Profit taking on negative earnings!!!
October 22nd, 2008 by Zeyar Htut
Closing Data
| current | change | % | |
|---|---|---|---|
| Dow Jones | 9033.66 | -231.77 | -2.5% |
| NASDAQ | 1696.68 | -73.35 | -4.1% |
| S P 500 | 955.05 | -30.35 | -3.1% |
| FTSE 100 | 4229.73 | -52.94 | -1.2% |
| Nikkei 225 | 9306.25 | 300.66 | 3.3% |
| SPI Futures | 4237 | -100 | -2.3% |
| All Ords | 4,251 | 152.6 | 3.7% |
| Oil | 71.29 | -2.82 | -3.8% |
| Gold | 768 | -22 | -2.8% |
| Silver | 10.075 | 0.385 | 4.0% |
| Aluminium | 2044 | -57 | -2.7% |
| Copper | 4490 | -385.5 | -7.9% |
| Lead | 1336 | -71 | -5.0% |
| Nickel | 10450 | 295 | 2.9% |
| Tin | 11960 | -1300 | -9.8% |
| Zinc | 1135.5 | -45.5 | -3.9% |
Profit taking on negative earnings!!!
Overnight the Dow Jones fell 231.77 points, or 2.50%, as concerns the economic slowdown would have an effect on commodity demand and negative earnings.
On the NYSE our largest miner BHP closed down -5.43% on lower commodity prices, however in the quarterly production update delivered this morning BHP said it was confident that growth of emerging economies will continue to drive demand for commodities. BHP also advised it had delivered a "solid performance'' during the first quarter of the financial year despite a challenging supply environment. We continue to see long term value in buying both BHP and Rio Tinto at current levels. Relative to our market which has declined 19% since the start of July, BHP and Rio Tinto have declined 33% and 45% respectively.
Our market is set to open lower, with overnight ASX 200 futures down 126 points, or 2.9%, however we should see some strong buying of miners and banks by smart investors today.
Given our market should stabilise at current levels we now recommend ASX. The company is a natural monopoly, conservatively managed and provides leverage to an improving Australian share market. Even though the number of new listings has declined resulting in the share price halving from $60 to $32 in 10 months, trading volumes remain relatively high protecting the earnings stream. At the current price ASX pays a solid 6% fully franked yield with plenty of long-term growth potential with a market recovery.
Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.
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