive in Anticipation of QE2

US stocks closed higher, as investors eagerly await clarification of the Federal Reserve’s QE2 measures.  European stock markets closed higher led by the miners. Asian markets closed flat, as  Chinese and Hong Kong shares declined from 6-month highs due to profit-taking after recent strong gains. The ASX will open higher today, led miners and banks.

The SPI Futures is below the key resistance level of 4725 the ASX is set to open higher as the SPI Futures closed up marginally 0.2% (or 10 pts) at 4,711.  The key levels for our index today are 4750 and 4650. M&A activity continues to drive specific stocks.  The Aussie dollar again reached parity against the USD overnight, after the RBA surprised economists with a 25 basis point rise in interest rates to 4.75%.  The RBA rate rise confirms that the Aussie economy continues to perform well and as we noted in our report on interest rates last week, they needed to raise rates in November to have a bigger impact on end-of-year spending.  Miners and banks should lead any gains today.

US Markets

US stocks closed higher. The mid-term elections are underway as Americans appear set to give Republicans control of the House of Representatives, while President Obama’s Democrats are expected to keep a narrow majority in the Senate.  If these outcomes unfold, then it will be seen as good for US equities, as the gridlock in Congress will likely limit the passage of new regulatory laws.  Elsewhere, the two-day Federal Reserve FOMC meeting is likely to confirm new economic stimulus measures (QE2), and investors are watching carefully for the scope of these measures.  The prospects of a Federal Reserve stimulus helped boost material stocks.  Corporate news was mixed with Pfizer, the world’s biggest drugmaker, reporting 3Q profit down 70 percent (citing acquisition costs), and Kellog said its 3Q profit fell 6 percent (citing rising commodities costs). 

Leading sectors included Energy up 1.1%, Consumer Staples up 1.1%, Industrials up 1.0% and Healthcare up 0.9%.  The Dow closed up 0.6% (or 64 points) at 11,189, while in the broader market the S&P 500 index was up 0.7% (or 9 points) at 1,193 and the tech-heavy Nasdaq ended up 1.1% (or 27 points) at 2,532.

European Markets

European stock markets closed higher.  In the UK stock prices were pushed higher on the back of strong corporate reports, with BG Group up 3.4% after reporting a 7 percent rise in 3Q net profit aided by higher commodity prices. BP was up 1.8%, posting a 3Q net profit of $1.8 billion (versus a 2Q loss of $17 billion), despite increasing its estimate for the cost of the Gulf of Mexico oil spill to $40 billion.  In Europe the mining sector led the gains, with copper stocks in focus again as commodities trade higher due the weaker US dollar.  In London the FTSE 100 index closed up 1.1% (or 63 points) at 5,757, the German DAX was up 0.8% (or 49 points) at 6,654, while in France the CAC was up 0.6% (or 24 points) at 3,864.

Asian Markets

Asian markets closed flat.  Chinese and Hong Kong shares declined from 6-month highs as there was profit-taking after recent strong gains, and ahead of the upcoming US Federal Reserve policy meeting this week. Japan continues to underperform, falling to its lowest close in 7 weeks, as the yen’s strength against the dollar hurt shares of exporters and currency sensitive stocks.  Financials also weighed.  In China the SSE Composite closed down -0.3% (or -9 points) at 3,045, while in Hong Kong the Hang Seng Index was down marginally 0.1% (or 18 points) at 23,671 and in Japan the Nikkei 225 Index was down marginally 0.1% (or 5 points) at 9,160.

Commodities

The Dollar Index was down -0.4% at 76.99 on a higher Euro, while the Australian Dollar last traded higher at 98.61.  Commodities were generally higher.

Benchmark crude NYMEX for December delivery was up 0.5% (or $US0.42) to settle at $US83.37. Copper prices rose, with Copper for December delivery up 0.2% (or 0.9 cents) at $US3.7875.  Gold prices also rose, with December gold up 0.5% at $US1,356.80.

Key International News Drivers Today

US -  Dow Jones around 2-year highs.  Federal Reserve’s FOMC meeting, Non-Farm Payrolls and mid-term elections this week are crucial.
EU -   Investor sentiment in Europe remains cautious.
CHINA – Chinese market outperforms, testing key levels. Government stands firm on access to credit.
JAPAN – Market at 7-week lows.

 

Markets Overview


Market

Movement

The Dow Jones Industrial Average

 Up 0.6% (or 64 pts)  at 11,189

The S&P 500                             

 Up 0.7% (or 9 pts)  at 1,193

The Nasdaq                              

 Up 1.1% (or 27 pts)  at 2,532



The FTSE 100                           

 Up 1.1% (or 63 pts)  at 5,757 

The German DAX               

 Up 0.8% (or 49 pts)  at 6,654 

The Fench CAC             

 Up 0.6% (or 24 pts)  at 3,864



The Dollar Index 

 Down -0.40% at 76.99

The Australian Dollar 

 Last traded at 98.61

The Commodities Index

 Up 0.29% at 301.5



Crude Oil Futures      

 Up 0.5% at $83.37 

Gold Futures             

 Up 0.49% at $1,356.80 

Copper Futures             

 Up  Marginally 0.24% at $3.7875

SPI Futures              

 Up  Marginally 0.2% (or 10 pts) at 4,711      





Market

Movement

SSE Composite (China) 

 Down -0.3%  at 3,045

Hang Seng Index (Hong Kong) 

 Down  Marginally -0.1%  at 23,671

Nikkei 225 Index (Japan) 

 Down  Marginally -0.1%  at 9,160

ASX News Today

The SPI Futures is below the key resistance level of 4725, and with the SPI Futures closing up marginally (or 10 pts) the ASX is set to open higher.  The key levels for our index today are 4750 and 4650. M&A activity continues to drive specific stocks.  The Aussie dollar again reached paritiy against the USD overnight, after the RBA surprised economists with a 25 basis point rise in interest rates to 4.75%.  The RBA rate rise confirms that the Aussie economy continues to perform well and as we noted in our report on interest rates last week, they needed to raise rates in November to have a bigger impact on end-of-year spending.  Miners and banks should lead any gains today.

