ASX 200 Stock Trading Report

ASX 200 4874.8 (+0.92%)

SPI Futures 4899.0 (+0.93%)

1. S&P/ASX 200 +44.6 points today. Largest contributions from Financials +1.5% and materials/energy up >0.9%.

ASX 200 4874.8 (+0.92%)

SPI Futures 4899.0 (+0.93%)

Overseas Headlines:

1. Japanese CPI figures have not fallen as sharply as expected. Deflationary fears will be met with easing Monetary Policy MP below 0.1%. It is not quite clear just what sort of an impact the BOJ expects from prices in their minutes to the MP meeting, however Japan remains the text book example of how MP becomes a blunt instrument.

2. There are mixed signals over the pricing mechanism of the Yuan. Despite a lot of offshore pressure the Chinese do not seem to have a clear picture over their stance on the matter, or at least they are not publicising it. The Americans over the past week have been very vocal about the impact pegging the Yuan has on global financial markets. Within the walls, however, there is misleading indications from the Bank (People’s Bank of China), the ministry (ministry of Commerce) and state councils leading one to believe that they have not sincerely assessed the impact of pricing mechanisms on global demand for Chinese products. Reinforcing their reputation as a very internal looking, corporation influenced macroeconomic policy maker. Not to mention the wealth of empirical evidence on Exchange Rate Mechanisms (ERM) and how they have been attractive for extreme speculation, the perfect example being Soros and the British Pound. ERM over the Yuan pegged to the USD means that not only can China manage the price of exports relative to trading partners but they can mange prices they pay for imports and the value of debt held in foreign dollar terms. Debt held particularly US treasuries.

3. Chinese Steel demand expected to double by 2010. According to Iron Ore chief from RIO Sam Walsh. An important indication for Iron Ore producers. RIO and Chinalco continue to talk of pursuing projects despite Stern Hu being trialed over Iron Ore negotiations in a closed court. The event seems to have become a triviality for corporations. RIO and Chinalco confirmed today talks of a joint development for a copper and gold mine in Mongolia . Aluminium Corp of China announced it is likely to record a 500,000T surplus of Aluminium for this calendar year. Forecast to be 17.5milT in aluminium production and 17milT consumption.

4. US Gaming stocks exposed to Macau have done well overnight. Las Vegas Sands (LVS.NYSE) +7.49% MGM Mirage (MGM.NYSE) confirming what was suspected last week that hotel visits in Macau is encouraging signs for spending in casinos. CWN $8.30 is still recuperating from losses in Vegas however has a foot in Macau . Galaxy Entertainment Group Ltd. (GXYE.Y) (HK:27) Wynn Macau Ltd. (HK:1128) (WYNM.Y) SJM Holdings Ltd. (HK:880) Melco International Development Ltd (MDEVF) (HK:200) Sands China Ltd. (HK:1928) are other direct investments in Macau.

Data Tomorrow:

1. Japan:

Merchandise Trades exports YoY survey 45.7 vs. prior 40.9

Merchandise Trades imports YoY survey 33.0 vs. prior 9.1

Merchandise Trades Balance survey ¥560.6bil vs. ¥prior 63.0B

2. HK:

February exports YoY survey 25.3% vs. prior 18.4%

February imports YoY survey 26.0% vs. prior 39.5%

Trade Balance February survey -32.8bil vs. prior -29.5bil

3. US:

Existing home sales February survey 5.00mil vs. prior 5.05mil

Existing home sales February MoM survey -1.1% vs. prior -7.2%

CFD Intraday Trade Idea – ANZ Banking Group (ANZ)

Selection of stocks likely to move on an intraday basis.

Our preference: as long as 16.55 is not broken down, we favour an upmove with 17.15 and then 17.5 as next targets. Alternative scenario: a penetration of 16.55 would call for a consolidation to 16.2.

Trade Disclaimer

Asia Pacific Equity Daily – 6 April 09

Market comment

U.S. indices erased their earlier losses thus closing higher on Friday, helped by gains in real estate and auto sectors. On the economic front, the U.S. economy lost 663,000 jobs in March according to the Labor Department. Thus, the unemployment rate jumped to 8.5% last month. Also, the ISM non-manufacturing index fell to 40.8 in March from 41.6.

In Asia, the Nikkei 225 (Japan) rose 0.34% to 8749.84 (new 30d high reached), the Hang Seng (HK) rose 0.16% to 14545.69 (new 30d high reached) and the S&P/ASX 200 (Australia) rose 1.51% to 3735.6 (new 30d high reached).

