Good Morning,
A “fight back” in crude oil and a great report from Walt Disney, saw the Dow Jones close +106 points.
So we should have a good day, right? More than 90 companies are scheduled to report results this week, including Goldman Sachs Group, Starbucks and American Express. Analysts are projecting a 9.5 per cent decline in first-quarter profit, compared with forecasts for almost flat growth at the start of the year. ..
"With Morgan Stanley numbers better than feared it helps one of the bigger sectors, financials, gain some momentum," said Yousef Abbasi, global market strategist at JonesTrading Institutional Services in New York. "These large-cap banks are helping bolster the financial sector and it's a bit of a positive."
In Oz, focus will this morning be on Rio’s production report, followed by BHP’s report released tomorrow morning….
Will they boost production?
Will they cut CAPEX and fixed costs?
What is management’s stance on oil and iron prices for the next few months?
Hopefully all of the above…. Driving BHP back towards $20/share and RIO well above $50/share…
All will be revealed shortly….
What's on today?
- Local data: RBA April meeting minutes at 11.30am, Governor Glenn Stevens speaks in New York at 11.30pm
- Rio Tinto first quarter operations review at 8.30am
- New York state presidential primaries.
- Sotheby's to auction Shirley Temple's blue diamond which has an estimated pre-sale of $US25-$35 million.
- Overseas data: Bank of Korea rate decision; HK March unemployment; Russia Oil and Gas Week begins in Moscow; ECB bank lending survey; UK's George Osborne to appear before Treasury committee to talk about British membership in the EU; German ZEW April expectations; US March housing starts, US March building permits.
- Overseas earnings: Goldman Sachs, Comerica, Harley-Davidson, J&J, Philip Morris Intl, Intel, Yahoo, TomTom.
Stocks in focus
Rio Tinto first quarter operations review at 8.30am
The SPI is up 57 points this morning
Market Wrap
United States
The S&P 500 rose 0.7 per cent to 2094.38 at 4pm in New York, the highest since December 2. Trading in S&P 500 shares was 6.7 per cent below the 30-day average. The Dow average rose 0.6 per cent to 18,004.16, the highest level since July 21. Energy producers surged 1.5 per cent, erasing a loss. Hasbro climbed 5.8 per cent on earnings that topped estimates thanks to sales of Star Wars items. Walt Disney Co. jumped 3.4 per cent.
Video-streaming service Netflix forecast US subscribers additions for the current quarter that fell short of analysts expectation, in part due to price increases for its service. The company's shares slumped 11.6 per cent in after-hours trading on Monday.
Europe
European stocks rebounded as car makers and commodity producers surged, while energy companies pared declines with oil.
Daimler and BMW led auto makers to the biggest advance among industry groups on the Stoxx Europe 600 Index. Miners recovered, with Rio Tinto Group and BHP Billiton pacing gains as base metals rose. While crude trimmed losses, it still pulled energy producers lower, with Total SA and Royal Dutch Shell weighing heaviest. Apple suppliers ARM Holdings and Dialog Semiconductor fell at least 3.3 per cent on speculation the iPhone maker will cut production amid slower-than-expected sales of the 6S and 6S Plus models.
The Stoxx 600 added 0.4 per cent to 344.2 at the close of trading, after earlier sliding as much as 1.4 per cent. European stocks, which hit their highest levels ever a year ago, have struggled for fresh impetus after rebounding as much as 14 per cent from a February 11 low. The Stoxx 600 has traded in a tight range in the past month amid renewed concern over global growth prospects, and is down about 5.9 per cent since the start of the year.
"The price of oil is driving the market higher," said John Plassard, a senior equity-sales trader at Mirabaud Securities LLP in Geneva. "Even if it's still negative, it's less negative than at the open since the Doha outcome was largely expected and there's rumours of a new meeting before June."
Closer to Home
Local shares are poised to rally, on a positive lead from Wall Street. Oil steadied. Iron ore advanced.
What you need2know
- SPI futures up 58pts or 1.1% to 5187
- AUD at 77.44 US cents, 84.29 Japanese yen, 68.47 Euro cents and 54.25 British pence
- On Wall St, at the close, Dow +0.6%, S&P 500 +0.7%, Nasdaq +0.4%
- In Europe, Stoxx 50 +0.3%, FTSE +0.2%, CAC +0.3%, DAX +0.7%
- In London, BHP +1.8%, Rio +1.7%
- Spot gold -0.1% to $US1233.27 at 2.17pm New York time
- Brent crude -0.3% at $US42.96 at 1.52pm New York time
- Brent crude day range, as of 1.52pm New York time: 40.10 - 43.43
- Iron ore +3.6% to $US60.36
Currencies
Colombia's peso led gains among 31 major currencies on speculation that companies are bringing in dollars from abroad to pay taxes this month. The peso climbed 0.9 per cent to 2969.45 per US dollar at the close of trading in Bogota on Monday, and reached the strongest level since November 11.
The euro climbed the most in three weeks amid speculation that the European Central Bank will maintain its monetary policy when it meets this week. The euro rose 0.3 per cent, the most since March 31, to $US1.1316 per dollar. The currency gained 0.4 per cent versus the yen after touching its lowest in three years.
Brazil's real, the world's best performing currency in the first quarter on speculation Rousseff would be ousted, fell Monday after lawmakers voted in favour of impeachment.
BlackRock says it expects losses for long-dated US government securities and euro-zone debt over the next half decade as high bond prices and low interest rates limit returns.
Commodities
The global iron ore market faces increasingly severe oversupply, according to Citigroup, which said the commodity's gains will probably be reversed in the second half. "Weaker-than-expected Australian exports and more resilient Chinese steel production have kept prices elevated. However, both trends are likely to reverse in the medium and long term."
Oil prices slid after a plan by major oil producers to freeze production was scuttled, but a Kuwaiti oil industry strike helped the market pare losses and settle off the day's lows. The strike crippled more than 60 per cent of Kuwait's crude output, lending support to price benchmarks such as Brent and Dubai. Brent tumbled as much as 7 per cent after oil majors from the Organisation of the Petroleum Exporting Countries and non-OPEC Russia failed to reach agreement on a plan to freeze output at a meeting in Doha, Qatar. "The material loss in production from the Kuwait strike has helped the oil market forget about the farce from Doha," said Matt Smith, director of commodity research at the New York-headquartered Clipperdata.
Benchmark copper on the London Metal Exchange ended up 0.4 per cent at $US4827 a tonne from an earlier session low of $US4758. Three-month aluminium rose 0.9 per cent to $US1570 a tonne.
What happened yesterday
Australian shares fell on Monday, led by energy stocks, after a potential deal between major global oil producers fell through on the weekend. However, once oil found a firm bottom, which it did early in the session, the market managed to briefly recoup its losses before drifting lower to finish the day in the red.
The benchmark S&P/ASX200 dropped 0.4 per cent to 5137.1 while the broader All Ordinaries dipped 0.4 per cent to 5204.9.
Position Update
PEAK ACTIVE
We are long MPL, BHP, SUN & AMP.
We recently locked profits in JHX, BXB, DMP and BAP, following their strong results.
PEAK INCOME
We are sitting on no open positions and assessing opportunities in the healthcare space.
PEAK GROWTH
We are currently long IPL, AVB, RAD, FLN
We are monitoring stocks that have a large weighting of their earnings coming from the US and Europe…
Have a great day,
Niv
Niv Dagan
Executive Director
Peak Asset Management
By Niv Dagan