 
 
 AAD – Ardent Leisure Group says revenue and earnings have rebounded in the September quarter compared to a year earlier.

ARU- Shares in Arafura Resources fell after a major Chinese shareholder said it would allow its stake to be diluted under Arafura’s $90 million capital raising.

ASX- State investment firm Temasek Holdings denies it plays any role in running the Australian Securities Exchange (ASX).

BHP- The Saskatchewan government says if the Canadian Federal government approves BHP’s takeover of Potash Corp it will consider it a “profound betrayal of our province and its people”.

CBA- CommBank was the first bank to lift its variable home loan interest rate, with an increase of 0.45 basis points (nearly double the RBA increase), higher than the cash rate rise.

CWT- Challenger Wine Trust is in talks with third parties and expects to announce the outcome of those talks within days.

DOW- Downer EDI says it has signed a maintenance agreement with Main Roads WA worth about $50 million a year for 5 years.

IDM- Industrial Minerals Corporation Ltd says it’s on track to bring its Oregon heavy minerals project in the US into production in late February 2011.

LEI- Leighton Holdings Ltd says it will report a downgrade of $85 million in its 1Q11 profit due to the Brisbane Airport Link project and the strong Australian dollar.

MAP- MAp Group, the Sydney airport operator, says earnings for the YTD are up 19.5 percent with traffic growth of 7 percent across the board.

SGZ- Scotgold Resources will appeal against Scotland’s Parks Authority’s refusal for planning permission for its Cononish gold and silver project in the Grampian Highlands.

TEN- Ten Network has offered James Packer and Lachlan Murdoch directorships, as Mr Murdoch is in talks to buy half of Mr Packer’s new stake in the television broadcaster.

WDC- Westfield Group securities is in a trading halt as the property group prepares to make an announcement about a possible transaction.

WCL- Westside Corporation say a local subsidiary of Japan’s Mitsui group says it will exercise a farm-in option to buy 49 per cent of WestSide Corp’s Galilee Basin tenements.

 

Economic Reports :
Australian PSI for October
Building Approvals for September
VFACTS vehicle sales for October
 

Companies:

Downer EDI Ltd (DOW)           Full year 2010 AGM
Westpac Banking Corp (WBC)  Full year 2010 Results
Bendigo Bank Ltd (BEN)           Full year 2010 AGM
CSR Ltd (CSR.AU)                   Interim 2010 Results
 
Ex-Dividends
None
 
Market Summary

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

US ADRs –  higher

BHP up 1.9% & RIO up; AWC up 1.3%
ANZ up 2.7% & NAB up 2.5%
NEM  down 2.2%, JHX up 1.2%, NWS up 1.4%
 
Commodities Stock Index up 0.2%
Gold Stocks Index up 0.6%
Oil Stocks Index up 1.4%

 

By Michael Hevern
Head of Research
 

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Stock Market Analysis: U.S. Market Push Higher On Prospect of QE2

Monday, October 11th, 2010

Stock Market Analysis

U.S. Market Push Higher On Prospect of QE2

U.S. markets ended higher, as a bleak jobs report convinces investors that the Fed will need to introduce quantitative easing (QE2). The US dollar dropped to a 15-year low against the yen on the expectation of QE2. European stocks were mixed Friday, as investors still fear a faltering recovery. Asian markets closed higher led by China. The ASX is set to trade higher today, with the positive lead from the U.S.  Gold prices held around fresh record highs, as the US dollar weakness spurred buying interest in commodities and shares of companies producing them, and in currency trading as the Australian dollar was trading against the U.S. dollar around its highest levels since the currency was allowed to float freely in 1983.

The SPI Futures is just above the key resistance level of 4700 the ASX is set to open higher the SPI Futures closed up 0.5% (or 22 pts) at 4,717 (up 0.9% for week). The key levels for our index this week are 4800 and 4600. M&A activity continues to drive specific stocks. The ASX will trade higher today, with the positive leads from the China and U.S.  Options volatilty is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

US Markets

The Dow Jones closed above 11000 on Friday for the first time since May, as a bleak jobs report boosted expectations that the Federal Reserve will move to stimulate economic growth. The index closed above the 11000 level for the first time since 3 May’10, which was on three days before the “flash crash”, which severe to unnerve the markets in the subsequent 6-months. The Non-farm Payrolls report showed a net 95,000 workers lost their jobs in September, a worse-than-expected decline. The private sector added 64,000 jobs, while the unemployment rate remained unchanged at 9.6% in September. Investors pushed the markets higher on the hope the poor jobs data will increase the odds that the Fed will take new steps to jump-start the economy with QE2. Alcoa was the Dow’s biggest gainer, surging 5.7% after kicking off earnings season with results that exceeded analysts expectations and they lifted their forecast for global aluminum demand in 2010.  The Dow has gained 5.5% year-to-date and the S&P 500 is up 4.5% for 2010. The Materials (up 2%), Energy (up 1.3%) and Consumer Discretionary (up 1.1%) sectors leading the way. The Dow closed up 0.5% (or 58 points) at 11,006 (up 1.3% for week), while in the broader market the S&P 500 index up 0.6% (or 7 points) at 1,165 (up 1.4% for week) and the tech-heavy Nasdaq ended up 0.8% (or 18 points) at 2,402 (up 0.9% for week).

European Markets

European stocks were mixed Friday, as investors still fear a faltering recovery. Global governments are trying to task the IMF with calming the recent outbreak of tensions over currencies, with fears that they many instigate a protectionist backlash. The U.K. market ended little changed for the week. The European Commission (ECB) has warned that the rising euro could jeopardize recovery in the EU bloc. European markets are still under pressure as investors fear that the austerity measures being pursued by the governments will curb economic growth.  In London the FTSE 100 index closed down marginally -0.1% (or -5 points) at 5,658 (up 1.1% for week), the German DAX up 0.3% (or 15 points) at 6,292 (down -0.1% for week), while in France the CAC was down marginally -0.2% (or -7 points) at 3,763 (up 1.0% for week).

