Overanalysed banks poised to fall
August 14th, 2009 by Bryden Elssmann
Closing Data
| Current | Change | % | |
|---|---|---|---|
| Dow Jones | 9398.19 | 36.58 | 0.4% |
| NASDAQ | 2009.35 | 10.63 | 0.5% |
| S P 500 | 1012.73 | 6.92 | 0.7% |
| FTSE 100 | 4755.46 | 84.12 | 1.8% |
| Nikkei 225 | 10517.19 | 82.19 | 0.8% |
| ASX 200 | 4,436 | 92.9 | 2.1% |
| COMEX Gold - Dec 09 | 956.5 | 4 | 0.4% |
| COMEX Silver - Sep 09 | 14.987 | 0.402 | 2.8% |
| COMEX Copper - Sep 09 | 291.4 | 9.05 | 3.2% |
| WTI Spot | 70.52 | 0.36 | 0.5% |
| AUD-USD | 0.8421 | -0.0005 | -0.1% |
| Aluminium | 2035 | 143 | 7.6% |
| Copper | 6419 | 390 | 6.5% |
| Lead | 1886.5 | 111.5 | 6.3% |
| Nickel | 21070 | 1800 | 9.3% |
| Tin | 15650 | 740 | 5.0% |
| Zinc | 1897.5 | 112.5 | 6.3% |
Australian stocks are set for a positive start this morning after Wall Street ended higher on better than expected earnings. Resource stocks can expect a boost after rises in oil, base metals and gold prices. Mining giant BHP Billiton (BHP) is set to rise, with its New York shares closing at a 1 percent premium to its Australian close on Thursday.
On Wall Street stocks ended higher after a choppy session as the Federal Reserve’s positive economic report overshadowed a report showing a drop in retail sales. The Dow ended the session up 37 points or 0.4% while the S&P 500 rose 7 points or 0.7% its highest close in 10 months.
In commodities crude rose 36 cents to $US70.52 a barrel. The rise in oil is likely to continue as the US dollar continues to weaken against major currencies following a report showing that the economies of Germany and France are forecast to return to growth in the second quarter, raising expectations that the Euro zone will emerge from a prolonged recession.
Australian oil producer Woodside Petroleum yesterday rose $1.05 to $44.60 in line with the oil price and is expected to open stronger this morning possibly breaking $45.00.
The banking sector has rallied following positive analysts comments regarding the strength of the sector, particularly the Commonwealth Bank’s full-year result. It is worth keeping in mind that these are the same analysts that called CBA a sell at $26.5 citing the end of capitalism as banks were forecast to fall to their knees. Instead the big four have capitalised at lower levels and are set to benefit from reduced competition. Hindsight is a powerful thing, realistically the banks are heavy at these levels having rallied off March lows (having not fallen to their knees). Please note CBA goes ex-dividend on Monday, $1.15 fully franked. We feel CBA is likely to pull back toward $44 in the short-term.
As we have seen quite an aggressive move on the market over the last 4 weeks (680 pts or 18% XJO) we believe that some form of protection needs to be applied to client portfolios in the next 100-150 basis points (XJO 4600- 4650). Contact your broker to have a chat about various strategies.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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