Tuesday, July 13, 2010

Update Daily Investment News

China shares may fall, Government denies mortgage report

US Securities houses buy EUR-USD - Trader

KLCI may fall after 5-session gain, support 1.315

USD-SGD lower, 1.3730-1.3850 likely range

Crude rises on view of US inventory drop - Trader

[Dow Jones] ASIA OUTLOOK: Regional stock markets likely in tight range; not much of a cue from Wall Street with DJIA +0.2% though miners could get a lift as Alcoa reports swing to net profit in 2Q; shares +3.2% in after-hours trade. Earnings upgrades for Microsoft, Sandisk could help Asian techs. In FX markets, EUR may remain under pressure on concerns over euro zone debt problems with Spain, Greece gearing up to sell about EUR30 billion in debt this week. EUR/USD at 1.2587 vs 1.2593 in late NY trade, EUR/JPY at 111.60 vs 111.55, USD/JPY at 88.66 vs 88.59. On data slate: Australia lending finance at 0130 GMT, Japan revised industrial production at 0430 GMT, consumer confidence survey at 0500 GMT; there's also Australia NAB business survey while IMF and Korea co-host international conference. Later there's German WPI, French CPI, UK CPI, Nationwide consumer confidence index, German ZEW indicator of economic sentiment, IEA oil market report, U.S. NFIB small business optimism index, ICSC-Goldman Sachs chain store sales, trade, Johnson Redbook retail sales index, API oil report, ABC News consumer confidence index, Bank of England MPC member Sentance speaks.

[Dow Jones] Nikkei may rise tad, opening price may be pegged around CME close of 9580 (vs Osaka close of 9550), then trade between 9500-9650, market analysts say. Also say sentiment generally positive as U.S. stock futures rising after Alcoa (AA) posts strong earnings after hours (effectively kicking off corporate earnings reporting season). "Strong demand for aluminum in the construction and automotive industries may boost sentiment in other commodity shares like steel and trading houses," says Masumi Yamamoto, market analyst at Daiwa Securities Capital markets. But adds overall volume may stay low as investors cautious during U.S. earnings season.

[Dow Jones] Kospi likely to open higher on overnight Wall Street gains; "The key interest rate hike by the central bank last week will continue to boost bank and insurance stocks today, helping the benchmark Kospi index," says Shim Jae-youb at Meritz Securities; tips 1730-1750 range for today. Expects airline stocks to remain strong on higher fares, soaring demand during summer holiday season in 3Q. Adds, expectations for strong 2Q results already reflected in Posco (005490.SE) shares, but additional steel product price increase in 3Q may be another catalyst. Kospi closed +0.6% at 1734.05 yesterday.

[Dow Jones] Singapore stocks may gain as better-than-expected results, guidance from companies kicking off earnings season underpin hopes for robust performances by more firms in coming days. STI may face resistance at 2959 (May 4 high) after closing above resistance-turned-support level of 2900 for 2nd straight session yesterday, +0.3% at 2925.32. "The U.S. earnings season got off to a good start with Alcoa returning to the black and guiding for increased aluminum demand. Here in Singapore, SPH posted a decent set of results too. Hopefully, we'll see more companies doing the same in the days ahead," says trader at local brokerage. Singapore Press Holdings (T39.SG) may be in focus following media group's 29.9% on-year jump in fiscal 3Q10 earnings; stock ends +1.0% at S$3.93.

[Dow Jones] S&P/ASX 200 should react positively to Alcoa's results, which beat revenue expectations and forecast global aluminum consumption to grow 12% from 10%. While U.S. materials sector fell 1.1% on weaker Chinese imports of copper and iron ore, reported over the weekend, Asia wasn't concerned about that data yesterday. "On balance, I would say it's positive for the market because Alcoa gave much more upbeat commentary on end-markets," says a senior trader at UBS. "It's just a question of whether their outlook commentary provides a spark to get the aluminum price up, because aluminium fell off a cliff at the end of the second quarter." Strong results from CSX Corp should also help. The U.S. railroad operator reported EPS of US$1.07 on revenue of US$2.7 billion vs expectations of 96 cents EPS on US$2.62 billion revenue. On the charts, S&P/ASX 200 should test the 50-day moving average, at 4433, in early trading. From there, it could also test the 61.8% retracement of the June 21-July 6 fall, at 4453. Further gains will probably depend on whether DJIA can break its 50-day moving average at 10238, which was resistance last night. Index last 4409.9.

