Wall Street Update and Outlook
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Previous close
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Chg
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% chg
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DOW
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10,751.27
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-78.41
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-0.72%
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Nasdaq
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2,344.52
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-26.23
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-1.11%
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S&P
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1,137.03
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-9.21
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-0.80%
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Source: Yahoo Finance
Broad-based selling dropped stocks for sizable losses Monday. The slide found support at last week’s lows, though. Action was a bit choppy in the early going, but with neither concerted nor clear leadership sellers were able to claim control. Materials stocks were hit with the worst – they dropped 1.4% as steel stocks sank 2.4% and shares of diversified metals and miners dropped 2.1%.
Tech stocks were among the heaviest drags, though, given that the tech is the heaviest by market weight. Its 1.1% loss was largely due to weakness in semiconductor stocks (-1.6%) and semiconductor equipment stocks (-1.9%).
Financials had shown early strength, but faltered as the broader market began to roll over. It ended the day 0.7% lower with considerable weakness in shares of American Express (AXP 39.09, -2.73), which will challenge an antitrust lawsuit by the government. Shares of AXP endured their worst single-session slide since January to settle at their lowest level in three months. Visa (V 73.24, -0.08) and MasterCard (MA 222.64, -2.14) both plan to settle, but each saw its shares settle lower.
Lacklustre trading volume resumed as fewer than a billion shares were traded on the NYSE. The lack of participation suggests that their may not have been much belief in the stock market’s mover lower. To be fair, though, share volume was anaemic all the way up to the stock market’s multi-month highs, which were set just last week.
Personal opinion: S&P dropped 0.8% yesterday amid mixed economic data, a downgrade on Microsoft and weakness around credit card companies. Caution is the key word for this week post the 8.8% rally in S&P last month.
Schedule of Economic News for the Day (SIN time)
06.30 am – AUD – AIG Services Index
08.30 am – AUD – Retail Sales m/m
11.30 am – AUD – RBA Rate Statement
03.15 pm – CHF – CPI m/m
04.30 pm – GBP -Services PMI
05.00 pm – EUR – Retail Sales m/m
10.00 pm – USD – ISM Non-Manufacturing PMI
China will be closed till next Friday.
US / Overseas Economic News
1. The number of contracts to purchase previously owned homes in the U.S. increased for a second month, a sign the housing market is beginning to stabilize. The National Association of Realtors’ index of pending home resales rose 4.3% in August, more than the median analysts’ forecast of 2.5%, after a revised 4.5% gain the prior month that was less than initially estimated. Compared with the same month a year ago, pending sales were down 18.4%.
2. Factory orders for August fell 0.5%, which is a bit steeper than the 0.4% decline that had been expected. Orders for the prior month were revised higher to reflect a 0.5% increase.
3. The euro declined from a six-month high against the dollar as “undercapitalize” concerns on Europe’s major banks made the region’s assets less attractive. The 16-nation currency weakened versus most of its major counterparts as a Swiss government-appointed panel said UBS AG and Credit Suisse Group AG should almost double the capital required under Basel Committee on Banking Supervision rules announced last month.
4. Ireland’s government must find savings in excess of the 3.0 billion euros it plans to announce in its next budget, the Central Bank said on Monday as it also slashed its forecast for economic growth to 0.2% this year, a major downgrade from previous guidance for a 0.8% expansion.
The assessment comes after Ireland last week admitted that its public deficit would hit 32 per cent of economic output this year – a record for a eurozone nation – as a result of massive state support for the banking sector.
US / Overseas Corporate News
1. Sanofi-Aventis SA began an $18.5 billion hostile takeover offer for Genzyme Corp. after the U.S. biotechnology company spurned Sanofi’s $69-a-share bid as too low and refused to negotiate.
2. For the first time in more than a year analysts are cutting their forecasts for Standard & Poor’s 500 Index earnings, jeopardizing gains from the biggest September rally since World War II. Estimates for S&P 500 companies’ combined 2011 profit fell as low as $95.17 last month from an August high of $96.16 and posted the first quarterly reduction since the three months ended June 2009, according to more than 8,500 analyst forecasts tracked by Bloomberg.
