Outlook: ASX set to surrender 2014 gains

Market Reports

The Australian share market looks to surrender a day of gains yesterday after Wall Street started its trading year in the red. Global stocks dropped on fear for China’s growth prospects after disappointing reads on manufacturing activity in the world’s second largest economy.  
 
US investors were also impacted by their own soft economic figures, dampening the desire to buy into the new year. On the flip side gold shone as the price ticked up almost 2 per cent. After tumbling 28 per cent in 2013 gold stocks have been attracting the bargain hunters in early 2014.
 
China economic news 
 
On New Years Day - China’s government reported factory activity eased more than expected at the end of 2013. The National Bureau of Statistics reported the official Purchasing Managers’ Index (PMI) slipped to a four-month low of 51 in December, but remained above the 50-mark which shows the sector is in expansion territory. 
 
Yesterday - The final HSBC/Markit PMI confirmed a read of 50.5 which was in line with last month’s preliminary read which showed factory activity expanded at the slowest pace in three months. 

US economic news
 
America’s manufacturing activity grew at a slower pace at the end of 2013. The Institute for Supply Management's PMI edged down to 57.0 in December from 57.3 the month before. 

Initial jobless claims dropped for the second consecutive week but still came in higher than expected. The Labor Department reports initial jobless claims dipped 0.6 per cent in the final week of 2013 after falling a revised 10.3 per cent the week before.
 
Figures
 
Wall Street started the first day of the trading year in the red for the first time since 2008. Pulling back from record highs at the end of 2013 the Dow Jones Industrial Average dropped 135 points to close at 16,442, the S&P 500 fell 16 points to close at 1,832 and the NASDAQ lost 34 points to close at 4,143.
 
European markets posted a lackluster start to the new year on the back of soft Chinese and French manufacturing figures: London’s FTSE lost 31 points, Paris lost 69 points and Frankfurt lost 152 points.
 
Asian markets ended mixed following the release of China’s disappointing manufacturing figures: Tokyo’s Nikkei added 112 points, Hong Kong’s Hang Seng firmed 34 points, and China’s Shanghai Composite fell 7 points.
 
The Australian share market started the first trading day of the new year higher after a gain of 15.1 per cent in 2013: The S&P/ASX 200 Index rose 16 points on Thursday to end the session at 5,368. On the futures market the SPI is 41 points lower. 
 
Currencies
 
After closing at $US0.8921 on New Years Eve the Australian Dollar has continued to ease into the new year and at 8:20AM was buying $US0.8912, 54.21 Pence Sterling, 93.33 Yen and 65.22 Euro cents.
 
Company news
 
Shares in Osprey Medical Inc (ASX:OSP) got a boost yesterday after reporting the publication of results from its pilot clinical trial of its AVERT system. The AVERT system lowers the amount of contrast dye injected during imaging procedures. The US-based medical device company says it has been very encouraged by the effectiveness of the AVERT system following the 21-patient trial. Shares in Osprey Medical rose 2.94 per cent in the first session of the year to end at $0.70. 
 
Molopo Energy Limited (ASX:MPO) also ended higher yesterday after it tied-up the sale of its Texas assets. The oil and gas company had previously-announced the deal to the market and says it was completed for gross proceeds of $US4.8 million. Molopo Energy says is continues to consider potential cash deployment opportunities with a year-end balance sheet of about $US62 million and no bank debt. Shares in Molopo Energy rose 2.78 per cent in the first session of the year to end at 
$0.185. 
 
Dividends today
 
Programmed Maintenance Services Limited (ASX:PRG) paying a 6 cent fully franked dividend 
 
Commodities
 
As investors piled out of equities in the new year they climbed back into the safe haven asset of gold. The price gained $22.60 in overnight trade to $US1,225 an ounce for the February contract on Comex. 
Silver has risen about 4 per cent, adding $0.64 to $20.02 for March. 
Copper prices have eased $0.01 to $3.38 a pound. 
Oil prices fell with Libya poised to reopen a key oilfield, having fallen $2.91 and buying $US95.51 a barrel for January light crude in New York.