(WEDNESDAY 23RD NOVEMBER - JAMES GERRISH - 7:48am)...The DOW JONES lost -53pts overnight while the S&P 500 fell -0.41%. European mkts were mostly lower (FTSE down -0.3%, German DAX off -1.22%, French CAC down -0.84%) while locally, the SPI FUTURES mkt is pricing a lower open down -24pts when trading kicks off here this morning.
Yesterday, the S&P/ASX 200 fell -29 pts to close at 4133.
US MKT - The GDP print actually came in below expectations overnight printing +2% (v 2.5%) in Q3 which prompted the slight weakness amongst stocks. Looking at the composition of the number it was a case of corporate profits were higher but there was a big downward revision to inventory levels. So the takeout here is that the US is growing and Q4 is looking like it will come in fairly strong due to restocking of inventory levels that were run down in Q3.
We also had the FOMC minutes released and it showed there was some discussion around further policy easing if the economy required it. I think it was Charlie Aiken who coined the phrase 'the Benanke Put' and it seems it is a fairly long dated one. The main impact overnight was felt in the commodity space that rebounded on the back of the hint towards further easing. We've been a bit negative gold here and a little concerned about its short term prospects but it was clearly shown overnight that any indication of further QE in the US (or the UK for that matter) will be supportive of the Gold price.
DOW JONES
AUSSIE MKT - It was fairly volatile day yesterday with the index hitting a low of -69pts before recovering to be down -13pts at its best before closing off -29. The big news yesterday was in the Steel stocks with Bluescope announcing a 4for5 accelerated renounceable entitlement offer at 40c to raise $600million. The offer is fully underwritten. Not surprisingly, OneSteel (OST) was wacked on the news and closed at an 11 year low. BSL is still in trading halt but will open sharply lower when it comes back online.
Volume was actually better in the mkt yesterday but we're expecting the rest of the week to be pretty thin. Thanks Giving holidays start in the US tomorrow (Thursday) with a half day Friday but in reality a lot of them will pull up stumps half way through the session tonight.
Today, keep an eye out for Chinese flash PMI due out at 2.30pm and we want to be seeing this number remain above 50.
S&P/ASX 200
Also worth noting the strong bounce in the Iron Ore price over the past 3 weeks adding +27. Unfortunately this hasn' t followed through into Iron Ore stocks which have struggled in recent weeks.
MODEL PORTFOLIO UPDATES
iiNET (IIN) (Pension Performers)
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Another positive acquisition 22-Nov-11 24:43
IIN acquired TransACT Communications - an internet service provider (ISP) with a fibre-to-the-node network - for $60m. The deal is priced at an EV/EBITDA multiple of 3.5x, inline with previous acquisitions debt funded and EPS accretive.
AUSTRALIAN STOCK PRICES OVERNIGHT
In New York, News Corp rose by US$0.28 to US$16.30, equivalent to A$16.57, A$0.10 above its last close on the ASX.
ResMed fell by US$0.25 to US$29.67, equivalent to A$3.02, A$0.05 below its last close on the ASX.
In London, Rio Tinto rose 37.5 pence to £31.64, A$0.60 higher in Australian currency terms.
BHP-Billiton fell 14.5 pence to £18.68, A$0.23 lower in Australian currency terms.
Henderson Group Plc rose 2.5 pence to £1.09, A$0.04 higher in Australian currency terms.
