Morning Note - US remains resilient

by James Gerrish 09 March 2011

** 09/03/11  - 9.03am  -  by James Gerrish** 

  • The US market was positive last night with the DOW JONES adding +124 points  or +1.03% to close at 12214. 
  • The market remains in a consolidation faze as you can see in the charts above of the DOW JONES but it does appear to be resilient 
  • Yesterday's local session was certainly a positiveone with sentiment turning mid morning - the index finished up on the day despite a drop of nearly -90 points in the US the previous session. 
  • Importantly, the S&P/ASX 200 closed above 4800 which remains the key level in the market for mine. 
  • The Chinese market has been interesting lately and we highlighted the potential for it to break out from its falling channel some time ago - this has happened and the market there looks bullish. SEE CHART
 
  • The Banks were a highlight yesterday with the majority finding clear support at the midpoint of their recent trading range. 
  • This probably shows a bit of indecision in the market about what to buy - I think there is little doubt that the market has remained in a bullish stance but with such uncertainty around the price of Oil and the impact this could have on US economic growth in particular, the banks look to be a safeish bet - High yields, less exposure to volatile resource markets and trading on forward P/E of 10 compared to longer term average of 12 - all looks quite good with the banks.
  • Quite a number of clients have calls written against the banks expiring at the end of the month - these were written at higher levels and we may get the chance today to roll out of these for a credit and wait for another bounce to write again.
 
  • Oil continues to find the news with unconfirmed reports that OPEC is starting to quietly increase production.
  • It’s important to remember the actual disruption the tensions in Libya have had - Its not significantly material and accounts for about 1% of global production (1 million barrels per day)
  • OPEC will no doubt be very cautious not to over compensate for this given that any increase in supply takes some time to filter through - and if we get a scenario where tensions ease or don't spread into Saudi Arabia as the market obviously fears, then Oil will come with a thud.
 
  • A positive session likely today with SPI FUTURES pricing in a rise of +7points. – A little bit muted due to our rally yesterday
 
  •  Stocks trading overseas
    • In New York, News Corp rose by US$0.19 to US$18.31, equivalent to A$18.13, A$0.11 above its last close on the ASX.
    • ResMed rose by US$0.36 to US$32.15, equivalent to A$3.18, A$0.05 above its last close on the ASX.
    • In London, Rio Tinto fell 64.5 pence to £41.46, A$1.03 lower in Australian currency terms.
    • BHP-Billiton fell 27.5 pence to £24.43, A$0.44 lower in Australian currency terms.
    • Henderson Group Plc fell 0.8 pence to £1.66, A$0.01 lower in Australian currency terms

Disclaimer

James Gerrish is an Authorised Representative (Rep No. 352904) of Shaw Stockbroking Limited ("Shaw Stockbroking"). Shaw Stockbroking is a holder of Australian Financial Services Licence No 236048. Shaw Stockbroking, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this page or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.
 

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