Weekend is here :)
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Pre-Market Open Commentary for 31 July 2009
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DJIA: 9154.46 +83.74
Nasdaq Composite: 1984.3 +16.54
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Wall Street hit new year highs overnight, as the bullish sentiment was stoked by corporate earnings that did not disappoint. While some corporate were conservative on outlook guidance, this was shrugged off as other feel good factors came into play instead.
Companies that had announced earnings that were either in line or better than expectations included Motorola, Dow Chemical, MasterCard and Goodyear Tire & Rubber.
On the economic front, initial job loss claims went up by just 25,000 last week to 584,000, lending hopes that indeed the pace of job losses was finally slowing down. President Obama had earlier declared that the worst in the US economic crisis seemed to be over though it is also acknowledged the road to recovery would be a long one.
Crude prices also recovered, apparently in line with the m arket. Crude for September delivery rose US$3.57 to US$66.92 per barrel.
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In Singapore today:
After a shaky start yesterday, Singapore shares firmed up in the afternoon session, helped by the Shanghai Composite's 1.7 per cent jump and chirpier US index futures. There were also signs of bargain hunting and renewed buy orders from European traders. The STI index rose 32.13 points at 2,636.19 points. Market breadth was improved over the day, closing with 2 issues up for everyone that fell, from its earlier bearish tone. Turnover was 2.12bil shares with a value of $1.87bil traded.
Expect a likely firm close to the week today, unless the US futures do a belly up when it opens today. Sentiment remains bullish and even though SIA reported a loss of $307m for its 1Q, this was actually not as bad as feared. The group also said it could remain in the red for the rest of the year, but this is mainly due to depreciation. Operating cash flow remains positive.
Oil and gas stocks fou nd renewed strength as oil prices seemed to have good support at current levels above US$60per barrel. Keppel Corp rose 28 cents at $8.28. Jaya shares jumped 16 cents at 51 cents on speculations that it has found a white knight to help it tide over its short term financing issues. Other like Ezion, Ezra, Rotary, Swiber, Swissco, CH Offshore, KS Energy, Mermaid Marine, Marco Polo and Hiap Seng rose between 2 and 15.5 cents. `Oil stocks are on a breakout mode in the belief results will be good' a dealer said.
CapitaLand reported results that were largely in line with expectations. Its stock slid 1 cent at $3.99. Property counters were weak in general following Mr Mah Bow Tan's caution that the government would take pre-emptive actions to prevent speculations or a bubble forming. Shares of UOL and Bukit Sembawang eased between 1 and 3 cents.
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Friday 31 July 2009
Stocks soar on rekindled economic recovery hopes
GLOBAL EQUITIES
* Global equity markets round the world surged to fresh 2009 highs on Thursday, as solid corporate earnings boosted sentiment that had turned skittish earlier in the week.
* After roiling markets a day earlier, China soothed global markets by re-affirming a loose monetary policy. Fears of tighter credit had led world markets to plunge on Wednesday.
* The US stock market's advance was underpinned by strong demand for the Treasury Department's auction of a record $28 billion of 7-year notes
* Looking ahead, the Commerce Department will release much-awaited second-quarter GDP data today.
* The Dow Jones Industrial Average gained 83.74 points, or 0.9%, to 9,154.46. The Dow was led by a 6.9% surge in General Electric (GE) after Goldman Sachs analysts upgraded the conglomerate's shares to a "buy".
* The S&P 500 rose 11.60 points, or 1.2%, to 986.75, less than 4 points away from the psychologically-important 1,000 level. Economically-sensitive sectors such as materials were the biggest standouts.
* The technology-focused Nasdaq Composite Index rose 16.54 points, or 0.8%, to 1984.30 after briefly trading above 2,000 for the first time since October.
* Emerging markets: Russian stocks led a rally in emerging-market equities after reassurances on China's growth outlook and positive corporate earnings sparked a rally in commodities and equities markets worldwide.
* Russia's Micex Index gained for the first time in three days, rising 6.1%. Brazil's Bovespa gained 1.38%, pushing the MSCI Emerging Markets Index 1.4% higher.
* Bill Gross at Pacific Investment Management Co., who runs the world's biggest bond fund, said investors should buy assets in emerging markets where growth prospects are "tilted upward," in his monthly investment outlook on Pimco's Web-site.
GLOBAL BONDS
* US Treasury prices were higher across the curve, rebounding partly after a well-received $28-billion auction of 7-year notes.
* Thursday's sale drew the most interest from large institutional investors, including foreign central banks, of the three Treasury note sales this week.
* The robust demand eased fears about the appetite for US government debt after two disappointing Treasury note sales earlier in the week.
* The benchmark yield curve, the gap between the two- and 10-year yields, flattened even more, to plus 245 bps from 250 bps on Wednesday and 271 bps on Monday.
COMMODITIES
* Commodity prices, which suffered during Wednesday's session, roared back Thursday, riding a wave of resurgent optimism about the US economy displaced concerns about weak oil demand.
* NYMEX crude oil rose $3.59 to settle at $66.94 a barrel in New York -- the biggest gain for the front-month contract since 2 April.
