Pre-Market Open Commentary for 25 February 2010
DJIA: 10374.16 +91.75
Nasdaq Composite: 2235.9 +22.46
Wall Street was clued into Federal Reserve Chairman Ben Bernanke’s statement overnight, giving his semi-annual assessment of the economy. Mr Bernanke reassured that low interest rates were here to stay for some time, and that last week's move to raise the rate for emergency loans to banks was not indicative of more changes to come.
This led to a relief rally of sorts on Wall Street, but lower than expected new home sales reined in any undue euphoria. New home sales fell 11 per cent to a 309,000 annual unit rate from 348,000 in the previous month. Market consensus was going for an increase to a 354,000 annual unit rate.
In other news, there were reports Citigroup could be looking to sell its hedge fund business.
A continued rise in energy demand, coupled with a fall in inventory levels, helped push crude prices up. Crude for April delivery added US$1.14 to US$80 per barrel.
In Singapore today:
Investor sentiment remained cautious yesterday in the second session and though the STI index closed off the day’s lows, there was noticeable selling towards the close, resulting in the benchmark STI closing 20.41 points down at 2762.14 points. For every stock that fell, about 1.2 rose. Turnover was 1.2bil shares with a value of $1.2bil traded.
Dealers said trading was unusually choppy the last two days and could be linked to the rollover of index futures contract today.
We think there could be further correction in the property counters today as the Hong Kong government’s move yesterday to raise the stamp duty on luxury property sales, in a targeted move to prevent a property bubble, could reverberate into the local market here where the Singapore government has also stated it is watching the situation. The HK government further warned that more measures could follow if this was deemed to be insufficient, and that it would be adding more to supply as well.
On the corporate front, shares of Broadway rose 6.5 cents at 92 cents after the company announced a dividend of 3 cents alongside its good results. Noble Group bounced from its $3.03 nadir to close down 1 cent at $3.11 after reporting results that were in line with expectations.
CWT shares rose 3 cents at 91.5 cents on rumours that it may announce a special dividend with its results.
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Mid Day February 25. STI's upside limited by profit taking.
Asian markets were more obsessed with the falling Euro dollars than Fed Chief Bernanke's speech last night that sparked a Wall Street rally. Federal Reserve Chairman Bernanke pledged to keep interest rates low for the foreseeable future, that temporarily pulled the US dollar lower. The lower dollar helped lift stocks as risk appetite returned. Twelve hours later, the Euro dollars plummeted towards the lows of 2010 as fears about Greece got rekindled. The US dollar rose as traders squared positions.
Traders said volatility in the last few sessions lasting into (the first few days) the new month could be due to the expiration of current month futures contracts. The advance failed to gain traction on the STI index as profit taking limited its upside. The STI index ratcheted off the 2774 high to end 16.82 points down at 2745.23 points. For every stock that rose, 2 fell. Turnover was 796mil shares with a value of $586mil traded.
Straits Asia's results came in below consensus and it did not provide updates on its FY10 contracts. At least one broker downgraded the stock to a sell with a price target of $1.73 on lower earnings projections. The stock eased 7 cents at $2.07. Indoagri reported profits this morning that was in line with expectations. Stock fell 4 cents at $2.11 as traders opted for quick profits while awaiting more details from an analyst briefing this morning. Ezion shares rose half cent at 74.5 cents after its strong results came in above expectations. Traders said the stock could have another renewed upmove if it announces a contract win from the phase II of the Gorgon project. New listing Cogent debut at 24 cents but subsequently eased to end at 23 cents . This was still 1 cents above its 22 cents offering.
Shares of Jardine C&C, Jardine Matheson, Cosmosteel, SGX, Parkway, SingTel, Keppel Corp, SIA and Kim Eng fell between 2 and 26 cents.
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Market close Feb 25. Profit taking caps any attempt to rally
An attempt to rally in the S ingapore bourse failed to take off as profit taking limited its upside. The STI index ratcheted off the 2774 high to end 12.99 points down at 2749.15 points. For every stock that rose, nearly 2 fell. Turnover was 1.26bil shares with a value of $1.05bil traded.
Straits Asia's results came in below consensus and the group also did not provide updates on its FY10 contracts. At least one broker downgraded the stock to a sell with a price target of $1.73 on lower earnings projections. The stock eased 7 cents at $2.07.
Indoagri reported profits this morning that was in line with expectations. Stock fell 4 cents at $2.11 as traders opted for quick profits while awaiting more details from an analyst briefing this morning. Ezion shares gained 1 cent at 75 cents after its strong results came in above expectations. Traders said the stock could have another renewed move upwards, if it announces a contract win from the phase II of the Gorgon project.
New listing Co g ent made a debut at 24 cents but subsequently eased to end at 22.5 cents. This was still 0.5 cents above its 22 cents offering.
Shares of Jardine C&C, STX Panocean, JSH, and DBS, fell between 4 and 24 cents.
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