* U.S. stock markets backed off new all-time highs, as investors take stock of the next move in the markets, and continue to remove small cap, high multiple and tech stocks from their portfolios.
* European stocks eased back six year highs, as investors step back to assess the corporate earnings season, with respected to the elevated equites multiples and the German and UK markets at eleven week highs.
* Asian stock markets continued higher yesterday, towards four month highs, on the back of the positive leads from the US and Europe, and speculation of Chinese stimulus near-term.
* Commodities prices higher, Gold prices edged higher to $US1,305, while crude-oil rose to above $US102. Copper jumped rose to US3.16c, two month highs.
The Australian sharemarket closed the session flat with thee ASX200 at 5,496, holding near six year highs, following release of the Federal budget has raised taxes on high income earners and cut spending on welfare and health, while outlining plans to cut public service jobs. Three of the major banks Westpac, Macquarie and NAB all traded ex-dividend and CommBank reported better than expected. Telecom sector outperformed up 0.6% for the day.
Some stocks of interest post the Fed Budget include:
* Lend Lease, Transurban and Downer.
* SMS Management and Oakton and Technology One
* Cochlear, CSL and Sirtex.
The SPI 200 futures are down -0.4% at 5488, giving a negative lead for the ASX market today as it trades around six year highs. The 5460 level is key near-term for the ASX200, as markets across Europe and in the US held around record levels.
Copper prices are trading at two month highs.
US Markets
U.S. stock markets backed off new all-time highs, as investors take stock of the next move in the markets, and continue to remove small cap, high multiple and tech stocks from their portfolios.
The three benchmark indexes eased back after trading higher for the past five sessions. It is index options expiry at the end of this week and markets are expected to hold till then. Five of the ten S&P500 sectors predominately finished lower, with falls led by the Discretionary sector down over -1.1%, the Industrials and Financials sectors down -0.7%, closely followed by the Tech and Consumer Staples sector closed down over -0.5%.
The Dow Jones eased back from its all-time high, as dis the S&P500. We are seeing divergences in the markets with only around 10% of the S&P500 stock making new 52-week highs as the index sits at record levels. The Nasdaq eased again after recording its best session since January, but it remains -6% below its recent thirteen year high, while in the small caps, the Russell 2000 sold down another -1.6% (down nearly -3% in two sessions).
M&A activity continues with Coca-Cola increasing its stake in Green Mountain, while AT&T is looking to acquire DirecTV. However traders took profits after the Retail Sales figures came in at 0.1% last month (below the 0.5% forecast), down from 1.5% in the prior month.
With nearly 460 of the S&P500 stocks having reported to date over 76% have beaten on profits and 53% beat on sales, actual earnings rose 5.5%, profits have climbed 4.6% in the first quarter (1Q), while sales have risen by 2.8%, according to Bloomberg. Analysts are now forecasting profits will rise 7.2% and that sales will rise 4% for the year.
US PPI figures came in at 0.6% better than expected, while crude oil inventories rose. Fed Chair Janet Yellen in scheduled to speak tonight.
For the session Dow Jones closed down -0.6% at 16,613, the S&P500 close down -0.5% at 1,888 and the NASDAQ closed down -0.7% at 4,100, while on 10-year Treasury notes plunged to 2.54%.
European Markets
European stocks eased back six year highs, as investors step back to assess the corporate earnings season, with respected to the elevated equites multiples and the German and UK markets at eleven week highs.
The Stoxx Europe 600 Index eased -0.1%, but is still trading near six-year highs, on the back of the reporting season and reaffirmations from the ECB that it will remain accommodative. The index has risen over 3% over the past month.
The miners have enjoyed a push higher this week, after rising the most in nearly seven months, as JP Morgan recommended buying European mining shares, citing a recovery in Chinese demand and named BHP and RIO as the most attractive companies in the sector.
The positive sentiment continues after the German bank considers further stimulus, which follows last week’s ECB reassurances it will remain accommodative, which have prompted economist’s to predict that the ECB is likely to soon cut interest rates by 0.1% from their already record low of 0.25%.
The German and London markets have held at their eleven week highs on the back of M&A and gains in the mining and tech stocks. The London market hit new 14 year highs, after the BoE released its quarterly inflation report, where spare labour capacity is fallen on month.
For the session the German DAX 30 closed flat at 9,754, the UK the FTSE 100 closed up 0.1% at 6,878, the French CAC 40 closed down -0.1% at 4,501, while the Spanish market close up 0.3% at 10,613.
Asian Markets
Asian stock markets continued higher yesterday, towards four month highs, on the back of the positive leads from the US and Europe, and speculation of Chinese stimulus near-term.
The MSCI Asia Pacific Index rose another 0.8%, to its highest level since mid-January, as all ten industry sectors finished in the green once again. Of the around 400 MSCI Pacific Index stocks that have reported to date over 53% have beaten on profits, according to Bloomberg.
The Chinese finished flat, as investor wait for firm action on stimulus, but the Hong Kong markets jumped over 1%, as property developer shares rose on the back of speculation they will gain easier access to loans, after the Chinese central bank told lenders to improve their efficiencies of service and loan approvals.
In Japan the market is trading around five month highs, with gain outnumbering losers by nearly two to one, as the property developers sector led the gains.
For the session the Shenzhen Composite closed down -0.1% at 2,172, the Hong Kong Hang Seng closed up 1.0% at 21,582, and the Japanese Nikkei closed down -0.1% at 14,405, while the South Korean KOSPI closed up 0.9% at 1,982.
Commodities
The Dollar Index lower at 80.06 on a higher Euro, and the Aussie Dollar held at US93.8c. Commodities prices finished higher.
Overnight the COMEX WTI Crude for MAY14 delivery closed up 0.7% at $US102.40, the COMEX Copper for MAY14 delivery closed up 0.8% at 3.16, the COMEX Gold for MAY14 delivery closed up 0.9% at $US1,305.90.
ASX News
AGK – AGL Energy chief executive Michael Fraser will retire by mid-2015 after more than 30
years with the company and almost eighth years as its boss.
BHP – BHP Billiton is confident about Chinese growth despite acknowledging there could be a bumpy ride ahead.
CBA – Commonwealth Bank is on track to make a record $8.7 billion annual profit, sending its shares to their highest level ever.
CSR – CSR shares fell despite a rise in house and apartment construction has helped CSR return to profit, and it expects demand for its building products to continue to grow.
QAN – Qantas will cut dozens of pilots’ jobs giving them an oppuortunity for voluntary redundicies as the airline continues to slash costs.
RIO – Rio Tinto says its Pilbara iron ore operations in WA are producing ore more quickly than previously anticipated.
TLS – Telstra has sold its Hong Kong mobile phone business for more than $2 billion, marking its exit from mobile operations outside Australia.
Market Summary
ASX –open lower
US & UK/Europe – eased
US ADRs – Broadly Higher!…
ANZ -0.4%, NAB -0.6%, NWS -2.8%
AWC +0.3%, BHP +0.8%, RIO +0.6%, NEM -0.2%
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 advisory@d2mx.com.au.