Pre-Market Open Commentary for 26 February 2010
DJIA: 10321.03 -53.13
Nasdaq Composite: 2234.22 -1.68
US stocks ended with modest losses on Thursday following bigger selloffs in earlier trading led by downgrades by Standard & Poor’s and Moody’s on Greece’s debt ratings should the country fail to implement austerity measures to rein in deficit. Weak reports on the jobs market and factory orders further dampened sentiment, with the number of new claims for unemployment jumping last week to 496,000, worse-than-expectations of 460,000, from a revised 474,000 the previous week; claims have jumped 12% over the past two weeks due to the impact of severe winter storms on the east coast. In a separate report, durable goods orders rose 3% in January fueled by aircraft demand, ahead of expectations of a 1.5% increase, from a rise of 1.9% in December. However, orders excluding transportation came in worse-than-expected, falling 0.6% in January, against expectations of a rise of 1%, from an increase of 2% in December.
On the corporate front, Coca-Cola is looking to buy the North American operations of its largest bottler, Coca-Cola Enterprise (CCE) that will cut costs and provide it more control of its distribution. The multi-layer deal will result in Coca-Cola giving up its 34% stake in CCE worth about US$3.4bil and taking on US$8.9bil in debt.
All the major indices ended lower with the Dow Jones Industrial Average losing 0.51% while S&P 500 fell 0.21% to 1,102.93. Nasdaq composite dipped marginally by 0.08%.
Friday is a busy day for economic news with the release of the second reading on 4Q09 GDP growth, which is expected to remain unchanged from the first reading at 5.7%. The regional read on manufacturing, revised reading on consumer sentiment and existing home sales as well as the quarterly results of Berkshire Hathaway are also scheduled on the same day.
US light crude oil for April delivery fell US$1.83 to settle at US$78.17 a barrel.
In Singapore today:
Despite Wall Street’s overnight gains on Wednesday, led by Fed Chairman’s reassurance that interest rates will stay low for the foreseeable future, Greece’s mounting problems over debt and talks of downgrades by Standard & Poor’s and Moody’s on the country’s debt ratings rattled the Asian markets. Concerns over the weak US job market and weak housing sales further dampened market sentiment. The Hang Seng Index fell 0.33% while Nikkei fell 0.95%. The earlier 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 12.99 points down at 2749.15 points. For every stock that rose, 1.7 fell. Turnover was 1.27bil shares with a value of $1.05bil 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. New listing Cogent debut at 24 cents but subsequently eased to end at 22.5 cents, which was still 0.5 cents above its 22 cents offering.
Expect market to be range bound with downside bias today taking leads from the modestly weaker overnight close in Wall Street. Ahead of the weekend, investors are unlikely to take fresh positions in light of the lingering debt problems in Greece, which continues to dampen sentiment.
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Mid Day February 26. Asian markets mostly higher.
Wall Street recovered from its earlier slump to close between 0.1 and 0.5 per cent lower on rekindled fears about the economy. One prominent banker expressed fears of a "double dip" scenario given that `there are huge potential negatives out there'. Asian markets were mostly higher, helped by a retracement in the dollar's strength. The STI index eased 3.70 points to 2745.45 points. Market breadth was flat at best. Turnover was 687mil shares with a value of $724mil traded.
Shares of Genting Singapore plummeted 3 cents at 88 cents on 163mil shares on rumours of a rights issue. Dealers said there was little to play for `now that the casino is open. Classic buy on rumours, sell on news'.
Straits Asia fell a second day, erasing 7 cents at $2.00 after a series of downgrades after the company reported a lower than expected set of results yesterday. Recent ipo Cogent fell 1 cent at 21.5 cents as traders regurgitated their positions when the stock fell below its 22 cents ipo level. Other shares that fell were Jardine C&C, Jardine Matheson, UOB, Hyflux, SParkway, Olam, Keppel Land, UOL and Fortune REIT eased between 2 and 72 cents.
China Environment rose 3 cents at 30 cents after the company announced results that comforted investors. The stock has plunged in recent weeks on rumours of accounting problems. A dealer said the higher price was due to `re-stocking' by those who sold earlier amid talks that company may soon announce contract wins. Z-Obee rose 1.5 cent at 36 cents; ahead of its dual-listing ( the Hong Kong ipo price of Singapore equivalent of 32.5 cents) on Monday. Others like Great Eastern Holdings, APB, F&N, DBS, Semb Corp, Keppel Corp and Semb Corp rose between 2 and 20 cents.
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Market close Feb 26. Stocks close off day's high
Asian markets were mainly higher today, h elped by a retracement in the dollar's strength, but still closed off the day‚s high on profit taking ahead of the weekend and continued uncertainty as to whether the world will see a double dip recession. The STI index eased 1.71 points to 2750.86 points. Market breadth was flat at best. Turnover was 1.28bil shares with a value of $1.45bil traded.
Shares of Genting Singapore plummeted 1.5 cents at 89.5 cents on 235mil shares on rumours of a rights issue. Dealers said there was little to play for `now that the casino is open. Classic buy on rumours, sell on news'.
Straits Asia fell a second day, erasing 5 cents at $2.02 after a series of downgrades after the company reported a lower than expected set of results yesterday.
Yesterday‚s IPO debutante, Cogent fell 1.5 cent at 21 cents as traders regurgitated their positions when the stock fell below its 22 cents offer price.
Other shares that fell were Jardine C&C, Jardine Matheson, UOB, Sp Land, Ve n ture and City Dev, eased between 6 and 72 cents.
China Environment rose 7.5 cents at 34.5 cents after the company announced results that comforted investors. The stock has plunged in recent weeks on rumours of accounting problems. A dealer said the higher price was due to `re-stocking' by those who sold earlier amid talks that company may soon announce contract wins.
Z-Obee rose 4.5 cent at 39 cents; ahead of its dual-listing ( the Hong Kong ipo price of Singapore equivalent of 32.5 cents) on Monday. Others like APB, Great Eastern, and Elec, rose between 16 and 70 cents.
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