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US Stock Market Report – 9th February 2010 – US Dow Sinks Below 10,000.
9-Feb: The Dow industrials finished below the 10,000 level on Monday for the first time in three months, dragged lower by financial stocks, as investors remained concerned about Europe's debt woes and the US economic recovery.
The Dow Jones industrial average fell 103.84 points, or 1.04% to 9,908.39 and the Nasdaq composite was down 15.07, or 0.70% to 2,126.05.
The major US indexes have been on the decline for four weeks in a row as the optimism that propelled a 10-month rally off 12-year lows hit last March has been replaced by cautiousness. Bets that an economic recovery was gaining momentum, combined with trillions in fiscal and monetary stimulus, fed the 2009 rally.
But so far in 2010, US markets have been choppy and weak as investors wait for evidence that the recovery is really taking hold, particularly amid the hard-hit labor market and housing industry.
Helping to take the edge off the selling on Monday was a rally in commodity prices and energy and metal stocks as the US dollar lost some steam.
Last week, debt concerns battered the euro, propelling the dollar and dragging on dollar-traded commodities. A wish to dump riskier assets including US stocks also added to the selling.
In company news, a number of tech stocks gained on monday, including Hewlett-Packard, Intel, Google and Cisco Systems.
Home Depot gained after Morgan Stanley reportedly upgraded the Dow component to overweight from equal-weight, saying it will benefit from a recovering US housing market.
But a variety of financial shares fell, dragging on the market. Bank of America, JPMorgan Chase, Goldman Sachs and Wells Fargo were among the big losers.
Toyota Moto, reeling from the recall of more than 8 million vehicles due to brake problems, told its dealers it is close to announcing a solution to the problems with the Prius hybrid Sedan.
A few big corporations are due to report results this week, including Dow components Coca-Cola and Walt Disney on Tuesday and Sprint Nextel on Wednesday.
Coke is expected to have earned US66 cents per share up from US64 cents a year ago, according to a consensus of economists surveyed by earnings tracker Thomson Reuters. Disney is expected to have earned US39 cents per share, down from US41 cents a year ago. Sprint Nextel is expected to have lost US19 cents per share after earning US24 cents per share a year ago.
With 320 companies, or 64% of the S&P 500, having reported results, earnings are on track to have risen 207% versus a year ago and revenues to have gained 8%. But the big jump is partly due to easy comparisons to a tough fourth-quarter of 2008.
Financial companies in particular are driving the gains. Stripping out financials leaves earnings growth at 16% and revenue growth at 3%.
Results have largely been positive, with 74% of companies beating earnings forecasts and 70% beating revenue forecasts.
In commodities, COMEX gold for April delivery rose $US13.40 to $US1,066.20 an ounce.
US light crude oil for March delivery rose US70 cents to settle at $US71.89 a barrel on the New York Mercantile Exchange.
In currency trading, the US dollar was down versus the euro and up versus the yen.
One Australian dollar currently buys:
AUD/USD .8643
AUD/EUR .6333
AUD/GBP .5546
AUD/JPY 77.170
AUD/NZD 1.265
In overseas trade Britain’s FTSE 100 rose 0.62%, Germany’s DAX was up 0.93% and France’s CAC 40 climbed 1.22%.
ASX Afternoon Market Wrap – 8th February 2010 – Share Market Manages Small Gain.
The Australian share market struggled to hang on to early gains, closing slightly higher as a small recovery rally fizzled in the afternoon.
At close of trade the ASX 200 rose 7.3 points to 4521.4 and the All Ordinaries was up 6.3 points to 4538.8.
At the close most sectors were posting losses with the health care sector posting the highest losses.
Banks will probably raise interest rates above and beyond any official increases announced by the Reserve Bank over the next few months as they move to shore up margins after the federal government ends its wholesale funding guarantee. The Rudd government said yesterday it will scrap its $190 billion wholesale funding guarantee on 31 March 2010. That could create a new reason for banks – many of which hiked rates by much bigger margins than the 25-basis point rise announced by the central bank in December – to ask borrowers to pay more. The market is forecasting only a one-in-five chance of a 25-basis point rise in March. A 25-basis point rate rise adds about $45 to the average cost of a $300,000, 25 year loan.