Asian Markets

Asian stock markets ended higher Friday.  Chinese stocks jumped for their best percentage gain in more than 4-months, as trading resumed after the week-long Golden Week holiday. Several resource shares traded limit-up , jumping by the 10% daily limit, playing catch up to a recent rally in commodities.  Metal and coal producers jumped higher, helping overcome the early weakness displayed by property developers in the wake of further tightening measures introduced by the government.  The index closed at its highest level in 6-months. Hong Kong stocks finished higher too, while Japanese stocks fell, again led by the exporters.  In China the SSE Composite closed up 3.1% (or 83 points) at 2,739 (up 5.7% for week), while in Hong Kong the Hang Seng Index was up 0.3% (or 60 points) at 22,944 (up 3.7% for week) and in Japan the Nikkei 225 Index was down -1.0% (or -96 points) at 9,589 (up 1.2% for week).

Commodities

The Dollar Index down marginally -0.2% at 77.18 on higher Euro, while the Australian Dollar last traded at 98.48.  Commodities were generally higher, with soft commodities traded “limit-up” for the session.

Gold prices are still around record highs. The benchmark crude NYMEX for September delivery was up 1.2% (or $US0.99) to settle at $US82.84 (up 8.3% for week). Copper prices higher, Copper for September delivery delivery was up 2.5% (or 9.3 cents) at $US3.7770 (up 4.2% for week). Gold prices are around record highs, are around key $US1,350 level, with December gold as up 0.8% at $US1,346.50 (up 3.9% for week).

Key News International Drivers Today

US - The Non-farm Payrolls report showed a net 95,000 workers lost their jobs in September.
EU - Tensions over currencies wars with fears that they many invite a protectionist backlash.
CHINA – Market plays catch-up. Government stands firm on access to credit.
JAPAN – Exporters weigh as Yen at 15-years highs.

Markets Overview

Market

Movement

The Dow Jones Industrial Average

Up 0.5% (or 58 pts)  at 11,006 (up 1.3% for week)

The S&P 500

Up 0.6% (or 7 pts)  at 1,165 (up 1.4% for week)

The Nasdaq

Up 0.8% (or 18 pts)  at 2,402 (up 0.9% for week)

The FTSE 100

Down  Marginally -0.1% (or -5 pts)  at 5,658 (up 1.1% for week)

The German DAX

Up 0.3% (or 15 pts)  at 6,292 (down -0.1% for week)

The Fench CAC

Down  Marginally -0.2% (or -7 pts)  at 3,763 (up 1.0% for week)

The Dollar Index

Down  Marginally -0.19% at 77.18

The Australian Dollar

Last traded at 98.45

The Commodities Index

Up 2.72% at 295.1

Crude Oil Futures

Up 1.2% at $82.84 (up 8.3% for week)

Gold Futures

Up 0.77% at $1,346.50 (up 3.9% for week)

Copper Futures

Up 2.53% at $3.7770 (up 4.2% for week)

SPI Futures

Up 0.5% (or 22 pts) at 4,717 (up 0.9% for week)

Market

Movement

SSE Composite (China)

Up 3.1%  at 2,739 (up 5.7% for week)

Hang Seng Index (Hong Kong)

Up 0.3%  at 22,944 (up 3.7% for week)

Nikkei 225 Index (Japan)

Down -1.0%  at 9,589 (up 1.2% for week)

ASX News Today<

The SPI Futures is just above the key resistance level of 4700 the ASX is set to open hiher  the SPI Futures closed up 0.5% (or 22 pts) at 4,717 (up 0.9% for week).  The key levels for our index this week are 4800 and 4600. M&A activity continues to drive specific stocks.  The ASX will trade higher today, with the positive leads from the China and U.S.  Options volatilty is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

AMP- AMP Financial Services and Bendigo Bank have entered into a partnership where Bendigo Bank’s 460 branches will sell AMP life insurance products.

AWB-  An independent expert Lonergan Edwards & Associates says the propsed Agrim Inc $1.24 billion takeover offer is fair and reasonable and in the best interests of shareholders.

BHP- BHP expects to pay about $C90 billion in royalties and taxes to local, provincial and federal governments over the multi-decade operating life of its Jansen potash project in Saskatchewan, Canada.

CFE- Cape Lambert Resources Ltd will buy back 10 percent of the company’s ordinary shares as part of a capital management program.

LEI- a subsidiary of Leighton Holdings has announced the securing of a contract with resources explorer CGA Mining, to increase production at a major gold mine in the Philippines.

MND- Monadelphous Group the engineering group, has won contracts worth $120 million for projects in PNG and WA.

MYR- Myer Holdings the retailer has been through a difficult environment in the past fiscal year, but the outlook is improving.

NEC- Northern Energy Corporation the coal explorer, has rejected a takeover offer from rival miner New Hope as inadequate, but is willing to keep talking.

PEM- Perilya the lead and zinc miner, has entered into a binding agreement with Canada’s GlobeStar Mining Corporation as a precursor to a friendly $186 million takeover bid.

QRL – QR National investors will pay $2.50 to $3 a share to get a slice of Queensland’s rail freight business when it is floated 22 Nov’10.  More than $5 billion could be raised in the float.

SDL- Sundance Resources the mining explorer, has appointed Sinosteel Midwest Corp. CEO Giulio Casello as its managing director and chief executive.

RIO- Rio Tinto has not made any final decision regarding the proposed WA iron ore JV with BHP Billiton.

