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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11,020.40
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10.06
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0.09%
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Nasdaq
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2,417.92
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15.59
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0.65%
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S&P
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1,169.77
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4.45
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0.38%
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Source: Yahoo Finance
Though stocks were quick to recover from an early slide, the broader market stagnated near the neutral line until word of possible quantitative easing pushed stocks into positive ground for a solid finish.
Moderate, yet widespread weakness had dropped the stock market for a loss in the early going. Near-term support provided a floor for a rebound, but the S&P 500 struggled to turn positive with the dollar holding out in positive territory.
The dollar finally dipped into the red following the release of the minutes from the FOMC’s meeting on September 21. According to the minutes, members are prepared to provide additional accommodation, if needed, to support the economic recovery and to return inflation, over time, to levels consistent with the FOMC mandate. While such accommodation may be appropriate before long, members made clear that any decisions would depend upon future information about the economic situation and outlook.
Relative to competing currencies, the dollar ended the day with a 0.1% loss after it had been up as much as 0.6% in overnight trade.
Personal opinion: Intel’s solid 3Q results and forecast of a strong 4Q allayed concerns of a weakening in consumer demand for computers. As Intel supplies chips to 80% of the world’s PCs, its results typically provide unparalleled insight into whether the largest computer makers are preparing for robust sales, or bracing for bumps in the road. Intel CEO Paul Otellini said the company is still seeing healthy worldwide demand for all types of computing products.
Attention would also be on the financial sector to as JP Morgan will be the first bank to release its results.
Schedule of Economic News for the Day (SIN time)
07.01 am – GBP – Nationwide Consumer Confidence
07.30 am – AUD – Westpac Consumer Sentiment
07.50 am – JPY – Core Machinery Orders m/m
03.15 pm – CHF – PPI m/m
04.10 pm – USD – Fed Chairman Bernanke Speaks
04.30 pm – GBP – Claimant Count Change
05.00 pm – EUR – Industrial Production m/m
08.30 pm – USD – Import Prices m/m
Tentative – CNY – Trade Balance
Note 1: China may announce economic data on its New Loans, Foreign Direct Investment & M2 Money Supply on any day from 14th to 15th (inclusive) October.
US / Overseas Economic News
1. U.K. inflation exceeded the government’s 3% limit for a seventh month in September as higher clothing and food costs kept up price pressures in the economy. Consumer prices rose 3.1% from a year earlier, the Office for National Statistics said today in London. That matched the median forecast of 31 economists in a Bloomberg News survey.
2. The IBD/TIPP Economic Optimism Index (another form of U.S. consumer survey) increased 1.1 points, or 2.4%, in October posting 46.4 vs. 45.3 in September. The index is 0.2 points below its 12-month average of 46.6 and 2.0 points above its reading of 44.4 in December 2007 when the economy entered into the recession, and 4.3 points below its all-time average of 50.7. Note: Index readings above 50 indicate optimism; below 50 indicate pessimism.
3. US Federal Reserve officials thought in September the struggling recovery might soon need more help and they discussed several ways to provide it, including possible adoption of a price-level target.
The Fed officials who gathered on Sept 21 focused both on the possibility of buying more longer-term US government debt to drive borrowing costs lower and ways to nudge the public into expecting higher levels of inflation in the future to spur spending, the central bank said on Tuesday.
Policy-makers had a ‘sense that (more) accommodation may be appropriate before long,’ minutes of the meeting said. ‘Many members considered the recent and anticipated progress toward meeting the committee’s mandate of maximum employment and price stability to be unsatisfactory,’ the minutes said.
US / Overseas Corporate News
1. The world’s biggest maker of microprocessors, the “brains” of PCs, reported that its third-quarter net income leaped 59% and revenue rose 18%. The results topped analysts’ expectations and showed that economic jitters didn’t ruin consumers’ appetite for new computers during the back-to-school crush. Intel’s fourth-quarter forecast suggests that demand is expected to stay solid.
Intel said after the market closed that it earned $2.96 billion, or 52 cents per share, compared with $1.86 billion, or 33 cents per share, a year ago. Analysts expected 50 cents per share, according to a Thomson Reuters survey. Revenue rose 18% to $11.10 billion, from $9.39 billion. Analysts expected $10.99 billion.
US Corporate Results Update & The Week Ahead
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Companies
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Stk Symbol
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Actual
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Consensus
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Intel
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INTC
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0.52
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0.50
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Source: Briefing.com
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 shares ended mostly lower Tuesday, with Japanese stocks taking a hammering amid concerns over the yen’s strength, but China’s shares rose for a fourth straight session on gains in resources plays.