In company news, Santos Limited has increased its oil and gas reserves to record volumes, driven by the growth of its liquefied natural gas (LNG) portfolio. The Company announced that it’s proved and probable (2P) reserves grew by 42% or 427 million barrels of oil equivalent (mmboe) to 1.44 billion barrels last year. Santos said this was its sixth successive annual reserves increase and excluded its production last year of 54.4 mmboe.
Nickel producer Western Areas NL announced it is tipping a turnaround in fortunes in its first half, after making a loss in the corresponding period a year earlier. The Company expects a net profit of $10.7 million for the six months to 31 December 2010, compared to a loss of $12.3 million in the same period in 2008. The before tax profit for the period is likely to be $16.9 million compared to a loss of $16.3 million a year earlier. Production during the period is expected to be up nearly 38% at 5,874 tonnes of concentrate.
Eldorado Gold Corporation posted today’s greatest gains up 62 cents or 4.62% to $14.04.
JB Hi-Fi Limited posted today’s greatest losses down $1.02 or 5.07% to $19.09.
At 1617 AEDT the 12 GICS indices were:-
Discretion 1,558.9 down 8.2
Energy 14,230.6 up 38.3
Financials 4,518.6 up 20.2
Fin-x-property 5,258.0 up 41.8
Gold 5,190.2 up 68.6
Healthcare 8308.7 down 23.9
Industrials 3,781.5 down 20.5
Info Technology 674.4 down 2.7
Materials 11,601.8 up 45.4
Metals and Mining 4,106.8 up 18.7
Property Trusts 859.4 down 12.9
Consumer Staples 7,103.5 down 21.7
Telecommunications 1,143.1 down 9.6
Utilities 4,107.1 down 15.4
Individual stock performances
BHP Billiton was at $39.58 up 3 cents. Rio Tinto was at $67.17 up 57 cents.
Banks
Westpac was at $23.25 up 64 cents. NAB was at $25.46 up 15 cents. ANZ was at $21.01 up 11 cents. Commonwealth Bank was at $52.85 up 18 cents.
Media
News Corp was at $17.36 down 44 cents. The Seven Network was at $6.91 up 19 cents. John Fairfax was at $1.70 down 2 and a half cents.
Retail
Woolworths was at $25.53 down 14 cents. Harvey Norman was at $3.68 up 6 cents. David Jones was at $4.59 down 3 cents.
Toll Holdings was at $8.33 down 10 cents. Qantas was at $2.84 up 4 cents.
Food
Coca Cola was at $10.65 down 9 cents. Goodman Fielder was at $1.541 down 2 and a half cents.
Insurance
AMP was at $6.26 up 11 cents. QBE was at $22.10 up 10 cents. IAG was at $3.85 up 4 cents.
Gold
Gold may fall after slumping to a three-month low last week as the US dollar's rally reduced the appeal of the precious metal as an alternative asset.
At the close gold was trading at $US1,067.00 up $US14.20 an ounce.
Oil
Crude oil rose from a seven-week low on speculation demand will improve as the global economy recovers from its worst recession since World War II.
At close US light crude was trading at $US71.55 a barrel, up US55 cents a barrel.
Dollar
The Australian dollar was higher today, bolstered by a lift on equity markets.
At 1600 AEDT the Australia dollar was:
AUD/USD .8659
AUD/EUR .6348
AUD/GBP .5551
AUD/JPY 77.361
AUD/NZD 1.258
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[NQM] Resource estimate for Lone Sister deposit at Twin Hills
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[GGP] Fausse Point well update
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[ANP] Data on ATL1101 Published in Scientific Journal and Australian Patent Granted
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[CYU] Purchase agreement for Uranium Project Waterford, North Queensland
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[RCP] Redbank advances toward 2010 production
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[AVZ] Additional high grade Fe results from the Thresher Prospect
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[EQN] Equinox establishes new US$400 million corporate loan facility
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[GBE] Further high grade infill drill results – Kanyika Niobium Project
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