Economic Reports :

NAB Business Survey for September
Housing Finance Housing Finance Approvals for August

Companies:

Peak Oil and Gas $110 million IPO

Ex-Dividends

Coffey International (COF)
Cedar Woods Prop. (CWP)
Integrated Legal (IAW)
K & S Corporation (KSC)
Marbletrend Group (MDB)
Medusa Mining Ltd (MML)
Money3 Corporation (MNY)
NRW Holdings Limited (NWH)
Specialty Fashion (SFH)
Transmetro Corp. Ltd (TCO)

Market Summary

ASX – to open higher
US & UK/Europe – U.S. Higher, Europe Mixed
US ADRs –  Broadly Higher

BHP up 2.2% &

RIO up 2.0%

AWC up 5.0%

ANZ up 0.7% &

NAB up 1.6%

NEM down 0.2%

JHX up 0.8%

NWS up 1.3%

Commodities Stock Index up 1.3%
Gold Stocks Index up 0.6%
Oil Stocks Index up 1.0%

By Michael Hevern
Head of Research

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Stock Market Analysis: Markets Mixed as Gold Shines

Thursday, October 7th, 2010

Stock Market Analysis

Markets Mixed as Gold Shines

US stocks closed mostly lower after a disappointing report on the jobs market renewed concern about the US economy. European stocks rose on positive German industry data. Asian markets rose. Gold shares around the Asia rallied after spot gold hit a new record high. The ASX is set to trade flat to higher today ahead of the release of our jobs report.

The SPI Futures is just above the key resistance level of 4700 the ASX is set to open higher as the SPI Futures closed up marginally 0.2% (or 8 pts) at 4,707. The key levels for our index today are 4750 and 4650. M&A activity continues to drive specific stocks. The ASX will trade flat to higher today but will be impacted by today’s  employment report, as the Australian Bureau of Statistics (ABS) is scheduled to release labour force data for September. Gold stocks continue to be in focus. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

US Markets

US stocks ended mixed, ahead of the Non-Farm Payrolls Employment report out Friday. Overnight data showed the number of private sector jobs in the U.S. unexpectedly dropped last month for the first time in seven months (by 39,000), pointing to continued labor-market weakness. Trading volumes were again subdued.  Falling stocks narrowly outpaced rising ones on the NYSE. Economically sensitive sectors including materials, energy and industrial led to the upside, rising over 0.6%, while declines in defensive areas including telecoms, health care and utilities weighed on the indices. The Dow closed up marginally 0.2% (or 23 points) at 10,968, while in the broader market the S&P 500 index down marginally -0.1% (or -1 points) at 1,160 and the tech-heavy Nasdaq ended down -0.9% (or -20 points) at 2,379.

European Markets

European stocks rose on positive German industry data. Investors are speculating that the central banks will work to take action to boost the faltering economic recovery as necessary. Miners advanced as metal prices rose, while investors ignored another downgrade for Ireland’s debt and weaker-than-expected jobs data in the U.S. In the U.K. the market was led higher by the mining and banking sectors. German stocks rose on the back of a report that showed German August factory orders increased almost four times the pace economists forecast, led by demand for investment goods such as machinery.  In London the FTSE 100 index closed up 0.8% (or 46 points) at 5,681, the German DAX up 0.9% (or 55 points) at 6,271, while in France the CAC was up 0.9% (or 33 points) at 3,764.

Asian Markets

Asian markets rose.  In Japan investor sentiment improved as additional monetary easing by the Bank of Japan showed the BoJ is prepared to act to support the economy. Gold miners rose around the Asian region after bullion prices surged to new highs and real estate companies also gained in Japan. Hong Kong stocks rose, while Chinese markets were closed for a public holiday. In China the SSE Composite was closed  at 2,656, while in Hong Kong the Hang Seng Index was up 1.1% (or 241 points) at 22,880 and in Japan the Nikkei 225 Index was up 1.8% (or 173 points) at 9,691.

Commodities

The Dollar Index down -0.5% at 77.39 on higher Euro, while the Australian Dollar last traded higher at 96.94. Commodities were generally higher.

Gold prices are still around record highs. The benchmark crude NYMEX for September delivery was up 0.4% (or $US0.35) to settle at $US83.17. Copper prices rose, Copper for September delivery Copper for September delivery delivery was up 0.8% (or 2.9 cents) at $US3.7480. Gold prices are around record highs, are around key $US1,350 level, with December gold was up 0.6% at $US1,347.00.

Key News International Drivers Today

US - Private sector jobs in the U.S. unexpectedly dropped last month.
EU - German August factory orders increased almost four times the pace economists forecast.
CHINA – Market closed yesterday. Government stands firm on access to credit.
JAPAN – BoJ unexpectedly cuts interest rates to “virtually zero”.

Markets Overview

Market

Movement

The Dow Jones Industrial Average

Up  Marginally 0.2% (or 23 pts)  at 10,968

The S&P 500

Down  Marginally -0.1% (or -1 pts)  at 1,160

The Nasdaq

Down -0.9% (or -20 pts)  at 2,379

The FTSE 100

Up 0.8% (or 46 pts)  at 5,681

The German DAX

Up 0.9% (or 55 pts)  at 6,271

The Fench CAC

Up 0.9% (or 33 pts)  at 3,764

The Dollar Index

Down -0.46% at 77.39

The Australian Dollar

Last traded at 96.94

The Commodities Index

Up 0.25% at 289.2

Crude Oil Futures

Up 0.4% at $83.17

Gold Futures

Up 0.60% at $1,347.00

Copper Futures

Up 0.78% at $3.7480

SPI Futures

Up  Marginally 0.2% (or 8 pts) at 4,707

Market

Movement

SSE Composite (China)

Up 1.7%  at 2,656

Hang Seng Index (Hong Kong)

Up 1.1%  at 22,880

Up 1.8%  at 9,691


ASX News Today

The SPI Futures is just above the key resistance level of 4700 the ASX is set to open higher as the SPI Futures closed up marginally 0.2% (or 8 pts) at 4,707. The key levels for our index today are 4750 and 4650. M&A activity continues to drive specific stocks.  The ASX will trade flat to higher today but will be impacted by today’s  employment report, as the Australian Bureau of Statistics (ABS) is scheduled to release labour force data for September.  Gold stocks continue to be in focus. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

AMP- AMP Financial Services and Bendigo Bank have entered into a partnership where Bendigo Bank’s 460 branches will sell AMP life insurance products.