US Corporate Results Update & The Week Ahead
5 Oct after market closes Yum! Brands
6 Oct before market opens Monsanto
7 Oct before market opens PepsiCo
7 Oct after market closes Alcoa
Asian Markets Update on Previous Close
Asian: Asian equity markets ended mostly higher Monday, though stocks in Japan reversed early gains to end lower as banks tumbled in afternoon trading after a Swiss government expert group proposed higher capital requirements for banks there.
The Nikkei Stock Average, which climbed as high as 9,508.36 during the session, fell 0.3% to end at 9,381.06. Hong Kong’s Hang Seng Index rose 1.2%, Australia’s S&P/ASX 200 added 1%, Taiwan’s Taiex ended little changed, South Korea’s Kospi inched up 0.1%. In afternoon trading, India’s Sensex rose 0.2% after ending close to a 33-month high on Friday, while Singapore’s Straits Times Index added 0.9%. Markets in China were closed for the national day holiday.
Elsewhere in the region, New Zealand’s NZX 50 rose 0.5% and Philippine shares gained 1.9%. Malaysian shares gained 0.3%, Thailand’s SET Index fell 1.0% and Indonesian shares added 0.4% in afternoon trade.
Dow Jones Industrial Average futures fell 47 points in screen trade.
STI Market Update on Previous Close and Outlook
STI: Singapore shares ended firmer Monday in line with other Asian equity markets and supported by a stronger Wall Street close as investors remained positive about the region despite a raft of conflicting U.S. economic indicators.
The benchmark Straits Times Index closed 26.55 points, or 0.8%, higher at 3,157.45, with gainers outnumbering losers 343 to 205. In the broader market, 2.16 billion shares changed hands compared with 1.77 billion Friday.
Personal opinion: STI is likely to open lower in line with the weak showing in the U.S. markets. Nevertheless, if markets continue to show weakness in the next few days, traders may consider to position their trades (long trades) in companies which are going to release results next week.
STI supports and resistances are:
Current: 3,157.45
Support 1: 3,146
Support 2: 3,132
Support 3: 3,125
Resistance 1: 3,183
Resistance 2: 3,187-3,196
Resistance 3: 3,214
SIN / Asian News
1. NA.
SIN Companies News
1. Shipbuilding firm JES International said on Monday it has won contracts to construct and sell one unit of 95,000 deadweight tons (DWT) bulk carrier for a company incorporated in Panama, two 82,000 DWT bulk carriers for a South Korean firm, and five 47,500 DWT bulk carriers for a Chinese company.
2. Offshore services firm Swiber Holdings said on Monday it will issue three-year fixed rate notes worth S$80 million ($60.88 million) at an interest rate of 5.8 percent per annum under its S$500 million multicurrency medium term note program.
3. Ascott Residence Trust, a REIT unit of The Ascott Ltd, said on Monday that it has received valid provisional allotment acceptances and excess new units applications for 136.7 million new units, more than double the total number of new units available under its preferential offering
SIN Technical Highlights*
1. NA.
*This is to highlight stocks which are worth to look into from a technical standpoint for a small punt (i.e. with smaller gains over a shorter period of time) It involves speculation and may not meet the needs of certain clients. In addition, this strategy involves cutting loss if necessary. Thus, this mentality may not be suitable for some clients. Furthermore, entry and exit levels may change depending on market and chart conditions.
Commodities Update
Soft commodities were the largest declining group in the commodities sector, led lower by a 4.8% sell off in Dec coffee futures. Outside of that sizeable sell off, it was a quiet session for commodities.
Nov crude oil settled lower by 0.1% to $81.47 per barrel, while Nov natural gas shed 1.5% to finish at $3.73 per MMBtu. Crude put in highs at $82.38 early in pit trade, but spent the remainder of the session chopping around the flat line.
Despite strength in the dollar index, it was an uneventful day for the precious metals. Dec gold finished lower by 0.1% to $1316.80 per ounce, while Dec silver shed 0.2% to close at $22.04 per ounce.
All the best for your investment and trading!
P.S: This news update is delayed for a few hours.
Disclaimer
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