Stock Market Analysis: Global Markets Continue To Selloff | Online …
* US stock markets sold down again, weigh down by the energy sector, which fell -4.1% last week, due to concern over geopolitics in Europe.
* European stock markets edged higher, snapping a four session losing streak, as earnings were better, but there are still concerns over financial contagion and the escalating violence in the Middle East and Ukraine.
* Asian stock markets fell on the back of disappointing Chinese data and concerns over geopolitics.
* Commodities prices eased. Gold prices rose to $US1,289, while crude-oil held below $US98. Copper edged down to US3.20c.
The Australian sharemarket closed lower again yesterday, with the ASX200 index down -0.4% at 5581. Local investors chose to look ahead to company earnings season which starts in earnest this week. The market was weighed down by the Materials, Industrials and Discretionary sectors all down over -0.8%, while the Financials fell -0.5%. The Healthcare sector rose 1.1%, while the Energy and Tech sectors rose 0.3%.
The Australian trade deficit widened for a third month from $1.1 billion to $1.6 billion, as exports slumped 2% on month and imports were flat. In June the trade deficit narrowed as lower imports and higher rural exports and volumes helped offset soft prices for iron ore and other minerals. The RBA left the official cash rate on hold making it a year since the it took rates to a record low of 2.5%.
Reporting continues today with OZforex, Folkestone Education.
Thursday: BWP Trust, Flexigroup, Henderson Group, TABCorp
Friday: Newscorp, Realestate.com
The SPI 200 futures are down -0.6% to 5443, giving a negative lead for the ASX market today, as the US and EU markets fell. The 5500 level will be key for the ASX200 today. The Australian dollar edged lower to US93.0c.
Crude Oil (WTI) is holding below key pivot of $US100.
US Markets
US stock markets sold down again, weigh down by the energy sector, which fell -4.1% last week, due to concern over geopolitics in Europe, as Russian troops build up at the Ukrainian border.
The three benchmark indexes fell over -0.8% for the session. All ten S&P500 sectors finished in the red, led by falls in the Energy down -2.1%, the Materials, Tech, Utilities and Financials sectors fell around -1.1%, while the remain sectors fell over -0.5%. The VIX jumped 12% to 16.9.
Traders reduce their risk exposure on the prospect of higher rates as early as mid-2015, as US ISM Service Industries expanded in July as the fastest rate since December 2005, while factory orders improved by 1.1% in June. This comes on the back of the US economy adding 209,000 jobs in July and unemployment is at 6.2%, the sixth straight reading above 200,000. Selling in the markets increased as indexes broke last week’s support levels.
The US earnings season continue this week with 72 S&P500 companies due to report this week. Walt Disney shares rose on better than expected earnings, but Groupon dropped -17% after quarterly profit fell. In M&A Fox pulled its bid for Time Warner, while Family Dollar rose on speculation of a revised bid. Of the S&P500 companies that have reported 76% have beaten on profits, 65% beat on revenues, while 66% beat sales forecast.
For the session Dow Jones closed down -0.8% at 16,429, the S&P500 closed -1.0% at 1,920 and the NASDAQ closed down -0.7% at 4,352, while on 10-year held at 2.48%.
European Markets
European stock markets edged higher, snapping a four session losing streak, as earnings were better, but there are still concerns over financial contagion and the escalating violence in the Middle East and Ukraine. In economic news Markit reported eurozone services expanded less than expected in July, the PMI rose 54.2 (up from 52.8).
The Stoxx Europe 600 Index closed recovered 0.3% for the session, paring earlier gains of 0.8%, following its worst weekly performance for three weeks, contributing to its second monthly fall in July (the first back to back monthly falls in over two years). The Portuguese central bank has taken control of Banco Espirito Santo in a $US4.9 billion bailout. Selling eased initially as a number of corporates including Deutsche Post and Credit Agricole reported better in on earnings. Geopolitical tensions continue though, with the continuing violence in Ukraine and Russian troop buildups and the Gaza Strip.
The German market edged higher after slumping -4.5% last week, on concerns of geopolitics and caution over the impacts of the EU limits Russia’s access to capital markets. The London markets held at three week lows having fallen -1.8% last week, the most in three weeks. In earnings of the Stoxx Europe 600 that have reported 57% beat on profits and 51% beat on sales, according Bloomberg.