CQT- Conquest Mining the mining explorer, has released further drilling results from a high-grade eastern extension to its V2 deposit at the Mt Carlton mine site near Townsville in Queensland.

FMG- Fortescue the iron ore miner, has been ordered to pay $3.8 million in a dispute with Armada (Singapore) Pte Ltd over a canceled shipping contract.

LCM- Logicams the engineering services provider, has won a $5.4 million contract with Rio Tinto Iron Ore for train loading improvement project in WA’s Pilbara region.

LEI- Leighton’s Asian arm has joined a JV to develop a new $660 million sewerage sludge treatment facility in Hong Kong.

PXS- Pharmaxis Ltd, which develops treatments for respiratory and autoimmune diseases, has won regulatory approval to sell its asthma test kit, Aridol, in the U.S.

RIO- Rio Tinto has not made any final decision regarding the proposed WA iron ore JV with BHP Billiton.

SGP- Stockland is in the final process of buying Aevum, the retirement village operator.

SPN- SP AusNet the electricity and gas provider, has confirmed a 15-20 percent improvement in net profit after tax in 1H11, due to a favorable tax position.

SRX- Sirtex Medical the cancer drug maker, has sold a record number of doses in the 1Q of financial 2011 following strong sales during FY10.

Economic Reports :

SEEK Employment Index for September
Australian PCI for September
Unemployment Report (est 5.1%)
AFOM is set to issue $600 million 21 Jan’10 Treasury notes.

Companies:

Broadvector Ltd is scheduled to list on the ASX.

Ex-Dividends

Aus Gov Index Fund (AQF)
Gerard Lighting (GLG)
OrotonGroup Limited (ORL)
Toll Holdings Ltd (TOL)

Market Summary

ASX – to open higher
US & UK/Europe – Higher
US ADRs –  Broadly Higher

BHP up 2.4% &

RIO up 2.7%

AWC up 2.2%

ANZ up 1.0% &

NAB up 0.6%

NEM up 1.7%

JHX up 4.3%

NWS up 0.5%

Commodities Stock Index up 1.0%
Gold Stocks Index up 1.5%
Oil Stocks Index up 0.8%

By Michael Hevern
Head of Research

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Stock Market Analysis: Financials Lead Markets Lower

Tuesday, September 28th, 2010

Stock Market Analysis

Financials Lead Markets Lower

U.S. stocks eased after their surge last Friday with Financials leading the pullback. European markets were cool on worries over the financial health of European banks. Asian stock markets ended higher as they played catchup with Wall Street’s Friday session. Commodities gave back some of their recent gains as the US dollar bounced and the ASX is expected to drift lower today.

The SPI Futures is just below the key resistance level of 4700 and the ASX is set to open lower as the SPI Futures closed down -0.4% (or -18 pts) at 4,686. The key levels for our index today are 4700 and 4600. M&A activity continues to drive specific stocks and the ASX will trade lower today. We are at the end of the dividend period, which has been supporting our market in the past month. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

US Markets

U.S. stocks eased after their surge last Friday, Financials led the pullback. U.S. stocks faded into the close. Another round of corporate deal making pushed the markets higher early on, however the financial sector dragged the indices lower on the close. Citigroup traded lower as the U.S. Treasury may miss its end of year deadline to sell its shares in the company. The US dollar bounced off its April lows against the euro, as traders bet that any Fed quantitative easing to kickstart slowing growth, will be measured.  M&A activity included Wal-Mart and Southwest Airlines announcing acquisition plans. The Dow closed down -0.4% (or -48 points) at 10,812, while in the broader market the S&P 500 index down -0.6% (or -7 points) at 1,142 and the tech-heavy Nasdaq ended down -0.5% (or -11 points) at 2,370.

European Markets

European stock markets ended lower as worries simmered over the financial health of European banks.  European markets gave back early gains as investors started to book their gains for the month/quarter. M&A activity included Unilever the consumer products manufacturer saying it will buy U.S. based Alberto Culver Co. for $US3.7 billion in cash. In London the FTSE 100 index closed down -0.5% (or -25 points) at 5,573, the German DAX down -0.3% (or -19 points) at 6,279, while in France the CAC was down -0.4% (or -16 points) at 3,766.

Asian Markets

Asian stock markets ended higher, chasing Wall Street’s Friday performance. Even in Japan the stocks rose with exporters and resource stocks leading the market higher. The bulls stepped in China and Hong Kong markets which both returned from holidays. Resource shares were broadly higher across the region as commodity prices rose. In China, PetroChina rose 1.3%,  Chalco gained 2.5% and Jiangxi Copper jumped 5.2%, though property developers in China fell after the government announced its latest measures to curb the nation’s hot property market. In China the SSE Composite closed up 1.4% (or 36 points) at 2,628, while in Hong Kong the Hang Seng Index was up 1.0% (or 221 points) at 22,341 and in Japan the Nikkei 225 Index was up 1.4% (or 13147 points) at 9,603.

Commodities

The Dollar Index is up marginally 0.1% at 79.47 on lower Euro, while the Australian Dollar last traded higher at 95.75. Commodities were generally lower.

Gold prices are still around record highs. The benchmark crude NYMEX for September delivery was down -0.4% at $US76.21. Copper prices lower, Copper for September delivery was down -0.6% at $US3.5915. Gold prices are around record highs, are around key $US1,250 level, with December gold was flat at $US1,296.60.

Key News International Drivers Today

US – Another round of corporate deal making failed to hold markets higher.
EU – A survey of purchasing managers (PMI) pointed to a sharp slowdown in euro-zone growth.
CHINA – Ended higher, chasing Wall Street’s Friday performance. Government stands firm on access to credit.
JAPAN – Ended higher, chasing Wall Street’s Friday performance.