Japan’s Nikkei Stock Average slumped 2.1%, Australia’s S&P/ASX dropped 1.7% and South Korea’s Kospi shed 1.2%. Hong Kong’s Hang Seng Index slipped 0.4% after closing at an over two-year high Monday, while China’s Shanghai Composite tacked on 1.2%.
Among other markets, New Zealand’s NZX 50 slipped 0.1%, Philippine shares shed 1.2%, Singapore’s Straits Times Index shed 0.4%, Indonesian shares ended flat, Thailand’s SET Index slipped 0.1%, Taiwan’s Taiex fell 1.1% and Malaysia’s KLCI declined 0.1%.
Dow Jones Industrial Average futures were down 56 points in screen trade.
STI Market Update on Previous Close and Outlook
STI: Singapore shares ended lower Tuesday as investors booked small profits ahead of earnings reports due in coming days and expectations of U.S. monetary easing to boost sagging economic growth.
The benchmark 30-share Straits Times Index fell 0.4%, or 14.05 points, to 3,149.36, giving up all gains made Monday. Losers outnumbered gainers 354 to 129. Volume was 1.91 billion shares, lower than the 2.37 billion traded Monday.
Personal opinion: STI is likely to open higher as firstly, there is a sell off yesterday due to the hugely negative U.S. futures yesterday. Secondly, the FOMC minutes “reassured” investors that Fed is likely to act soon. Thirdly, Intel solid 3Q results and strong 4Q guidance also allayed concerns on consumer demand for consumer discretionary items like computers. All in, markets should be strong today.
STI supports and resistances are:
Current: 3,149.36
Support 1: 3,130 – 3,136
Support 2: 3,114
Resistance 1: 3,196 – 3,200
Resistance 2: 3,214
SIN / Asian News
1. According to a Reuters report, China has temporarily raised reserve requirements on six banks to drain cash from the economy. Beijing hasn’t confirmed the report, but such a move would mark the first increase in banks’ deposit-reserve ratio since May.
2. India’s industrial output rose at a smaller-than-expected rate of 5.6% in August from a year earlier, compared with economists’ expectations for more than a 9% growth.
3. China’s exports rose 25.1% in September from a year earlier as imports climbed 24.1%, leaving a trade surplus of $16.88 billion, the customs bureau said on its Web site today. The median forecast in a Bloomberg News survey of 23 economists was for a 26% increase in exports and a 25% gain in imports. Survey estimates indicated a $17.75 billion trade surplus.
SIN Companies News
1. Information technology firm ECS Holdings said on Tuesday, it is considering a proposal to offer and list Taiwan Depository Receipts, comprising new ordinary shares, on the Taiwan Stock Exchange.
2. Wilmar International, the world’s No.1 palm oil firm, expects Indonesia’s proposed two-year ban on clearing forests to have a limited impact on its operations as land available for oil palm estates is ample.
3. SPH full-year net profit rose 18 per cent to $497.9 million (US$381.1 million), from last year ‘ s $421.9 million, thanks to better performance from its newspaper business and profits from property project Sky@eleven. The group achieved record operating revenue of $1.38 billion for the year ended Aug 31, 2010, 6.1 per cent up from FY2009 ‘ s $1.3 billion. The directors have proposed a final dividend of 20 cents per share, comprising a normal dividend of nine cents per share and a special dividend of 11 cents per share
4. Ezra is likely to announce 4QFY10 results around 22 Oct 10.
Source: Various sources, eg. Reuters & analyst reports
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
Gains in commodities were led by the grains sector, which rallied for 2.2%. Dec corn futures settled higher by 4.2% to $5.79 per bushel, extending its recent rally to a fourth consecutive session. In fact, over those past 4 sessions, corn has surged for ~19%. The rally has been helped, in part, by Friday’s bullish USDA report. Also worth mentioning is that the Dec contract traded to a new contract high at $5.83 per bushel. Jan soybeans rallied for 2.3% to finish at $11.90 per bushel.
Nov crude oil finished lower by 0.7% to $81.67 per barrel, after it rallied into the close to recoup most of its losses. Nov natural gas gained 0.1% to end at $3.61 per MMBtu, after it too pushed out of negative territory heading into the close.
Dec gold finished lower by 0.3% to $1346.70 per ounce, while Dec silver closed down 0.8% to $23.147 per ounce
All the best for your investment and trading!
*This news update was delayed. It was sent out to my clients in the morning
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