[Dow Jones] EUR/USD rises from 1.2590 to 1.2607 as $200 million worth of bids at 1.2580 prompt short-term funds to speculate pair's downside very limited, therefore "it's not wrong to buy the pair just below 1.2600," says senior dealer at major bank in Tokyo. Adds while reason behind 1.2580 bids unclear, sentiment positive due to upturn in share prices. Pair may rise to 1.2635. USD/JPY also rises, last at 88.73, may rise to 89.00; EUR/JPY last at 111.82, may rise to 112.25.

Dow Jones] AUD/USD looking heavy just under the 0.8800 level at time when daily oscillators look overbought -- suggesting risk with long positions at this stage, says BNP Paribas FX strategy. Adds, upcoming release of key Chinese data Thursday -- particularly industrial production, 2Q GDP -- will be key, especially on back of softer import data from China over weekend. China industrial production worth watching for signs of slowdown, potentially leading AUD lower. But overall as China cushions itself for slowdown, allocates its resources to development in the Western provinces, AUD will likely be well supported. Trade recommendation: buy 0.8650, stop 0.8550, target 0.8930. Now 0.8764.

[Dow Jones] Spot gold last bid $1,196.70 early in Sydney, down 40 cents vs NY close, near bottom end of yesterday's trading range. Commonwealth Bank of Australia attributed yesterday's modest decline to profit taking; notes metal has fluctuated in a relatively narrow range around $1,200 since early July with failure of price to sustain higher levels leaving investors more cautious. Others, such as Adam Klopfenstein, senior market strategist with Chicago-based Lind-Waldock, a division of MF Global, said USD strength clearest pressure on gold prices while last week's mixed economic data didn't leave traders "a specific reason to buy gold right now", eroding support. ScotiaMocatta says price action while it holds below $1,215 technically bearish; says $1,215 support level broke on July 1 and every attempt to reclaim it has been rejected; says break below $1,185 should see a move to $1,167.

[Dow Jones] EUR likely rise as news U.S. Alcoa swung to 2Q profit, raised aluminum consumption outlook, suggests high demand for aluminum, meaning global economic recovery remains solid, positive cue for shares, says senior dealer at major bank in Tokyo. Says with better-than-expected earnings report, Asian shares likely to gain, tailwind for risk sensitive euro. EUR/USD may trade in 1.2550-1.2625 range vs last 1.2588. EUR/JPY may trade in 111.45-112.00 band vs last 111.61. USD/JPY may rise on expected gains in Asian shares as well; investors will pay attention to 10-year U.S. Treasury auction, Intel earnings report later in global day, he says. Pair may trade in 88.40-89.00 band vs last 88.66.

House price balance UK +9 in June, below forecast +20.

COMMODITY SUMMARY: LME base metals reversed direction yesterday, settling lower after a day of thin trading in which data showing a drop in Chinese copper imports weighed heavily on sentiment. "People have been very much focused on the data out of China, and on the month-on-month decline, even though if you look back across the years the figures are actually quite positive," said Robin Bhar, metals analyst at Calyon in London. LME 3-month copper fell $130 vs Friday's PM kerb to $6,625/metric ton, while aluminum was down $34 at $1,970, lead $56.50 at $1,783.50, zinc $48 at $1,855.50, nickel $300 at $19,195, and tin $150 at $17,500. Spot gold last bid $1,195.90 early in Sydney, down $1.20 vs NY close, at bottom end of yesterday's trading range. Gold futures in NY slipped overnight, with equities markets in a holding pattern ahead of start of earnings season. USD was stronger during a calm day across many markets, with investors continuing to favor USD amid an uncertain economic outlook. Among other precious metals, silver at $17.89/oz, down 2 cents from late NY, platinum down $1 at $1,512, palladium flat at $453. Nymex May crude futures up 9 cents early in Asia at US75.04/bbl.

[Dow Jones] The dollar gained Monday, as investors took a defensive stance ahead of upcoming debt auctions in Europe and the start of the U.S. 2Q earnings season. The U.K. pound fell against the dollar after S&P affirmed the country's top-shelf credit rating, but warned that its debt level could threaten the country's coveted AAA standing. Monday afternoon, the euro was at $1.2588 from $1.2640 late Friday. The dollar was at Y88.56 from Y88.65, while the U.K. pound was at $1.5017 from $1.5066. The ICE Dollar index, which tracks the greenback against a trade-weighted basket of currencies, was at 84.260 from 83.914.

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