Markets Overview

Market

Movement

The Dow Jones Industrial Average

Down -0.4% (or -48 pts)  at 10,812

The S&P 500

Down -0.6% (or -7 pts)  at 1,142

The Nasdaq

Down -0.5% (or -11 pts)  at 2,370

The FTSE 100

Down -0.5% (or -25 pts)  at 5,573

The German DAX

Down -0.3% (or -19 pts)  at 6,279

The Fench CAC

Down -0.4% (or -16 pts)  at 3,766

The Dollar Index

Up  Marginally 0.10% at 79.47

The Australian Dollar

Last traded at 95.75

The Commodities Index

Up  Marginally 0.18% at 284.1

Crude Oil Futures

Down -0.4% at $76.21

Gold Futures

Up  Marginally 0.05% at $1,296.60

Copper Futures

Down -0.55% at $3.5915

SPI Futures

Down -0.4% (or -18 pts) at 4,686

Market

Movement

SSE Composite (China)

Up 1.4%  at 2,628

Hang Seng Index (Hong Kong)

Up 1.0%  at 22,341

Nikkei 225 Index (Japan)

Up 1.4%  at 9,603

SPI: Near key Level 4700 – SPI down -0.4% at 4,686

ASX News Today

The SPI Futures is just below the key resistance level of 4700 the ASX and is set to open lower as the SPI Futures closed down -0.4% (or -18 pts) at 4,686. The key levels for our index today are 4700 and 4600. M&A activity continues to drive specific stocks. The ASX will trade lower today.  We are at the end of the dividend period, which has been supporting our market in the past month. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

ANZ- ANZ Banking expansion into China continues with plans to set up a Chinese language centre in support of the Chinese operations there.

CFX- CFS Retail Property Trust has completed its $540 million equity sale enabling its purchase of four Direct Factory Outlet (DFO) centres.

CHC- Charter Hall Group is to acquire a new $75 million Woolworths distribution centre in Tasmania.

CQT- Conquest Mining has gained control of over 50 percent of North Queensland Metals after rival Heemskirk Consolidated allowed its offer to lapse.

CRG- Crane Group the plumbing supplier, will acquire full ownership of home building supplier Hudson Building Supplies Pty Ltd for $31.5 million.

GNS- Gunns is to “transition” its Hinman, Wright & Manser division to Hazell Bros as existing projects are completed.

KCN- Kingsgate Consolidated the gold miner, says production for the September quarter will be lower than the average for financial 2010 due to maintenance, lower grades and heavy rain.

LNG- Gas companies LNG and Metgasco (MEL) have agreed to jointly study the feasibility of project converting gas to LNG at Gladstone in Queensland.

MMX- Murchinson Metals the junior iron ore miner is in a trading halt pending an announcement from the company.  Shares down 10.2%.

NUF- Nufarm the ag chemicals supplier, has secured waivers on its banking covenants in respect to the periods ending 31 Jul’10 and 30 Oct’10.

LEI- Leighton Holdings has won an $800+ million contract from Chevron Australia to deliver the civil and underground works for the Gorgon gas project in WA.

SXE- Southern Cross Electrical Engineering is in talks with Leighton Holdings to provide the underground electrical and instrumentation services for the mining contractor’s Gorgon gas contract in WA. Shares rose 14.6%.

VBA -  Virgin Blue says its airport check-in and boarding systems are back online, but delays continue.

WES-Wesfarmers with the Bunnings hardware chain, will increase its investment in NSW by $600+ million in establishing 18 new stores in the next 3-years.

Economic Reports :

Parliament reconvenes

Companies:

Nufarm (NUF) Full year results
AVEXA AGM meeting

Ex-Dividends
Seymour Whyte Ltd (SWL)

Market Summary

ASX – to open Lower US & UK/Europe – Lower
US ADRs – Broadly Lower

BHP down 0.4% &

RIO down 0.4%;

AWC up 0.6%

ANZ up 1.8% &

NAB up 0.6%

NEM down 1.2%,

JHX down,

NWS down 1.2%

Commodities Stock Index down 0.5%
Gold Stocks Index down 0.9% Oil Stocks Index down 0.3%

By Michael Hevern
Head of Research

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Stock Market Analysis: September Rally Continues

Monday, September 27th, 2010

Stock Market Analysis

September Rally Continues

U.S. stocks finished higher for a fourth straight week, as durable goods data for August showed capital spending rose for businesses. European markets ended the week higher as German business confidence improved unexpectedly. Asian stock markets ended mixed, as markets were quiet due to several regional holidays last week. Commodities had an outstanding week due to the weakening US dollar and investor focus returned to fundamentals, with concerns about supply constraints for several of the base metals, which is driving demand. Copper climbed to fresh 5-month highs, Gold is around all-time highs and Oil up 4 percent for the week.

The SPI Futures is just below the key resistance level of 4700 the ASX is set to open higher as the SPI Futures closed up 1.2% (or 57 pts) at 4,677 (up 0.9% for week). The key levels for our index this week are 4750 and 4500. M&A activity continues to drive specific stocks. The ASX will trade higher today. Note that we are nearing the end of the dividend period (see below), which has been supporting our market in the past month. Options volatility is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

US Markets

U.S. stocks rose sharply on Friday, continuing the September rally for a fourth straight week. Economic data was positive with stabilization in durable goods and housing. Upward revisions for U.S. sales of new homes and durable goods for July, triggeredd the rally. The durable goods data for August also showed capital spending by businesses rose. All 30 of the Dow Jones components rose, sending the index for it biggest one day rise for the month, with Caterpillar (up 3.9%), Alcoa (up 3.9%) and BoA (up 3.3%) leading the way. The Dow is up 8.4% for the month and is tracking for its best September gains since 1939. The Nasdaq and S&P500 indices rose, with all sectors in positive territory. Consumer discretionary, mining, industrial and financial sectors were all up over 2.5%. The Dow closed up 1.9% (or 198 points) at 10,860 (up 2.4% for week), while in the broader market the S&P 500 index up 2.1% (or 24 points) at 1,149 (up 2.1% for week) and the tech-heavy Nasdaq ended up 2.3% (or 54 points) at 2,381 (up 2.8% for week)

European Markets

European markets ended higher, with the London markets extending gains to a fifth week. In London investors were cautious as the U.K. government Independent Commission on Banking is considering recommending breaking up banks, imposing higher capital requirements and taxes on larger institutions, which will potentially force some selling of assets to make the sector more competitive. The irish economy returned to recession in the second quarter and a string of downbeat economic data for the euro zone, weighed on sentiment earlier. In Germany markets were helped by an unexpected rise in business confidence to its highest level in over three years. In London the FTSE 100 index closed up 0.9% (or 51 points) at 5,598 (up 1.6% for week), the German DAX up 1.8% (or 114 points) at 6,298 (up 1.4% for week), while in France the CAC was up 1.9% (or 72 points) at 3,782 (up 1.0% for week).

