(FRIDAY 20TH JANUARY- 07:27- JAMES GERRISH)...The US MKT was higher overnight with the DOW JONES up +45pts while the S&P 500 added +0.49%. European mkts were higher (FTSE up +0.68%, German DAX up +0.97%, French CAC up +1.96%) while locally, the SPI FUTURES mkt is pricing a higher open up 29pts when trading kicks off here this morning.
The ASX 200 had a pretty weak session yesterday and although it was only down 3pts, it opened much higher and was sold off all day following the weak employment numbers.
OVERSEAS MKTS - The DOW is approaching the top of its range so we should be conscious of this and I guess that's why there was a bit of selling about yesterday (or lack of buying support) and stocks drifted off on our mkt.
Watch 12750 as the key region in the DOW
DOW JONES
The DOW is now up more than 400pts for the year to date and although the rhetoric coming out of Europe remains fairly negative, earnings in the States have held up pretty well.
If we look at the companies that have lead the DOW this year, they are Caterpillar, 3M, American Express and United Technologies which in itself tells a pretty interesting story. At the height of the GFC - when investors were massively gloomy, Warren Buffet came out and said that one of the biggest mistakes global investors will make, is underestimating the ability of the US to innovate. There is no more obvious example of this than Apple which hit another all time high overnight.
But its not just the Tech plays that are a stand out. I also like to keep an eye on industrial companies such as Union Pacific which is obviously involved in the movement of goods around the US. It gives a good indicator of domestic activity in the States. It too hit an all time high overnight and reported great numbers yesterday - CLICK HERE to view their release - outlines some current trends in the US.
Another interesting trend last night was a sharp increase in US bond Yields (10 year +4.92% and 5 year +6.6%) - we spoke last week about the strange trends that were playing out in the mkt - Equities going up and Yields going down when traditionally, we see money move out of bonds into equities pushing equities up and bond yields up. That trend re-emerged last night which is a bit more comforting.
We also had bond auctions in Europe and here is what Adam Carr from ICAP had to say this morning.....
"Spain managed to sell €6.6 billion of 2016, 2019 and 2022 bonds, which was well above the target of €4.5 billion and with bid to cover ranging from 2-3.2. In each case yields were sharply lower - so for instance the 2022's went out at an average yield of 5.403 per cent, which is down from 6.975 per cent paid in November - although they then rose in the secondary market. So far, Spain has completed one-fifth of its 2012 funding needs. The French in turn sold €8 billion in bonds (maturities ranging from 2014, 2015 and 2016) with solid demand and lower yields than before their credit downgrade. Both auctions are a good sign that the European situation may be stabilising. This is why euro was up about 90 pips to 1.2938."
ASX 200 - was off 3 pts yesterday after being up in early trade. It seems traders were a bit spooked by the worse than expected domestic jobs data which showed a drop of 29000 jobs v expectations of a 5000 gain. The Unemployment rate stayed steady at 5.2%.
Looking at our mkt on the charts is a bit disheartening relative to the DOW JONES. On the positive side, we are attempting to break out from recent consolidation as the chart below shows but we really need to go on with it - for a break out like this to have validity, it needs to have some force behind it (like the Copper chart we've been showing recently and is available below).
ASX 200
Another positive for our mkt at the moment is that the Chinese mkt is getting a bit of traction - It was down nearly 30% last year on growth concerns but this weeks GDP data (better than expected) seems to have put a base in that mkt and its starting to edge higher.
CHINESE MKT
I've had a lot a discussions with clients at the start of the year about what to expect for 2012. Yesterday, Shane Oliver from AMP put out an interesting piece for the Eureka Report which outlined his view on current themes for this year. CLICK HERE to view the report. Its well worth a read!
COMMODITIES; For a full list of overnight prices, CLICK HERE
Pretty much all Commodities were higher overnight with Copper up another 1.75% and has clearly broken out of its range.
AUSTRALIAN DUAL LISTED STOCKS
In New York, News Corp rose by US$0.48 to US$20.05, equivalent to A$19.25, A$0.30 above its last close on the ASX,
ResMed rose by US$0.37 to US$26.37, equivalent to A$2.53, A$0.05 above its last close on the ASX.
In London, Rio Tinto rose 2.0 pence to £37.13, A$0.03 higher in Australian currency terms.
BHP-Billiton rose 21.0 pence to £21.59, A$0.31 higher in Australian currency terms.
Henderson Group Plc rose 5.9 pence to £1.14, A$0.09 higher in Australian currency terms
