(TUESDAY 15TH NOVEMBER - JAMES GERRISH - 7.17am)...The DOW JONES lost ground overnight down -74pts while the S&P 500 finished off -0.96%. European mkts were all lower (FTSE down -0.47%, German DAX off -1.19%, French CAC off -1.28%) while locally, the SPI FUTURES mkt is pricing a lower open down -36pts when trading kicks off here this morning.
Yesterday, the S&P/ASX 200 added +8pts or +0.19% to close at 4304 however that was a long way off session highs (+50pts)
DOW JONES - low volumes and anemic trading action overnight with the mkt still focused on Italy. Domestically in the US, there was some positive news with Boeing signing an agreement with Emirates for 50 777-300ER jets, and an option for 20 more, in a deal valued at $26 billion. We also had an upgrade of Caterpillar + Warren Buffet disclosed a 5% holding in IBM. Normally, that would get traders excited but not to be overnight.
S&P/ASX 200 - A disappointing day yesterday with the MKT coming well off session highs. Expect trade to remain choppy but we retain the view that we'll continue to edge higher into Christmas.
URANIUM...In the headlines
Julia Gillard has confirmed that she'll support Uranium exports to India even though India has not signed the Nuclear Non-Proliferation Treaty.
"We must, of course, expect of India the same standards we do of all countries for uranium export - strict adherence to International Atomic Energy Agency arrangements and strong bilateral and transparency measures which will provide assurances our uranium will be used only for peaceful purposes," she told Fairfax.
So its worth taking a look at the broader dynamics of the Uranium market. There is no doubting that Fukishima was a game changer but it wasn't terminal for the industry. In Japan, the 6 nuclear reactors that were involved in the incident have been closed while all other nuclear plants have been suspended. Germany has pulled back its nuclear ambitions and plans to shut down plants over the next 10 years or so. A similar scenario is playing out in Switzerland and Italy.
On the flip side, France, Russia, Korea, China and India all seem likely to continue on with Nuclear power. China is clearly the main driver of nuclear power with 14 nuclear power reactors in operation, more than 25 under construction, and more about to start construction soon.
Additional reactors are planned, including some of the world's most advanced, to give more than a ten-fold increase in nuclear capacity to at least 80 GWe by 2020, 200 GWe by 2030, and 400 GWe by 2050. With the growing industrialisation of China and pressure coming from the associated environmental impacts of traditional electricity generation (Coal), there seems to be a lack of any other alternatives for China.
By 2016, its tipped that China will need 10,000 tonnes of uranium per annum and as it stands, they've nailed down supply for the next 3-5 years.
In India, electricity demand is increasing rapidly, and the 830 billion kilowatt hours produced in 2008 was triple the 1990 output. But the Indian electricity industry has problems. There are huge losses in transmitting power over long distances. Coal provides around 68 per cent of Indian electricity but reserves are limited and can't support the planned enormous power expansion projects.
Gas provides about 8 per of Indian power and hydro 14 per cent, while nuclear is currently around 4 per cent, because India has had problems accessing world nuclear technology. In the longer-term that technology freeze looks like being a blessing for India, because when the Western world turned its back on nuclear, India did extensive research work developing nuclear power technology.
But that's all changing. Not only does India expect to double per capita electricity consumption by 2020, but huge rises in power generation are expected in the following decades.
While there is considerable community debate in India, the 2050 broad plan is to generate 25 per cent of this greatly expanded electricity requirement via nuclear power.
So although the demand dynamics have taken a hit, the medium to longer term outlook still looks encouraging and for investors with that type of horizon, now could be a good time for some exposure.
(Information on India sourced from the Business Spectator this morning. Data on China + broader Uranium mkt sourced from a variety of research)
MODEL PORTFOLIO UPDATES
No new updates this morning
AUSTRALIAN DUAL LISTED STOCKS
In New York, News Corp fell by US$0.20 to US$17.4, equivalent to A$17.06, A$0.04 below its last close on the ASX.
ResMed fell by US$0.34 to US$27.70, equivalent to A$2.72, A$0.02 below its last close on the ASX.
In London, Rio Tinto fell 44.5 pence to £34.23, A$0.69 lower in Australian currency terms.
BHP-Billiton fell 21.5 pence to £19.71, A$0.34 lower in Australian currency terms.
Henderson Group Plc fell 0.70 pence to £1.16A$0.01 lower in Australian currency terms