Asian Markets

Asian stock markets were mixed. Trading activity was modest last week as Asian stock markets were quiet due to several regional holidays this week. Japanese exporters declined as the yen strengthened to its highest levels against the U.S. dollar in a week. Markets in China were shut from Wednesday for public holidays. The Hang Seng surprised early last week, with property developers driving Hong Kong shares to a fresh 5-month high, as their interest rates are pegged to the US dollar and will remain low for longer, and ahead of a government land auction this week.  In China the SSE Composite was closed at 2,592 (down -0.3% for week), while in Hong Kong the Hang Seng Index was closed at 22,119 (up 0.7% for week) and in Japan the Nikkei 225 Index was down -1.0% (or -95 points) at 9,472 (down -1.6% for week).

Commodities

The Dollar Index down -0.8% at 79.27 on higher Euro, while the Australian Dollar last traded higher at 95.88. Commodities were generally higher.

Gold prices are still around record highs. The benchmark crude NYMEX for September  delivery was up 1.7% (or $US1.31) to settle at $US76.50 (up 4.0% for week). Copper prices rose, Copper for September delivery was up 0.8% (or 2.9 cents) at $US3.6255 (up 3.3% for week). Gold prices are around record highs, are around key $US1,250 level, with December gold was up marginally 0.1% at $US1,295.40 (up 1.7% for week).

Key News International Drivers Today

US – Durable goods data for August showed capital spending rose for businesses.
EU – A survey of purchasing managers (PMI) pointed to a sharp slowdown in euro-zone growth.
CHINA – Markets closed for holidays. Government stands firm on access to credit.
JAPAN – Markets were quiet due to several regional holidays last week.

Markets Overview

Market

Movement

The Dow Jones Industrial Average

Up 1.9% (or 198 pts)  at 10,860 (up 2.4% for week)

The S&P 500

Up 2.1% (or 24 pts)  at 1,149 (up 2.1% for week)

The Nasdaq

Up 2.3% (or 54 pts)  at 2,381 (up 2.8% for week)

The FTSE 100

Up 0.9% (or 51 pts)  at 5,598 (up 1.6% for week)

The German DAX

Up 1.8% (or 114 pts)  at 6,298 (up 1.4% for week)

The Fench CAC

Up 1.9% (or 72 pts)  at 3,782 (up 1.0% for week)

The Dollar Index

Down -0.77% at 79.27

The Australian Dollar

Last traded at .00

The Commodities Index

Up 1.25% at 283.6

Crude Oil Futures

Up 1.7% at $76.50 (up 4.0% for week)

Gold Futures

Up  Marginally 0.13% at $1,295.40 (up 1.7% for week)

Copper Futures

Up 0.79% at $3.6255 (up 3.3% for week)

SPI Futures

Up 1.2% (or 57 pts) at 4,677 (up 0.9% for week)

Market

Movement

SSE Composite (China)

Up  Marginally 0.1%  at 2,592 (down -0.3% for week)

Hang Seng Index (Hong Kong)

Up 0.3%  at 22,119 (up 0.7% for week)

Nikkei 225 Index (Japan)

Down -1.0%  at 9,472 (down -1.6% for week)

SPI: Near key Level 4700 – SPI up 1.2% at 4,677…

ASX News Today

The SPI Futures is just below the key resistance level of 4700 the ASX is set to open higher as the SPI Futures closed up 1.2% (or 57 pts) at 4,677 (up 0.9% for week). The key levels for our index this week are 4750 and 4500. M&A activity continues to drive specific stocks.  The ASX will trade higher today.  Note that we are nearing the end of the dividend period (see below), which has been supporting our market in the past month. Options volatilty is subdued at the moment, which gives investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

BHP-BHP Billiton has approved the development of the $US1.5 billion Macedon gas field off the coast of Exmouth in WA. The company and also has cleared the first US regulatory hurdle in its bid for Potash Inc.

CAB- Cabcharge the taxi fare payment firm will pay $15 million in penalties and costs related to legal action taken by the ACCC.

CFX- CFS Retail Property Trust has agreed to buy four Direct Factory Outlet (DFO) centres for $498 million, funded through a $540 million new equity sale.

FGL- Fosters, Excise collected for beer was $24 million lower than in 2009-10 Fed budget estimation.

KMD- Kathmandu the clothing company, reported a 14 percent lift in annual revenue, following its listing last year.

MAP- MAp Group will pay a special distribution of 12.5 cents per stapled security from proceeds of divestment of its Mexican airports interest.

ORL- Oroton Group the upmarket fashion retailer, reported its FY10 profit up 18 percent and indicated that the business will return to positive growth this financial year.

RIO- RiO will invest $242 million to increase capacity at its Dampier Port (WA) facility by 5 million tonnes p.a., taking it to 230 Mt/a by the Q1 of 2012.

TLS- Telstra lost 500,000 subscribers in the past decade.  There are concerns over sustainabilty of its dividend.

VTA- Viterra the Canadian based grains marketer is still committed to building a $110 million malthouse at Minto in southwestern Sydney.

VBA- The ACCC has given preliminary approval to an alliance between Virgin Blue and Middle East-based airline Etihad, which would see the airlines cooperate on pricing and scheduling.

