Stock Market Analysis: Mixed Leads As US Rise On Earnings, While …
* US stock markets recovered thanks to corporate earnings and as energy stocks saw some bargain hunting after falling -4.1% last week.
* European stock markets eased again overnight, following their worst week in two years, as earnings disappointed, while concerns simmered over financial contagion and the violence in the Middle East and Ukraine escalated.
* Asian stock markets rose, led by tech stocks across the region, recovering from their worst weekly performance since February.
* Commodities prices eased. Gold prices eased to $US1,288, while crude-oil held at $US98. Copper edged up to US3.244c.
The Australian sharemarket closed slightly lower yesterday, with the ASX200 index down -0.3% at 5541, after Friday’s biggest single session loss in four month. Local investors chose to look ahead to company earnings season which starts in earnest this week, putting aside the negative leads from overseas, while volumes were thin owing to the NSW Bank holiday. The Consumer Staples sector was the only positive up 0.2%, after official data showed a recovery in retail sales in June which gave modest support to the supermarkets. The Energy and Healthcare sectors fell over -0.6%, the Consumer Discretionary sector fell -0.5%, Financials were broadly weaker, while the miners were mixed, with mid-tier iron ore miners showing some life.
Global markets have lost $US1.2 trillion in value in the past week, as the spectre of financial contagion reared its ugly head again, in Argentina and Portugal.
Reporting continues today.
The SPI 200 futures are up 0.1% to 5484, giving a subdued lead for the ASX market today, as the US and EU markets recovered. The 5550 level will be key for the ASX200 today. The Australian dollar edged up to US93.3c.
Crude Oil (WTI) is holding below key pivot of $US100.
US Markets
US stock markets recovered thanks to corporate earnings and as energy stocks saw some bargain hunting after falling -4.1% last week.
The three benchmark indexes recovered 0.7% for the session. Nine of the ten S&P500 sectors finished in the green, led by gains in the Energy, Materials and Discretionary sectors jumped over 1.2%, while the Tech and Financials sectors rose 0.7%, the Utilities sector fell -0.5%. Last week the S&P500 retreated -2.7%, the Dow Jones index fell -1.5% two month lows, and the Nasdaq fell -2.2%. The VIX eased -11% to 15.1.
Traders remain cautious over the prospect of higher rates as early as mid-2015, as the US economy added 209,000 jobs in July and unemployment is at 6.2%, missing forecasts. The sixth straight reading above 200,000 is signaling the economy is sustaining its momentum, while the Institute for Supply Management (ISM) manufacturing index rose more than expected, and a reading on consumer sentiment slipped slightly, but was in line with expectations. The S&P Ratings agency has declared Argentina is now in a state of selective default.
The US earnings season continue this week with 72 S&P500 companies due to report. Berkshire, Groupon and Walt Disney shares rose on better than expected earnings, but Michael Kors dropped -6% after quarterly profit fell. 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 up 0.7% at 16,569, the S&P500 closed up 0.7% at 1,939 and the NASDAQ closed up 0.7% at 4,384, while on 10-year eased to 2.48%.
European Markets
European stock markets eased again overnight, following their worst week in two years, as earnings disappointed, while concerns simmered over financial contagion and the violence in the Middle East and Ukraine escalated.
The Stoxx Europe 600 Index closed down another -0.2% for the session, following its worst 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. Sellers prevailed as a number of corporates disappointed in on earnings. Geopolitical tensions continue, with the continuing violence in Ukraine and the Gaza Strip.
The German market continued lower 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, as HSBC provided some support after forecast rising revenues for 2015 and a fall in bad debt provisions. 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 down -0.6% at 9,154, the UK the FTSE 100 closed down -0.1% at 6,678, the French CAC 40 closed up 0.3% at 4,217, while the Spanish market closed down -0.2% at 10,496.
Asian Markets
Asian stock markets rose, led by tech stocks across the region, recovering from their worst weekly performance since February.
The MSCI Asia Pacific Index was up 0.4%, recovering from its worst week in the past three. 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 jumped to its highest close since December, led by the financials and mining shares. 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) warned that Chinese credit and money supply have increased rapidly and that it will refrain from extending monetary easing to further stimulate growth. The corporate earnings continues until the end of August.
The Hong Kong markets edged back towards its highest level since mid-November 2010 as it has entered into bull market territory after rising 20% from its March lows. The market went parabolic and is vulnerable to further downside. The Japanese market bucked the trend continuing to back 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 up 2.0% at 2,376, the Hong Kong Hang Seng closed up 0.3% at 24,600, and the Japanese Nikkei closed down -0.3% at 15,475, while the South Korean KOSPI closed up 0.4% at 2,080.
Commodities
The Dollar Index edged higher to 81.31 (off its highest level for a year) on a higher Euro, and the Aussie Dollar up to US93.3c. Commodities prices eased.
Overnight the NYMEX WTI Crude delivery up 0.2% to $US98.30, the COMEX Copper closed up 0.9% to 3.244, the COMEX Gold closed down -0.5% at $US1,288.80.
ASX News
AGO – Atlas Iron boss Ken Brinsden has talked down takeover speculation of his company, but says its shares are good value.
ASL – Ausdrill the mining contractor has announced the re-appointment of chief executive Ron Sayers on the same day that his tax conspiracy trial starts.
CWN – Crown gambling mogul James Packer is set to make another attempt at cracking the big casino market in the United States, saying it will expand into Las Vegas with the $US280 million purchase of a site in partnership with Oaktree Capital.
PXS – Pharmaxis the drug developer is suing one of its financiers in the United States for trying to withdraw funding for a cystic fibrosis drug.
ROC – Australia’s Roc Oil has backed a new $474 million takeover offer from Chinese heavyweight Fosun Group, ending its proposed merger with Horizon Oil.
TWE – US private equity firm KKR has increased its bid for Treasury Wine Estates to $3.4 billion, but the battle for the owner of Penfolds wines may be just beginning.
MYR – Retail spending is improving as Australian consumers recover from the federal budget austerity.
Market Summary
ASX – to open flat
US & UK/Europe – recovered
ANZ -0.1%, NAB 0.1%, NWS 0.2%
AWC -0.4%, BHP 1.4%, RIO 1.4%, NEM 1.7%
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].
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: Mixed Leads As US Rise On Earnings, While …
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