Pre-Market Open Commentary for 02 February 2010
DJIA: 10185.53 +118.20
Nasdaq Composite: 2171.20 +23.85
Wall Street started the first trading day of February with strong gains following better-than-expected reports on personal income, manufacturing and profits from Exxon Mobil. Personal income rose 0.4% in December, ahead of expectations of a 0.3% rise, from an increase of 0.5% in the previous month. The ISM manufacturing index also topped expectations, rising to 58.4 in January, against expectations of a rise to 55.5, from 54.9 in December as factories stepped up production in response to boost in orders ensuing from stimulus-fuelled gain in demand and record cutbacks in inventory. Exxon Mobil’s YoY 18% decline in profit to US$1.27 per share, which topped expectations, further lifted the advance.
President Obama also unveiled a US$3.8 trillion budget for 2011 which continued to focus on battling the double-digit unemployment rate in the US before tightening the fiscal belt the following year. To boost jobs, the President is setting aside US$100 bil in tax credits in 2010 aimed at small businesses as well as investments in clean energy and infrastructure.
All the major indices ended higher, with the Dow Jones Industrial Average gaining 1.17% and S&P 500 rose 1.43% to close at 1,089.18. Nasdaq composite surged 1.11%.
On Tuesday, market will take leads from economic reading on pending home sales index while the US automakers will be releasing their January sales figures throughout the day.
US light crude oil for February delivery added US$1.54 to settle at US$74.53 a barrel.
In Singapore today:
Wall Street’s weak close last Friday and ongoing worries about US and China continued to nib away investor confidence, weakening the major regional markets. The Shanghai bourse lost 1.6%, Taiwan’s Taiex Index fell 1.52% as its technology-heavy bourse tracked Nasdaq’s 1.45% loss while the Hang Seng fell as much as 2% before closing 0.61% higher. The STI index was off its nadir of 2724.04 points as a result of bargain-hunting and short-covering, and closed 9.18 points lower at 2736.17. For every stock that rose, 1.83 fell. Turnover was low with 1.34bil shares with a value of $1.24bil traded.
CWT revealed plans for the sale and leaseback of its commodity hub and it shares rose to a high of 97 cents before declining to end down 0.5 cents to 93 cents. The move to unlock value would free up more cash for the company for potential acquisitions, a trader said. Biosensors surprised the market with a strong set of 3QFY2010 results. A foreign broker increased their earnings expectations and raised the price target to $1.23. The stock closed 3.5 cents up at 83.5 cents. Z-Obee shares rose 0.5 cents at 36.5 cents on hopes that the counter would rise further when it receives the approval for its dual listing in Hong Kong.
Expect market sentiment in the local bourse to be more upbeat and market to rebound modestly following reports that the pace of global manufacturing, including those in US and Britain, is picking up in response to faster economic growth. Production gains, in turn, are starting to encourage hiring needed for a sustainable recovery. Recently, companies such as Ford, Caterpillar and General Electric have announced that they are starting to add new jobs to their factories.
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Mid Day February 2. Upside remained capped in the short term.
Wall Street's positive lead helped Asia recouped some lost ground today as traders short covered and helped some brisk bargain hunting. Strong US manufacturing data helped push Wall Street to a positive start for February and was a reason for resource stocks to lead markets higher today. The STI index reached a high at 2767.4 points at its high but retreated to end 3.19 points down at 2732.98 points. For every stock that rose, 3 fell. Turnover was 898mil shares with a value of $740 mil traded. While it was a better Tuesday, dealers report jittery clients who were using any bounce opportunities to lighten up. `The upside remains capped in the short term. Too much damage' a dealer said, relating to some penny caps that have fallen over 30 per cent in the last 2 weeks.
China Environment shares tumbled 27 per cent or 11 cents at 30 cents on rumours that company was facing some accounting irregularities issues. The Hang Seng index's rapid retreat from the 20533 level also precipitated weakness across the board as traders jettisoned their positions. From their respective rebound highs, shares of Marco Polo, Epure, IndoAgric, China AnimalHealthcare and PSL shed between half and 1 cent. Maintaining their upside were shares of Jardine Strategic, APB, Jardine Matheson, Haw Par, Venture Corp, Keppel Land and ST Engineering rose between 2 and 28 cents.
On the balance, shares of SIA, SingTel, Keppel Corp, Wilmar, DBS, SPH, City Developments and UPP fell between 2 and 18 cents.
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Market close Feb 2. Buying momentum stalled in the second session
The buying momentum stal led in the afternoon session, despite the morning‚s boisterous start, as traders took profit on the back of a still jittery economic environment and negative trading of the US futures. At closing bell, the benchmark STI retreated 15.30 points down at 2720.87 points. For every stock that rose, nearly 2 fell. Turnover was 1.6bil shares with a value of $1.3bil traded. Dealers reported that jittery clients who were using any bounce opportunities to lighten up. `The upside remains capped in the short term.
China Environment shares tumbled 26.8 per cent or 11 cents to 30 cents on rumours that company was facing some accounting irregularity issues.
The Hang Seng index's rapid retreat from the 20533 level also precipitated weakness across the board as traders jettisoned their positions. From their respective rebound highs, shares of Marco Polo, Epure, IndoAgric, China AnimalHealthcare and PSL shed between half and 1 cent.
Maintaining their upside were shares o f Jardine Strategic, APB, Jardine Matheson, Haw Par, Venture Corp, and Keppel Land rose between 8 and 24 cents.
On the balance, shares of SIA, HL Asia, F&N, UOB, Kep Corp and Kim Eng, fell between 10 and 20 cents.
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