A tough week in the markets

August 21st, 2009  by Bryden Elssmann

Closing Data

	Current	Change	%
Dow Jones	9350.05	70.89	0.8%
NASDAQ	1989.22	19.98	1.0%
S P 500	1007.37	10.91	1.1%
FTSE 100	4743.84	54.17	1.2%
Nikkei 225	10383.41	179.41	1.8%
ASX 200	4,378	3.7	0.1%
COMEX Gold - Dec 09	941.7	-3.1	-0.3%
COMEX Silver - Sep 09	13.88	0.005	0.0%
COMEX Copper - Sep 09	274.15	-1.9	-0.7%
WTI Spot	72.54	0.12	0.2%
AUD-USD	0.8317	0.0001	0.0%
Aluminium	1906	1	0.1%
Copper	6122	175	2.9%
Lead	1821	31	1.7%
Nickel	19250	150	0.8%
Tin	14650	550	3.9%
Zinc	1803.5	43	2.4%

Stocks rallied on Wall Street, with financial and technology shares leading the advance, as a report showing surprise growth in the manufacturing sector and gains in overseas markets propelled the market. The Dow closed up 70.89 points, or 0.76 per cent, at 9350.05, marking its third-straight day higher.

Asian markets were also stronger: Hong Kong’s Hang Seng is up 375 points. Tokyo’s Nikkei added 179 points and the Shanghai Composite gained 126 points.

Positive leads from overseas markets are expected to push the Australian share market higher at the open, although the 3 day fall in the Baltic Dry Index could have a negative impact on Asian markets. This may flow through to the Australian market and, after all, it is Friday.

Company News

TLS - Telstra shares are steady at $3.65. Telstra’s biggest shareholder, the Future Fund has taken advantage of a bullish market to sell more than a quarter of its holding in the nation’s largest phone company. The Federal Government's Future Fund has sold $2.4 billion worth of shares with UBS managing the sale. Since the Future Fund was established in 2006, it has reduced its stake in Telstra by a third to 10.9%. Looking at the past five years of net profit results, Telstra’s best year was in 2005.

NWS - News Corporation shares closed higher yesterday, up 2.33% to $15.34. The British newspaper arm of Rupert Murdoch's News Corp, News International, plans to shutdown the London paper – which is a free evening paper for London commuters. The company has started a 30-day consultation on the proposed closure which will affect about 60 staff. The move follows Murdoch’s warning earlier this month that it would move away from free content and start charging readers of its online newspapers in the coming year. News Corp’s net profits have been on the up and up over the past four years.

Earnings results:

AGK – AGL Energy has posted an 11 percent increase in annual underlying net profit and forecast an improved result in 2009/10

AMP – AMP LTD says financial markets are likely to see ongoing volatility despite recent signs of improvement, after the group reported a fall in first half profit.

BXB – Brambles LTD has posted a 30 percent drop in annual net profit and forecast a return to its traditional sales revenue strength as the global economy recovers.

DOW – Downer EDI LTD has posted a 14 percent rise in annual net profit and forecast 2009 net profit to grow by 5 precent.

QBE – QBE Insurance Group LTD increased first-half profit by 19 percent to $1.018 billion despite volatile conditions, with Australia’s biggest insurer expecting premium rate increases to continue during the second half of 2009.

STO – Santos LTD has maintained its production guidance for calendar 2009 after reporting a 66.5 percent fall in first half profit due to lower gas and oil prices.

WES – Wesfarmers LTD has posted a 44 percent rise in annual profit and says it’s cautiously optimistic about the economic outlook although retail trading conditions are hard to predict.

Earnings season continues today and those due to report their annual results include Insurance Australia Group, Mortgage Choice and Billabong International. First-half results are also due from APN News & Media and Macquarie Airports. Westpac is due to issue its June quarter update.

CSL

CSL limited, the world’s second-biggest maker of blood plasma products, ended down 3% yesterday following a brokerage downgrade. CSL posted a 63 percent increase in 08/09 net profit after tax between $1.16bn and $1.26bn. However, the share price has been through somewhat of a rollercoaster ride over the past 12 months, from a high of $41.50 to a low of $28.11. The recent fluctuations over the past month have been generally pointing north, except for the past 2 trading session (8% drop) following the report. CSL closed at $31.92 down 3.6% for the day. We feel that CSL has been oversold  at this level and potentially represents good value.

Quote

“Investing is laying out money today to receive more money tomorrow.” Warren Buffett

Contact your Freeman Fox Stockbroker on 07 3031 9960 or 1800 003 369 Ext 7.

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