Positive Wednesday 16/10/2013 -- Notes

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Subject: Positive Wednesday 16/10/2013

Author:
Rita143

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Date Posted: 20:46:14 10/16/13 Wed

Australian Stock Market Report

Wednesday 16, October 2013

Summary Close Movement % Change
All Ordinaries 5264.40 5.20 0.10
All Industrials 5262.90 3.80 0.10
50 Leaders 5436.80 6.20 0.10

Market Turnover
$A 4,399,351,371.00

Commentary

For detailed video updates:
http://www.youtube.com/user/CommSecTV

Afternoon Market Update
(17:30 AEDT)

One of the noteworthy developments of the last day has been the announcement by the Fitch ratings agency that it was placing the US’s AAA sovereign rating on ´´rating watch negative´´, This suggests a greater chance a credit rating downgrade, in fact a 1 in 2 chance , compared to 1 in 3 chance implied by a “negative outlook”.

Once again markets have held their nerve as the Midnight Thursday Washington time (3pm Friday Sydney )deadline offered by the US Treasury approaches (when it expects to exhaust its borrowing authority) leaving the US Federal Government with no more than US$30bn on hand. It will then depend on daily tax receipts and government payments, as to when the US government could potentially default on an obligation.

The ASX200 was able to reverse a 29 point deficit this morning. Volumes under the circumstance were reasonable. The positive impetus came from the big 3 miners, RIO, BHP and RIO. having maintained yesterday’s positive momentum.

Brambles (BXB) rose almost 1 % following a positive trading update. Brambles said sales revenue for its pooling solutions operations rose thanks to its acquisition of container company Pallecon late in 2012. The pooling business which provides pallets and containers to businesses received $1.38 billion for the three months to the end of September, an increase of seven per cent on the same time last year. The group said the increase reflected new business and the contribution of Pallecon which Brambles acquired for $170 million in December. Brambles´ pooling solutions does not include the company´s Recall information management business, which it plans to demerge. Brambles said it remained on track to deliver an underlying profit of between $US930 million and $US985 million for the 2014 financial year.

At its AGM today, CSL confirmed the $950mn share buy-back foreshadowed in its full year results in August, the seventh for the company in eight years .The blood products group reaffirmed expectations for a 10% increase in underlying profit growth.

GOLD is holding steady after being knocked around by political headlines concerning the US debt deal. A pick up in safe haven buying has emerged of late out of China and India on fears over a potential US default

Tom Piotrowski
Market Analyst

MID-SESSION REPORT
(12.30pm AEDT)

The local markets has done it all in the first half of the session, with stocks down by as much as 0.5 per cent early on, trading flat more recently and currently up by just a few points at lunch. The All Ordinaries Index (XAO) is up by around 0.2 per cent.

What makes this impressive is that the US political circus continues. Yesterday’s excitement of an imminent solution on the debt ceiling resolution and the reopening of the US government (now shut for 15 days) has died down. Fitch, one of the big three ratings agencies put the US AAA credit rating on ‘rating watch negative’. This implies that there’s a 50/50 chance of a credit downgrade (according to Fitch).

The mining sector is to thank for a good portion of today’s gains, with the S&P/ASX 200 Materials Index (a measure of mining sector performance) up 0.71 per cent at lunch. Rio Tinto’s solid quarterly production numbers yesterday is helping lift its shares by a further 1.2 per cent (up 2.5 per cent yesterday). The larger BHP Billiton (BHP), which issues its September quarter production figures on 22 October, is up 1.1 per cent. Iron ore producer, Fortescue Metals (FMG) is up 3 per cent.

The Annual General Meeting (AGM) season continues, with a number of well-known names speaking with investors. Biopharmaceutical firm, CSL Limited (CSL) is the biggest of the company’s meeting shareholders. The blood products and vaccines maker announced a close to $1 billion buyback over the next 12 months due in part to slow growth.

The Australian dollar currently buys US95 cents and has been a big winner in recent weeks with the US debt ceiling remaining a concern. Only a week ago, one Australian dollar was buying US94.4 cents and US93.8 cents a week earlier. The longer the negotiation deadlock continues in the US, the longer the Australian dollar is likely to remain strong.

No major economic news is issued in Australia or the region today. A public holiday in India will keep its market closed.

Have a great day.

Steven Daghlian
CommSec Market Analyst

MORNING REPORT
(7.05am AEDT)

In US economic news, chain store sales in the latest week were 3.2pct higher than a year ago, down from a 3.3pct annual gain in the previous week according to Redbook Research. And the Empire State manufacturing index eased from 6.29 to 1.52 in October.

European shares rose on Tuesday with investors remaining hopeful of a deal to end the US budget and debt ceiling stalemate. Shares in luxury goods maker Burberry fell by 7.6pct on news that its chief executive will move to Apple. The FTSEurofirst 300 index rose by 0.9pct, the UK FTSE rose by 0.6pct and the German Dax lifted 0.9pct. Mining shares also rose in London trade. Rio Tinto gained 4.2pct after an encouraging production report and BHP Billiton rose by 1.4pct.

US sharemarkets fell in thin trade on Tuesday with investors focussed on on-going budget and debt ceiling talks and company earnings results. Shares in Citigroup fell 1.5pct after reporting weaker than expected earnings. Shares in Johnson & Johnson rose 0.1pct and shares in Coca Cola fell 0.7pct in response to their respective profit results. The Dow Jones fell by 133pts or 0.9pct with the S&P 500 down by 0.7pct while the Nasdaq lost 21pts or 0.6pct.

US treasuries were mixed on Tuesday as investors continued to monitor US budget talks. The Federal Reserve bought $5.208 billion in treasuries with maturities ranging from July 31, 2018 to June 30, 2019. US 2yr yields eased 1pt to 0.354pct and US 10yr yields rose by 3pts to 2.73pct.

The US dollar was again mixed against major currencies over the European and US sessions. The Euro fell from highs near US$1.3570 to around US$1.3480 before ending US trade around US$1.3515. The Aussie dollar eased from near US95.45c to US94.98c, ending US trade near US95.10c. And the Japanese yen lifted from 98.69 yen per US dollar to JPY98.17, ending US trade near JPY98.33.

World oil prices fell on Tuesday as US budget and debt ceiling talks dragged on. Brent crude fell by US$1.08 or 1.0pct to US$109.96 a barrel while US Nymex rose by US$1.20 or 1.2pct to US$101.21 a barrel.

Base metal prices were mixed on the London Metals Exchange on Tuesday. Aluminium, copper and tin fell up to 1.2pct while other metals rose up to 0.4pct. Gold eased as US budget talks dragged on with the Comex December futures price down by US$3.40 an ounce or 0.3pct to US$1,273.20 per ounce. The iron ore price was unchanged at US$133.60 a tonne.

Ahead: In Australia, BHP Billiton releases its production report. In the US, weekly mortgage lending data is released.

Craig James
CommSec Chief Economist

This commentary is a general account of the day's trading and is not intended to be taken as a recommendation to buy, hold or sell any particular stock.

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[> Subject: Rita positive
Author: seen Tuesday 15/10/2013==Australian time [ Edit \| View ]	Date Posted: 20:49:23 10/16/13 Wed Remember Tuesday 8/10/2013==1pm and Wednesday 9/10/2013==11.30am DeckChairs