Economic releases

AU 01:30: Mar AiG Perf of Construction Index
AU 01:30: Mar TD Securities Inflation MoM%
AU 03:30: Mar ANZ Job Advertisements (MoM)
JN 06:00: Apr BoJ Monetary Policy Meeting
JN 07:00: Feb P Leading Index CI, exp.: 75.3
JN 07:00: Feb P Coincident Index CI, exp.: 86.9

Corporate events

Results
None

Dividends
None

INDICES

Nikkei 225 (60 min)

Our preference: as long as 8550 is a support, we are bullish with a target at 8987.

Alternative scenario: a downside breakout of 8550 would open the way to 8450.

Hang Seng (60 min)

Our preference: as long as 13950 is not broken down, we favour an upmove with 14755 and then 14975 as next targets.

Alternative scenario: a break below 13950 would invalidate our bullish scenario. The index could then decline to 13790.

ASX 200 (60 min)

Our preference: as long as 3650 is a support, we are bullish with a target at 3817.

Alternative scenario: a penetration of 3650 would call for a consolidation to 3580.

STOCKS TO WATCH

Mitsubishi Corp (8058)

Our preference: as long as 1440 is support, we are bullish. In this case, the upside breakout of 1530 will trigger a bullish acceleration towards 1605.

Alternative scenario: a break below 1440 would open the way to 1415.

Santos (STO)

 Our preference: as long as 17 is not broken down, we favour an upmove with 17.96 and then 18.55 as next targets.

Alternative scenario: below 17, the risk is a drop towards 16.55.

Tricom Today ASX Stock Market Report 16-3-09

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The SFE Futures suggested a 26 point rise in the market. BHP and RIO both up in ADR form Friday – 2.30% and 0.8% respectively. (BHP closed at the equivalent of 3186c, up 20c on Friday’s close.)Metals mostly up Friday – Copper up 2.51%, Zinc down 0.16% and Aluminium up 0.52%. Nickel up 1.53%. Oil price down 1.5% to $46.22. Gold up $6.10 to $930.10. Bonds down with the 10 year yield up to 2.8921%. A$/US$ down 0.5% to 65.475c. Obama announced a $730m package to provide assistance to small business owners. The government also plans to increase the government guarantee on some small business administration loans to 90%. They will also boost bank liquidity with
$10bn in an attempt to unfreeze the secondary credit market. Healthcare – the largest sector in the S&P 500 – up 3.3% after recent heavy selling pressure due to fears over government reform. Energy down the most – fell 0.7% on the lower oil price. OPEC’s meeting over the weekend only created more uncertainty about demand and stabilizing prices. They did not make a cut to production but urged their members to stop overproducing. The market is up 16 in-line with the 26 point rise predicted by the SFE Futures this morning. A pretty flat start to the week with not a lot of significant news around. Resources struggling, Property Trusts and Banks doing well.

The Banking Sector Wrap

The Big Four Australian banks outperformed the index this week (ending Thursday) marking an average 2.9% increase to a 1.5% lift in the ASX 200. The week began in a familiar dour mood for the broad market but spirits were lifted following a big one-day rally on Wall Street on Tuesday. Financial stocks led the rally in the US, spurred by a (spurious) claim from part-nationalized and arguably insolvent Citigroup that the bank registered an operational profit in both January and February (before write-downs).The two bigger banks of the Big Four – Westpac (WBC) and Commonwealth ((CBA)), which are deemed to be of sounder balance sheet – were the stars for the week, posting 5% gains. ANZ ((ANZ)) limped in with a 1.5% gain while National ((NAB)) didn’t much trouble the scorer.

From a sector-wide perspective, it was left to head bull BA-Merrill Lynch and head bear ABN Amro to once again air their differences. Last week Merrills lifted its banking sector rating from Neutral to Overweight, arguing that the margin outlook for the Big Four had never been better. This week the analysts took time to reiterate their stance, suggesting healthy margins on commercial and housing lending will offset the headwinds of higher bank funding costs in FY09.

Last week ABN Amro (Underweight for some time) argued that any revenue improvement would be offset not by funding costs specifically, but by increasing bad debts. It’s a bit of a coin toss for the unopinionated – Merrills believes bad debts will not reach heights that will undermine revenue growth from increased market share, while a more pessimistic ABN looks to 1992 for reasons to believe bad debts in the GFC are only just beginning to grow. It will all come down to just how bad the recession in Australia becomes.

And don’t believe we are not now in a recession.
This week ABN decided to attack the left hand side of the equation, suggesting that while the Big Four are indeed enjoying improved revenues at present, the joy is not likely to last. Again the analysts turn to the experience of the 1990s.