For the session the German DAX 30 closed up 0.4% at 9,189, the UK the FTSE 100 closed up 0.1% at 6,682, the French CAC 40 closed up 0.4% at 4,232, while the Spanish market closed down -1.4% at 10,353.
Asian Markets
Asian stock markets fell on the back of disappointing Chinese data and concerns over geopolitics.
The MSCI Asia Pacific Index slumped -0.7%, in broad selling as five stocks fell for every gainer. In earnings of the corporates that have reported on the MSCI Asia Pacific Index since the start of July, 60% have beat on earnings.
The Chinese market fell after the July reading for the Chinese Service Industry came in at 50 (down from 53.1), the lowest reading since November 2005, this comes on top of weekend data showed the Chinese services index declined to a six month low in July, due to the weaker property markets, as the non-manufacturing PMI fell to 54.2 (frown from 55). The People Bank of China (PBOC) has also warned that Chinese credit and money supply have increased rapidly and this will prevent it from extending monetary easing to further stimulate growth. The corporate earnings continues until the end of August.
The Hong Kong markets held and is trading near its highest level since mid-November 2010 as it has entered into bull market territory after rising 20% from its March lows. The market remains vulnerable to further downside. The Japanese market continued lower backing off six month highs again, as investors digest corporate earnings, in the first quarter since sales tax was raised back in April.
For the session the Shenzhen Composite down -0.3% at 2,369, the Hong Kong Hang Seng closed up 0.2% at 24,648, and the Japanese Nikkei closed down -1.0% at 15,320, while the South Korean KOSPI closed down -0.7% at 2,066.
Commodities
The Dollar Index edged higher to 81.53 (towards its highest level for a year) on a higher Euro, and the Aussie Dollar eased to US93.0c. Commodities prices eased.
Overnight the NYMEX WTI Crude delivery up 0.2% to $US97.60, the COMEX Copper closed down -0.1% to 3.20, the COMEX Gold closed up 0.3% at $US1,289.10.
ASX News
COH – Cochlear the hearing implants maker jumped 10% after it announced strong sales growth on the back of new product releases. Cochlear reported a -29% fall in net profit which was in line with guidance, but lower than what analysts were expecting and said sales in the 12 months ended June 30 rose 15%.
CWN – Crown shares sold off after it was cut to underperform from neutral by Credit Suisse.
DOW – Downer EDI the engineering group has predicted a weaker net profit for 2015 citing “very difficult” mining markets as contractor reported 2014 profits in line with expectations, in a worrying sign at the start of the earnings season. Downer said is targeting NPAT of $205 million for fiscal 2015 after reporting a 6% rise in 2014.
FMG – Fortescue Metals Group plans to pay down more than $2 billion in debt over the next two years as it looks to save $400 million by converting its operations to gas.
SIR – Sirius Resources the nickel miner is close to securing $1.5 billion for its Nova nickel project after striking a native title deal with traditional owners.
TCL – Transurban says strong growth in traffic on toll roads, especially the recently upgraded M2 in Sydney, has boosted operator its annual profit by 45%, revenue fell -4%. The company said it is “well positioned” for 2015 following a series of deals, including the $7 billion acquisition of Queensland Motorways.
TRG – Treasury Group the Australian fund manager is merging with US-based investment business Northern Lights Capital Partners.
Market Summary
ASX – to open lower
US & UK/Europe – lower
ANZ -1.4%, NAB -1.0%, NWS -1.0%
AWC -1.7%, BHP -1.9%, RIO -1.4%, NEM 0.6%
By Michael Hevern D2MX Investment Advisor For trade ideas and recommendations on how to trade in this market, sign up for a free trial of the D2MX Daily Trading Report, call 1300 610 024 or email [email protected].
Reporting next week:
Monday: Bendigo, JB Hi-FI
Tuesday: Bradken, Dominos, GPT, United Group, Wotif
Wednesday: CommBank, Computershare, Carsales, Echo, Goodman Fielders, OZ Minerals, Primary, Skilled, Suncorp.
Thursday: Crown, Dexus, Envestra, Fairfax, Goodman Group, SingTel, Telstra
Friday: ANZ, Crown, James Hardie
Tags: Asian Markets, ASX, ASX News, Business News, Commodities, Crude Oil, European Markets, Ex Dividend, gold price, Nasdaq, Stock Market Analysis, stockmarket, trading, US Market wrap
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Stock Market Analysis: Global Markets Continue To Selloff | Online …
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