dow jones market talk

DJ MARKET TALK: Australian Equities Roundup 28/12/2007 10:35AM AEST

0914 [Dow Jones] WALL STREET: Stocks fell on negatives including weak data, Sallie Mae selloff, assassination of former Pakistani Prime Minister Benazir Bhutto; higher crude oil prices also weighed. "There are questions about security and oil lingering in the market," said Fred Dickson, market strategist at DA Davidson. Jump in crude prices raised added concerns about how global, domestic economy will deal with higher oil prices, he said. Sallie Mae fell 11% after student-loan giant said it will sell $2.5 billion in stock, other securities to raise cash needed to settle contracts; Citigroup fell 2.9%, Merrill Lynch lost 2.5%, JPMorgan declined 2.9% after a Goldman Sachs analyst boosted his 4Q write-down estimates for the 3 financial giants. Indian companies that trade in the U.S. slipped after Bhutto's assassination raised prospect of further political turmoil in neighboring Pakistan. American depositary shares of Indian software services company Infosys Technologies fell 2.2%, Satyam Computer Services lost 5.9%, plus India's ICICI Bank fell 5.8%. High oil prices hurt American Airlines' parent AMR Corp., down 6.8%, Continental Airlines declined 3.9%. Amazon.com advanced 1.5% on news Amazon's MP3 customers can now purchase songs from Warner Music Group's digital audio catalog music. Dow down 1.4%, Nasdaq off 1.8%, Philly semicons down 1.8%. (SHN)


0927 [Dow Jones] S&P/ASX 200 offshore leads bearish, with Wall Street plunging on weaker-than-expected US economic data and assassination of Pakistani opposition leader Benazir Bhutto. Overnight SPI futures down 81 points at 6298.0. DJIA down 1.4% at 13359.61. November durable goods rose 0.1% vs 2.2% consensus. Jobless claims rose to 349,000 vs expected fall to 340,000. Consumer confidence rose to 88.6 vs expected fall. Goldman Sachs said Citigroup may write off 70% more than forecast US$8billion-US$11 billion, as well as cutting its dividend and raising US$5billion-US$10billion cash. Citi fell 2.9%. Goldman also raised concerns about Merrill Lynch. Sallie Mae fell 11.2% after announcing US$2.5 billion stock sale. Nymex crude rose 65 cents to US$96.62. U.S. crude inventories rose twice as much as expected. LME copper up 1.3%, zinc up 1.9%, aluminum near flat, nickel up 0.7%. UK-listed BHP (BHP.AU) down 1.1%. Rio Tinto (RIO.AU) down 2.8%. BHP ADRs at A$41.22 vs A$41.10 locally. Index last 6350.9. (DWR)


0938 [Dow Jones] Spot gold may rise to US$894.00 in the next few weeks, driven by political instability in Pakistan after Benazir Bhuto's assassination. Symmetrical triangle pattern objective is US$894.00. Resistance line from triangle pattern broke yesterday near A$821.40. Former resistance line should now offer support above A$821.00. Expect minor resistance from Nov. 26 high at US$836.70. Expect strong resistance from Nov. 7 high at US$845.40 and January 1980 high at US$850. Major resistance likely from projected monthly channel line, currently near US$910.0. Spot gold last US$825.30. (DWR)


0944 [Dow Jones] Spot gold strong on safe-haven buying in aftermath of assassination of Pakistani opposition leader Benazir Bhutto, sparks concerns for stability in the region, says analyst Darren Heathcote at Investec. Gold likely to probe higher on strong oil prices, currently trading at $96.86/bbl, up 89 cents; Middle East tension following Turkish air raids on targets in Northern Iraq earlier this week. Dollar weakens to 2-week low of $1.4642 against euro, last at $1.4610. Spot gold trades at $829.95/oz, up $2.15 vs NY close. (EFB)