* Comex gold futures rose nearly 0.8%, or $7.70, to end at $934.90 an ounce Thursday, as rebounding crude-oil futures heightened the metal's appeal as a hedge against potential inflation.
HONG KONG
* Property firms and index heavyweight HSBC gained due to ample liquidity and bargain-hunting in Hong Kong, sending the local benchmark index higher Thursday.
* But the gains were capped as oil majors fell on lower oil prices.
* The blue-chip Hang Seng Index rose 98.58 points, or 0.5%, to 20,234.08 yesterday.
* Funds continued to flow into the territory, prompting the Hong Kong Monetary Authority to sell HK$3.88 billion Thursday to defend the Hong Kong dollar's peg to the US dollar.
SINGAPORE
* Singapore shares ended higher Thursday on positive cues from US stock futures and a rally in bank shares, which rose on expectations of strong second quarter earnings.
* The benchmark Straits Times Index ended up 1.2%, or 32.13 points, at 2,636.19
* The STI had romped to a new 10-month although major companies such as Singapore Airlines and CapitaLand posted quarterly losses and warned of tough days ahead.
* Market players are awaiting the second-quarter employment report by the Ministry of Manpower at 10 am (local time) Friday.
CHINA
* China's central bank's reiteration of its moderately loose monetary policy supported gains in China's shares Thursday.
* A statement on the People's Bank of China Web site late Wednesday said the PBOC will rely more on market-based measures rather than administrative controls in setting credit growth.
* The statement appears to have eased concerns about a clampdown on lending, which triggered the benchmark index's 5.5% fall Wednesday, its biggest one-day percentage drop since mid-November.
* But analysts said consolidation is likely in the rest of the year, partly due to an expected slowdown in credit growth, as banks aren't likely to lend at as fast a pace as they did early this year.
* The benchmark Shanghai Composite Index ended up 55.13 points, or 1.7%, at 3,321.56 after a choppy session yesterday.
CURRENCIES
* The US dollar fell against its major rivals Thursday, except against the yen, as stocks and commodities rallied and after China said it would maintain a moderately loose monetary policy.
* China's central bank reassured markets on Thursday, pledging to maintain loose monetary policy to support the economy and ensure sustainable credit growth without resorting to heavy-handed quotas to rein in a lending spree.
* The euro's rebound was also helped higher by data showing an improvement in euro zone economic sentiment in July, as well as an unexpected fall in German unemployment, which were seen as an encouraging sign for the region's recovery prospects.
* Its gains were limited, however, with trade relatively quiet as many investors stayed on the sidelines ahead of key US GDP for the second quarter on Friday.
* Late Thursday afternoon in New York, the euro was at $1.4071 from $1.4034 late Wednesday.
* Perceived higher risk and commodity-linked currencies such as the Australian and Canadian dollars recovered some of the losses suffered on Wednesday, with sentiment buoyed by gains in Chinese shares and a recovery in oil prices.
* The Australian and New Zealand dollars were little changed Friday morning in Asia, though market players expect both currencies to continue their uptrend before US GDP data are out later in the global day.
* Australia's currency was at $0.8247 as of 9:07 am in Sydney this morning, from $0.8257 in New York yesterday.
* New Zealand's dollar traded at $0.6520, from $0.6522 in New York, underperforming after the central bank warned that interest rates may have to be cut again.
* US dollar gains on international markets after Asian markets closed Wednesday pushed the Chinese yuan down against the US dollar yesterday.
* The greenback eventually finished higher at CNY6.8323, up from Wednesday's close of CNY6.8314.
* The dollar-yuan central parity rate was set at 6.8335, up from 6.8314 Wednesday.
* The Singapore dollar was lower in Asian trade late Thursday after weakening on higher risk aversion overnight, but mostly held steady during the session on a lack of firm cues. USD/SGD was at 1.4451.
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Mid day July 31. Asian markets jumped in tandem with Wall Street's rally on Thursday.
Wall Street ra llied Thursday, taking its key indices to its highest close since November, helped by strong corporate results. A better than expected jobs reports also aided the rally. Asian markets jump with many climbing to levels not seen in about a year. The STI index rose 11.47 points at 2654.33 points. For every stock that fell, 2 rose. Turnover was 1.7bil shares with a value of $1.4bil traded.
Crude oil's rebound helped sustain the rally in offshore and marine and energy related stocks today. Keppel Corp climbed 14 cents at $8.42 and was tracked by Jaya, Ezra, Hiap Seng, Mermaid Marine, AusGroup, Ezion and Swiber that rose between 1 and 12 cents. Other gainers were Jardine C&C, Venture Corp, UOB, Wilmar, HongKong Land, DBS, Hyflux, Strait Asia, SGX, Keppel T&T and Noble Group climbed between 4 and 88 cents.
On the balance, shares of SIA, OUE, Great Eastern, Enviro-hub, Wing tai and MCL land fell between 1.5 and 30 cents. CapitaLand shed 16 cents at $3.83 after reporti n g its first quarterly loss since 4Q2003. Investors were also disturbed by the proposed $1.1bil convertible bond issue it was planning to issue.
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