(WEDNESDAY 12TH OCTOBER - JAMES GERRISH - 8.28AM)..A subdued night price wise on the US mkt with stocks largely in a holding pattern ahead of the Alcoa result which came out after mkt and the Slovakian vote in Europe (on the expansion of the EFSF) that failed to pass. On the boards, the DOW JONES fell -16pts while the S&P 500 was flat (+0.05%). Locally, SPI FUTURES are pricing a drop of -6pts.
EUROPE
The Slovaks (2nd poorest member nation) were the last member nation to put the revamped plan for the EFSF to their parliament and they failed to approve it overnight. We do expect that it will get approval shortly given new reports that Smer, the largest opposition party, which didn't back the legislation today, will support the changes in a second vote, ensuring it will pass. While no date has been set for the new vote, Finance Minister Ivan Miklos said the revamped European Financial Stability Facility will likely be passed this week.
16 other member nations have passed the bill and you'd imagine the pressure on the Slovaks would be fairly immense.
ALCOA
Kicked off the US Q3 reporting season overnight and missed expectations from an earnings perspective but beat on revenue.
Alcoa reported earnings of 15 cents a share against expectations of 22 cents with the company sighting softer demand out of Europe, but they did say that other key mkts were holding up well (Chinese demand up +17%). One interesting theme was a clear up tick in costs particularly energy related expenses that they were unable to pass onto customers. This is a common theme amongst a lot of the manufacturers at the moment and its even more pronounced in our domestic plays such as BSL and OST.
In respect of Alcoa, the stock was up +2% in the regular session but fell -4% in after hours trade so a net change of -2% on the result. Alumina (AWC) listed on our MKT hold 40% of a joint project with Aloca called AWAC. They earn a dividend from that project so any decline in that would have a negative impact on - no news of that at this stage but we'll be keeping an eye out for it.
TODAY ON OUR MKT
Not a lot happened overnight and we're expecting the same theme for our mkt today. We're likely to be lower on the open this morning, probably down around -15pts but nothing too dramatic.
As we said at the start of the week, we're really keen to monitor the flow of any selling that starts hitting the mkt. Obviously some profit taking is likely given the large bounce recently (+10% from last weeks lows), but if we see the mkt drift or take a breather on light volume, thats going to be a positive and will give us more confidence in our suggestion that the mkt will continue to move higher towards year end (4500ish the target we're working towards).
From an economic standpoint, we get consumer confidence figures released which will be fairly weak i'd say but mkts will see them for what they are (retrospective).
Tonight in the States the FOMC meeting minutes will be key as will the developments coming out of Slovakia while on Friday, inflation data coming from China will be the main print for the week.
MODEL PORTFOLIO UPDATES
No new updates
AUSTRALIAN DUAL LISTED STOCKS
In New York, News Corp fell by US$0.08 to US$16.89, equivalent to A$16.93, A$0.08 above its last close on the ASX.
ResMed fell by US$0.59 to US$29.621, equivalent to A$2.97, A$0.03 below its last close on the ASX.In London, Rio Tinto rose 14.0 pence to £32.62, A$0.22 higher in Australian currency terms.
BHP-Billiton fell 8.5 pence to £19.12, A$0.13 lower in Australian currency terms.
Henderson Group Plc rose 1.1 pence to £1.39, A$0.02 higher in Australian currency terms.