Economic Reports :
None

Companies:
None
Ex-Dividends

Clime Capital (CAM)
Consolidated Media (CMJ)
Cellestis Limited (CST)
Crown Limited (CWN)
Diploma Group Ltd (DGX)
Fantastic Holdings (FAN)
Fletcher Building (FBU)
Hydromet Corp. Ltd (HMC)
Healthscope Limited (HSP)
Konekt Limited (KKT)
Legend Corporation (LGD)
Lycopodium Limited (LYL)
Mac Services (The) (MSL)
Newcrest Mining (NCM)

Market Summary

ASX – to open Higher US & UK/Europe – Higher
US ADRs –  Broadly Higher

BHP up 2.6% &

RIO up 1.5%;

AWC up 2.3%

ANZ up 1.8% &

NAB up 1.6%

NEM down 0.8%,

JHX up 3.8%,

NWS up 3.4%

Commodities Stock Index up 2.0%
Gold Stocks Index dup 0.3% Oil Stocks Index up 2.4%

By Michael Hevern
Head of Research

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Stock Market Analysis: Weekly Market Wrap

Friday, September 24th, 2010

Weekly Market Wrap – Gold and Copper Strong

The market “melt-up” continued early in the week, however most markets are well off their highs as momentum is starting to falter. Base metals are closing the week higher as investor focus is returning to fundamentals and concerns about supply constraints for several of the base metals, which is driving demand for copper and gold. Asian markets have been quiet due to the seasonal holiday season, while European markets have traded down. The Australian market appears to be losing momentum as investors are facing several headwinds including an imminent interest rate hike, the end of the dividend season, uncertainties over next week’s parliament and the fact that we are running up to a seasonally weak period.

US Markets

The US markets have been trading into key resistance levels this week and have not been helped by recent economic reports. Firstly, the Fed disappointed the markets over its assessment of the US economy remaining weak and at risk, and spoke of the requirement for another round of quantitative easing (QEII), but refrained from pulling the trigger for the moment.

Then, overnight, jobs data disappointed with the Labor department reporting that initial unemployment claims increased by 12,000 to 465,000 in the week which ended 18 Sept 2010, and the previous week figures were revised up 3,000 to 453,000. Data on sales of existing US homes showed a surge of 7.6% in August, but this did little to help investor sentiment. The Financial and Industrial sectors fell the most and were down over 1.5%. Even the mining sector fell 0.9%, despite rising commodity prices. Overnight, the Dow closed down -0.7% to 10,662, while in the broader market the S&P 500 index was down -0.8% at 1,125 and the tech-heavy Nasdaq ended down -0.3% at 2,327.

European Markets

European markets are down this week. Profit-takers stepped in overnight as a survey of purchasing managers (PMI) pointed to a sharp slowdown in euro-zone growth, refueling economic worries and prompting traders to sell equities. The Markit Flash Eurozone Composite Output Index fell from 56.2 in August to 53.8 in September, posting the largest decline since November 2008. Investors were again spooked about the euro-zone sovereign debt and the slowing pace of economic growth, prompting traders to sell equities and buy gold.

The sovereign debt worries also resurfaced in Europe this week with the cost of insuring government debt against default once again soaring, particularly for the PIGS economies: Ireland, Spain, Portugal and Greece. Also in Ireland data disappointed showing the economy has contracted by 1.2% in the second quarter, highlighting the depth of the nation’s worries. In London, a report said that the UK economy will grow slower in 2011 (2%, less than the 2.5% previously forecast), as the biggest public spending squeeze since WWII starts to bite.

Investors have been coming to terms with key FX data this week as the sliding US dollar and strengthening euro depressed sentiment in Europe. The trend threatens European exporters, making them less competitive. Overnight in London the FTSE 100 index closed down marginally -0.1% at 5,547, the German DAX was down -0.4% at 6,185, while in France the CAC was down -0.7% at 3,710.

Asian Markets

Asian stock markets were mixed. Trading activity has been modest and Asian stock markets mixed, as markets were quiet due to several regional holidays this week. Japanese exporters declined as the yen strengthened to its highest levels against the US dollar in a week. Markets in China were shut from Wednesday onwards for public holidays. The Hang Seng surprised earlier in the week with property developers driving Hong Kong shares to a fresh 5-month high and interest rates are pegged to the US dollar which will remain low for longer. Overnight in China the SSE Composite was closed at 2,592, while in Hong Kong the Hang Seng Index was closed at 22,048 and in Japan the Nikkei 225 Index was down -0.4% at 9,566.

Commodities

Base metals closed higher in London as expectations of tightening fundamentals overcame selling pressure from disappointing US data and a firmer US dollar. Investor focus is returning to fundamentals, with concerns about supply constraints for several of the base metals, which is driving demand. Copper climbed to fresh 5-month highs, and gold is around all-time highs. Overnight, the benchmark crude NYMEX for September delivery was up 0.3% to settle at $US74.92. Copper prices also rose, with copper for September delivery up 2.7 cents at $US3.5675. Gold prices are around record highs, with December gold up 0.3% at $US1,291.60.

ASX News

The ASX market was unable to make a new high this week for the first time in a month. Investors are facing some headwinds including Asian markets being on seasonal holidays, the end of the dividend season, the RBA signaling an interest rate hike sooner rather than later and poor investor sentiment and economic data from overseas markets. Also the parliament is due to resume next week, but the uncertainty over who will fill the critical speaker position remains a factor.

Our View

Markets have surged this month but are trading at key resistance levels. The ASX has backed off the top of the trading range that’s been in place for the past six months. We would expect to see some further consolidation next week when the 4600 level will be key. Investors should take this opportunity to protect their portfolios as we move close to the seasonally weak month of October.

The S&P ASX200 is currently trading around 4600, at the top of the current trading range. The key level on the ASX is still around 4,600 and the key levels for our index next week are 4650 and 4400, with pivot around 4550. The momentum is starting to falter with investors facing a number of headwinds, as described above. Options volatility is still subdued at the moment giving investors access to “cheap” protection, so investors may consider taking this opportunity to protect their portfolios.

By Michael Hevern
Head of Research

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