0957 [Dow Jones] News of assassination of former Pakistani prime minister Benazir Bhutto adds to already firm tone for spot gold, given gloomy string of news from the US, says Kitco analyst Jon Nadler. Notes drop in US mortgage applications despite interest rate cuts, warning from Goldman Sachs that Citigroup, Merrill Lynch, JPMorgan may have to raise writedowns to $33.6 billion from nearly $19 billion estimated just six weeks ago. Gold could test November high of $845/oz, but trading conditions remain thin. Trade appears to be factoring in robust precious metals performance for January. Spot gold trades at $829.95/oz, up $2.15 vs NY close. (EFB)


1001 [Dow Jones] Palmary increases stake in Consolidated Minerals (CSM.AU) by 2.4% to 77.07% after nearly 5.5 million more acceptances and over 500,000 shares bought on market on Dec. 27 ahead of Jan. 1 closing date for A$5/share offer. While still needing another 13% in order to decide if it will exercise discretion to launch compulsory acquisition and notwithstanding holiday season lethargy, would expect last minute acceptances from hedge funds and other institutional investors will get it over 90% threshold to enable delisting. CSM last A$5.01. (WEL)


1003 [Dow Jones] S&P/ASX 200 expected to fall about 80 points, in line with overnight futures, after Wall Street dived on Bhutto's assassination and weak durable goods data. Resources, gold and oil stocks should continue yesterday's outperformance after commodity prices rose. Gold stocks look a good bet as spot gold could surge on political uncertainty and technical factors. Oil stocks should also do well in coming months. Financials will be weighed down by falls in U.S. banks after Goldman's bearish report on Citigroup. Technically, the index was always vulnerable to resumption of downtrend that has been in place, on weekly charts, since last week's close below 6312.6. Last month's bearish key reversal pattern on monthly charts was also a concern for the next few months' outlook. Expect some support today from former minor resistance at 6266.9. Close below 6150.0 should send index down to major weekly uptrend line, currently 5920.0. Index last 6328.4, down 22.5 points. (DWR)


1009 [Dow Jones] Australian markets expected to have minimum impact from Pakistani opposition leader Bhutto's assassination, with risk aversion theme overnight driven mostly by weak U.S. data, says Citi Australia economist Stephen Halmarick; I am "not too sure whether there will be much of an impact here" though notes thin trading conditions, USD under downward pressure. "Hard to quantify what impact" Bhutto killing having on markets, given "very disappointing" U.S. November durable goods orders, which had "big impact" on global markets - aiding bonds, hurting USD. Adds AUD is market risk aversion indicator, not political events. AUD/USD bid overnight, reaching 2-week high and breaking 0.8750; now at 0.8769.(EGC)


1012 [Dow Jones] AUD/USD expected to fall prey to heightened risk aversion as Asian equities markets come on stream despite rally in New York session on weaker USD, Lehman Brothers chief economist Stephen Roberts says; thin support likely around 0.8750-0.8760 area, fall through this level should put next AUD/USD support at 0.8700. Assassination of former Pakistan PM Benazir Bhutto elevates geopolitical concerns again; assassination also compounds risk fears triggered by weaker-than-expected U.S. economic data. Notes power sharing arrangement between President Pervez Musharraf and "moderate Muslim" Bhutto was partly engineered by U.S to bring stability to nuclear-armed Pakistan; hopes for stable democracy in region now shattered. Roberts adds "no clear trend" running through FX markets at present; "we're on a substantial seesaw, which moves between people dipping their toes in the water to take on risk and then being hurt when they try - the Australian dollar is going to be on that same seesaw." Expect strong resistance to remain at 0.8810 mark. AUD/USD last at 0.8769.(SRH)


1026 [Dow Jones] Spot gold quiet before Tocom opening but push from safe-haven buying in thinned holiday trading could push prices beyond November's $845.80/oz 28-year high, says Sydney-based trader. Assassination of ex-Pakistani PM Bhutto provides "decent reason to see a test of $845"; adds activity in gold market still focused on dollar story, but USD weakness to 2-week low vs EUR partly driven by Middle East tension following Turkish air raids on Northern Iraq, Bhutto assassination. Sharply higher oil prices, window-dressing by funds also helping; now at $825.50, down $2 on NY close.(EFB)