News update – 11 Oct 10

Wall Street Update and Outlook
Previous close
Chg
% chg
DOW
11,006.48
57.90
0.53%
Nasdaq
2,401.91
18.24
0.77%
S&P
1,165.15
7.09
0.61%

Source: Yahoo Finance
The market was able to advance even in the face of some ugly employment numbers as the data increased the chances that the Fed will implement a second round of quantitative easing. The notion that the Fed may expand its quantitative easing program to kick start the recovery prompted most of the buying interest in the equity market. It pushed the dollar down 1.2%, with the yen climbing to a 15-year high and the Australian dollar hitting the highest level since it was floated in the early 80s.
At the same time, Treasuries rallied, with the 10-year yield dropping from 2.51% to 2.39%, the lowest level since early 2009.
The benchmark index for U.S. stock options ended the week at the lowest level since May 3. The VIX, as the Chicago Board Options Exchange Volatility Index is known, fell the most in five weeks, dropping 8 percent to 20.71. The index, which measures the cost of using options to protect against S&P 500 declines, has fallen 55 percent since this year’s peak in May and is near its 20.41 average over its two-decade history.
Personal opinion: Attention would be shifted from the economic reports to the Q3 earnings results as they start to commence in earnest next week with widely held names such as Intel (INTC), JPMorgan Chase (JPM), Google (GOOG), and General Electric (GE) confirmed to report.
Schedule of Economic News for the Day (SIN time)
08.30 am – AUD – Home Loans m/m
Note 1: China may announce economic data on its New Loans & M2 Money Supply on any day from 11th to 14th (inclusive) October.
Note 2: Japan, U.S. and Canada are on trading holiday.
US / Overseas Economic News
1. Employers eliminated 95,000 jobs after a revised decrease of 57,000 in August, Labor Department figures in Washington showed. The median estimate in a Bloomberg News survey was for a 5,000-position drop. Private payrolls that exclude government agencies increased 64,000, less than forecast. The unemployment rate unexpectedly held steady at 9.6%.
2. The U.S. will sell $66 billion in notes and bonds next week: $32 billion in 3-year notes on Oct. 12, $21 billion in 10- year securities the next day and $13 billion in 30-year bonds on Oct. 14, the Treasury Department said.
3. U.K. Producer Price Index rose 0.3% on the month in September and were 4.4% above levels a year earlier. Analysts have expected to see an increase of 0.1% on the month and 4.3% on the year. Output price inflation has now eased for five consecutive months and stands at its lowest level since February.
US / Overseas Corporate News
1. NA.
US Corporate Results Update & The Week Ahead
12 Oct             after market closes                    Intel
13 Oct             before market opens                 JP Morgan
14 Oct             after market closes                    Advanced Micro Devices / Google
15 Oct             before market opens                 General Electric / Infosys / Mattel
Asian Markets Update on Previous Close
Asian: Asian stock markets were mostly lower Friday, though Chinese stocks delivered their best%age gain in more than four months as several resource shares jumped by the 10% daily limit in response to a recent rally in commodities as trading resumed after the week-long Golden Week holiday.
News that Moody’s Investors Service is reviewing China’s government bond rating for a possible upgrade boosted sentiment and also helped Hong Kong stocks finish higher.
Japan’s Nikkei Stock Average fell 1.0% to 9,588.88, Australia’s S&P/ASX 200 dropped 0.2%, South Korea’s Kospi shed 0.2%, Taiwan’s Taiex gave up 0.5% and Hong Kong’s Hang Seng Index tacked on 0.3%. In afternoon trading, India’s Sensex fell 0.5% and Singapore’s Straits Times Index gave up 0.3%. China’s Shanghai Composite added 3.1% for its biggest%age gain since May 24, while the Shenzhen Composite index advanced 2.8%.
Among other markets, New Zealand’s NZX-50 fell 0.1% and Philippine stocks gave up 0.2%. By late afternoon, Indonesian shares declined 1.2% and Thailand’s SET Index gave up 0.7%.
Dow Jones Industrial Average futures were down 18 points in screen trade.
STI Market Update on Previous Close and Outlook
STI: Singapore shares ended lower Friday as investors were cautious ahead of the key U.S. non-farm payrolls data due later in the day that will give a glimpse on how the U.S. is recovering, and its impact on the global economy.