In 1990 as Australia began to tip into recession following the crash of 1987 and subsequent crash in commercial property, the Australian pillars were enjoying excess revenue growth of 7%, ABN notes. By the tail end of the recession, revenue growth had fallen to 6% below average. With corporations likely to pull in their capital expenditure, the analysts expect lending to slow and revenue growth to become “anaemic”. Bad debts will peak in FY10, the analysts suggest.And don’t forget Westpac only survived 1992 because Kerry Packer stepped in.

On an individual bank basis, ABN has decided that NAB’s exposure to the basket case that is the UK, along with the still unresolved issue of toxic CDOs on the balance sheet, provides enough risk concern to prompt a downgrade from Hold to Sell. ABN’s target price falls from $18.96 to $14.97.

The good news is that relative price movements see ABN upgrade Westpac from Hold to Buy, but with little change in target. This puts Westpac streets ahead with five Buy ratings in the FNArena database, ahead of NAB with two, and ANZ and CBA with one each. (Note that ratings reflect current share prices against target prices and not necessarily overall quality).

Macquarie Group ((MQG)) also came in for an upgrade this week with Aspect Huntley lifting its already positive view by one notch to Buy, from Accumulate. Macquarie shares remain the target of shorters who continue to find ways around the ban on shorting financial stocks in Australia. No coincidence thus that both Macquarie and Suncorp-Metway ((SUN)) shares enjoy more buy ratings than all other banks outside Westpac: it’s not quality, but the larger price discount that makes up the big difference.

Tricom Today ASX Stock Market Report 23-2-09

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The market is down 46 after being down 90 earlier poor performance today underperforming the 3 point rise predicted by the SFE Futures this morning. Property down 2.3% – all the big names down Westfield Group down 3.6% at midday. They have results this week. Caltex down 6.1% on broker downgrades this morning after results down 95% on Friday. All other energy stocks down on the lower oil price Friday. Gold stocks all up on the gold price breaking through the $1000 barrier Friday. Small miners mostly down on lower metal prices. Industrials down 4.6% – Fairfax down, Virgin Blue down, and Transfield Services down on results. Cochlear down nearly 4.4% at midday having gone ex dividend 80c. Macquarie Infrastructure down 7% and Macquarie Airports down 5.3% on suggestions that the Macquarie stable is being shorted whilst Macquarie Group remains protected by the shorting ban on financials  which comes off on Friday week. MQG still fell 14% last week. Financials down 1.3% following a turbulent session in the sector in the US Friday where financials were down 9% at one stage on concerns over the need for Citigroup and the Bank of America to be nationalised. Our Banks all down 1-2% around midday. ANZ down 2.5%.

Tricom Today 13-2-09

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The Aussie market is up 32 basically in-line with the 20 point rise predicted by the SFE Futures this morning. Pretty quiet not much news apart from RIOs Chinalco deal and a few results. RIO is down 3.9%. BHP down 0.4%. Resources underperforming this morning down 0.4% on lower metal prices and a drop in the oil price. Oz Minerals announced they will incur writedowns of between $2.3bn-$2.8bn in FY08 accounts, including asset impairments.
Financials up 1.3% – banks all up by 1pm. ANZ up 7.7%after ruling out a capital raising in anannouncement last night noted their tier 1 ratio stood at 8.35%, well above regulatory requirements.Property sector down 2.8%. Westfield down another 4.1%. DXS down 5.8%.Last day to buy the CBA before it goes ex dividend 113c on Monday. Unchanged today at 3095c.The governments $41.5bn fiscal stimulus package has just been approved in the Senate.

Tricom Today 12-2-09

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The market is up 62 outperforming the 13 point rise predicted by the SFE Futures this morning. Having a strong day after showing great resilience yesterday following a terrible night on Wall Street Tuesday. All sectors bar property up on the open. The resources sector isleading the way BHP up 1.9% and RIO in a trading halt pending results this afternoon and a deal with Chinas Chinalco buying US$12bn worth of assets and making a US$7bn investment in equity. Fortescue Metals up over 6% early on. Energy stocks up despite the fall in the oil price and the decline in US energy stocks overnight. Gold stocks continuing their rally Newcrest and Lihir up 4.1% and 5.7% on another $22 jump in the gold price. Smaller gold stocks doing better than that. Industrials up 2.1% – Coca-Cola posted solid results up 3.5% early on. Fosters pumpingup over 5% at 11am on no news. Other risers include Orica,United Group, Toll, Macquarie Airports on no obvious news. CBA up another 3.0% afterresults yesterday. NAB down again. Seems the switch out of ANZ and NAB into CBA continues with NAB and ANZ seen as most likely to cut dividends. Mining Services sector having a moment as well with Macmahon up 9.5% and Monadelphous up 4.6%. Bradken down 7.5% on results yesterday Goldman Sachs JB Were have cut their earnings numbers by 12% and 35% quoting debt concerns and an uncertain outlook.