* US stock markets closed at new record levels, on the back of optimism that central banks will remain accommodative and the economy continues to improve.
* European stock markets continued higher for a second session, as the ECB is getting closer to introducing eurozone QE, which traders are speculating will come in the September meeting.
* Asian stock markets saw some profit taking after a three session rally, as equity valuations reached their highs for the year, as traders bet on the accommodative stances from central banks will continue.
* Commodities prices rose. Gold prices rose to $US1,285, while crude-oil rose to near $US94. Copper rose to US3.212c.
The Australian sharemarket closed up 0.1% at 5637, as miners continued to weigh, down another -0.2%, on the back of lower iron ore and crude oil prices. Rio and Fortescue fell another -0.7%. The REIT sector fell -1.1% and the Energy sector fell 0.4%, while the Healthcare sector rose 0.7% and the insurers had a solid session. Traders failed to be encouraged by the sharp positive leads from overseas markets. The earnings season continues into this week and there are around 60 companies going Ex-div in the next two weeks.
Local investors are looking at those companies reporting earnings today: BC Iron, Beadell Resources (BDR), Boral (BLD), Energy Developments (ENE), Flightcentre (FLT), Lend Lease (LLC), Ramsay Health (RHC) Seven West Media (SWM), Whitehaven Coal, (WHC) Worley Parsons (WOR).
The SPI 200 futures rose 0.2% to 5,605, giving a positive lead for the ASX market today, as the the US and Europe pushed higher again overnight. The 5650 level will be key for the ASX200 today. The Australian dollar rose to US93.1c.
S&P500 closes above 200 for the first time.
US Markets
US stock markets closed at new record levels, on the back of optimism that central banks will remain accommodative and the economy continues to improve.
The three benchmark indexes all finished up around 0.2% for the session. The US market is benefiting from a flight to safety, however trading volumes remain low, down 20% below the monthly average. The S&P500 hit a 30th record high closing above the 2000 level for the first time. The Nasdaq is trading at new fourteen year highs.
Seven of the ten S&P500 sectors finished in the green for the session, the Healthcare and Energy sectors led the gains up 0.5%, as M&A activity boosted sentiment as Burger King made a bid for Tim Horton the Canadian fast food business and crude oil recovered from a seven month low. The Nasdaq Bio-tech index rose another 1.3% to its highest level on record and has now risen over 20% from its February lows. Utilities and Staples sectors fell -1.2% and -0.1% respectively. The VIX eased -0.6% to 11.6, but is down -15% for the year.
In economic news US durable goods orders surged 23% in July the biggest gain on record, on the back of aircraft orders, while the Consumer Board consumer confidence index rose to 92.4 in August, the highest level since the start of the GFC.
The US earnings season is 98% complete with the S&P500 stocks, showing 7% on year growth. Of the S&P500 companies reported 75% have beaten on profits, 65% beat on revenues, while 66% beat sales forecast, according to Bloomberg.
For the session Dow Jones closed up 0.2% at 17,107 the S&P500 up 0.1% at 2,000 and the NASDAQ closed up 0.3% at 4,570, while the 10-year Treasuries rose to 2.40%, off twelve month lows.
European Markets
European stock markets continued higher for a second session, as the ECB is getting closer to introducing eurozone QE, which traders are speculating will come in the September meeting.
The Stoxx Europe 600 rose another 0.7%, building on the 1.1% gains from the prior session, as investors celebrated the ECB posture on a QE program by the end of the year. The banking sector led the gains on the back of the speculation over the ECB asset buying program. The index has now risen nearly 6% from its five month low, hit in early August, as geopolitical concerns have eased and the possibility of deflation near-term gives the ECB room to add stimulus to the eurozone.
ECB President Draghi has identified that the eurozone economy is faltering and called for governments to do more to help the eurozone. Inflation is at five year lows and falling inflation is a drag on economic activity as companies, consumer and investors withdraw spending in anticipation of lower prices in the future.
The German market rose another 0.8% building on the 1.8% rise of prior session, as discussions continued between Russia and the Ukraine and a negotiated peace has been reached over the Gaza Strip. The French market gained another 1.2%. Earnings of the Stoxx Europe 600 that have reported 57% beat on profits and 51% beat on sales, according Bloomberg. The London market returned from a bank holiday, playing catchup.
For the session the German DAX 30 closed up 0.8% at 9,588, the UK the FTSE 100 closed up 0.7% at 6,882, the French CAC 40 closed up 1.2% at 4,393, while the Spanish market closed up 1.8% at 10,690.
Asian Markets
Asian stock markets saw some profit taking after a three session rally, as equity valuations reached their highs for the year, as traders bet on the accommodative stances from central banks will continue.
The MSCI Asia Pacific Index eased -0.2% for the session, easing back from six year highs. In earnings of the companies that have reported on the MSCI Asia Pacific Index since the start of July, 54% have beaten on earnings.
The Chinese market eased again, after it had booked a sixth straight week of gains and is still up over 8% for the year on the hopes that the central bank will be prompted to add stimulus. The Japanese market saw profit taking, as discussion continue over the nation’s ballooning energy bill, since its 48 nuclear reactors have been shutdown since the 2011 tsunami and Fukushima plant disaster. The Hong Kong market eased but held above 25,000 and is up 20% from its March low.
For the session the Shenzhen Composite down -0.8% to 2,324, the Hong Kong Hang Seng closed down -0.4% at 25,074, and the Japanese Nikkei closed down -0.6% at 15,521, while the South Korean KOSPI closed up 0.4% at 2,068.
Commodities
The Dollar Index edged higher to 82.67 (holding at its highest level for a eleven months) on a lower Euro, and the Aussie Dollar rose to US93.1c. Commodities prices rose.
Overnight the NYMEX WTI Crude up 0.6% to $US93.80, the COMEX Copper closed down -0.8% at 3.212, the COMEX Gold closed up 0.5% at $US1,285.20.
ASX News
BLY – Boart Longyear the mining services company is considering selling out to private equity after suffering a fourth consecutive half year loss, saying it will sell its workwear business to Wesfarmers for $180m.
MTU – M2 Group the company behind internet providers iPrimus and Dodo has lifted annual profit 53% and expects growth of up to 20% in the year ahead as it continues to add new customers.
NHF – NIB the health insurer Health insurer expects further earnings growth this financial year after raising its profit 4% to $69.9 million in FY14.
PBG – Pacific Brands the struggling clothing maker is selling its workwear business after writedowns and weaker profit margins blew its full year loss out to $224 million loss.
SCG – Scenter Group the owner of Westfield’s Australian and NZ shopping centres raised its half year operating income by 2.3% and expects a similar increase for the rest of the year.
SFH – Speciality Fashion the women’s fashion retailer behind the Katies chain has suffered a dip in annual profit but says sales have improved at the start of the new financial year.
VRT – Virtus Health the IVF provider has beaten its profit forecast and expects demand for assisted reproductive services to increase as women wait longer to have children.
UGL – United Group is expecting an improved outlook for its engineering business, after raising its full year profit more than 70%.
Market Summary
ASX – to open higher
US & Europe – higher
ANZ 0.1, NAB 0.7%, NWS -0.4%, WPL 0.9%
AWC -0.6%, BHP -0.5%, RIO -0.8%, NEM 2.0%
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.
Reporting this week:
Thursday: Adelaide Brighton (ABC), Paladin (PDN), Mac Atlas Roads (MQA), Perpetual (PPT)
Friday: Harvey Norman (HVN) Perseus(PRU) Virgin (VAH), Woolworths (WOW).