While global economic uncertainty remains high, it will likely leave the Straits Times Index unaffected as the benchmark index benefits from ample liquidity, some traders said.
The benchmark STI wrapped the day 13.31 points or 0.4% lower at 3,153.34 points with losers overtaking gainers 244 to 221. In the broader market 1.81 billion shares changed hands compared with 1.55 billion traded Thursday.   
Personal opinion: Markets continue to rise on the expectation that the Fed may engage in quantitative easing II on the FOMC meeting in Nov. However, attention is likely to shift to our Q3 results release this week as U.S. companies and SIN companies start to release results in earnest. As mentioned last week, traders can position their trades accordingly in companies which are likely to release strong results.
STI supports and resistances are:
Current: 3,153.34
Support 1: 3,136
Support 2: 3,114
Resistance 1: 3,196 – 3,200
Resistance 2: 3,214
SIN / Asian News
1. Japanese Finance Minister Yoshihiko Noda said on Friday that finance leaders from the Group of Seven nations agreed at a meeting that excessive and disorderly foreign exchange movements are undesirable.
Investors remain on full alert for further intervention by Japan as an unexpected drop in US payrolls data pushed the dollar to a fresh 15-year low against the yen on Friday.
2. There were news that Moody’s Investors Service is reviewing China’s government bond rating for a possible upgrade. In a statement, Moody’s cited “the resilient performance of the Chinese economy following the onset of the global financial crisis, and expectations of continued strong growth over the medium term.”
“The Moody’s move suggests global markets turn increasingly positive about China’s medium-term fundamentals, so it’s a big positive for commodities and related currencies,” Bank of America-Merrill Lynch China economist Ting Lu wrote. “This move will be positive for Chinese corporates, especially banks, as their ratings will be raised accordingly,” Lu added.
SIN Companies News
1. Property developer Keppel Land may be in focus after saying its unit Alpha Investment Partners has invested $210 million in a structured investment in a prime commercial property in South Korea
2. Wilmar said on Friday it had signed a mandate letter for the launch of a $1.1 billion syndicated term loan facility to finance the acquisition of Sucrogen and A$600 million syndicated revolving credit facility to finance Sucrogen’s corporate and working capital requirements. Australia and New Zealand Banking Group and HSBC are the mandated lead arrangers and bookrunners.
3. Chip component distributor Serial System said it is considering listing Taiwan depository receipts of up to 90 million new shares on the Taiwan stock exchange. The listing will help the firm’s expansion in Taiwan and broaden its shareholder base, it said.
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
The weak dollar helped boost commodities, with the CRB Commodity Index rallying 3.3% to a two year high. Gold hit a fresh all-time nominal closing high at US$1,344.20, while silver hit a 30 year high.
Oil for November delivery rose 99 cents to settle at $82.66 a barrel on the New York Mercantile Exchange. Futures increased 1.3% since Oct. 1, the third straight weekly gain. It was the longest stretch of weekly advances since June. Prices have advanced 15% in the past year. The climb was amid speculation the Federal Reserve will buy more debt to stimulate the economy after a government report showed the U.S. lost more jobs than forecast in September.
All the best for your investment and trading!

*This news update was delayed. It was sent out to my clients in the morning.

Disclaimer
The information contained herein is the writer’s personal opinion and provided to you for information only, and is not intended to, or nor will it create/induce the creation of any binding legal relations. The information or opinions provided herein do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or invest in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein are suitable for you. The writer will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials appended herein. The information and/or materials are provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.

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