insto - Australian financial markets

Chris Weston, from the institutional dealing desk at IG Markets, filed these comments to sum up the week’s action on local and regional equities markets:

Across Asia, regional indices are all lower after the weak session we saw on European and US markets overnight. Comments from Fitch Ratings that Chinese banks’ capital positions may be more strained than they appear due to the increasing use of off-balance sheet transactions are also weighing on the region. The Shanghai Composite is the worst performer in the region, lower by 1.4 per cent while the Hang Seng is weaker by 0.8 per cent. The Nikkei 225 is also down on the session.

In Australia the ASX 200 closed down 0.4 per cent at 4650, well off its earlier lows of 4604. Losses came predominantly from the materials, telecommunications and financial sectors while the energy and healthcare sectors offered some support.

Highlights from the preliminary Thomson Reuters Capital Markets Review for Q4 09 and the 2009 year in review include the following:

• IB fees at lowest annual activity level since 2004: With an estimated US$67.4bn earned in 2009 global investment banking fees (IB fees) are down 10 per cent when compared to last year. It is also the lowest level of annual activity since 2004 (US$67.2bn). Q4 figures do not fare any better down 7 per cent when compared to last quarter.

Cameron Peacock, market analyst for IG Markets, filed these comments to sum up the week’s action on local and regional equities markets:

Across Asia, all regional markets are trading higher as they digest better-than-expected industrial production numbers out of China, a drop in US jobless claims and the confidence boosting impact of Australia’s stellar employment numbers from yesterday. The Nikkei 225 is the regions best performing market, up 2 per cent, while the Hang Seng is higher by 1.6 per cent. The Shanghai Composite and the Kospi are seeing more moderate gains, both higher by 0.3 per cent

US stocks rose on positive economic news, while a weakening dollar gave commodities a boost. Near the close, the Dow was trading at 10,472 (up 127 pts, or +1.22 per cent); with the Nasdaq up 31 to 2,176 (+1.46) and the S&P 500 up 1.2 per cent.

Hopes rose that the Dubai World crisis will be contained, with news overnight (US time) that the Middle East conglomerate was “in the process of restructuring” US$26bn in debt. Although no details were given, this is much less than the US$59 bn originally mentioned. Part of the rise was on the back of several pieces of good news – US established home sales rose again for the fourth consecutive month; and the US ISM manufacturing index printed at 53.6 per cent (down from 55.7 per cent in October), indicating overall growth among US manufacturing firms.

The financial markets finished last week in mini-meltdown mode. Now that there’s been a chance for investors to cool off, it’s likely that Dubai’s debt restructuring will get underway – technically, it is still a standstill, not a default. The US markets were on holidays when the major news on Dubai World broke, and consequently the fall on Friday wasn’t as great as in other markets when trading resumed on a holiday-shortened Friday.

Ben Potter, research analyst for IG Markets filed these comments to sum up the week’s action on local and regional equities markets:

Across Asia, equity markets are all lower following the shock news overnight that Dubai had asked creditors of ports operator Dubai World for a 6-month standstill on repayments on debts worth about US$60 billion. After falling 3.6 per cent yesterday, the Shanghai Composite is lower by 1.9 per cent today, the best relative performer of the region. Elsewhere, the Nikkei 225 is down 2.9 per cent while the Hang Seng has lost 3.5 per cent and the Kospi 4 per cent.

In Australia, the ASX 200 closed 2.9 per cent lower at 4572, near the lows of the day. We saw widespread selling on large volumes as investors headed for the exit door. However, with relatively little actual exposure to Dubai, especially among the banks, we were mainly down in sympathy. The financials, industrials and materials detracted the bulk of the points.

AOFM $500 m May 2021 Treasury Bonds
Durig the week ended 27 November 2009 the Australian Office of Financial Management announced the sale of A$500 million 5.75 per cent 15 May 2021 treasury bonds at a weighted average yield of 5.425 per cent. Tender results are:

Markets were slightly lower overnight, with news of a stronger dollar and news that China’s banks will need a massive amount of extra capital to meet more stringent regulatory requirements. This raised fears that the recovery may not be as long and strong as hoped, hitting commodities prices: base metals in London all fell by around 30 to 80 points.

While monetary policy decisions taken in Washington can still influence emerging markets, their future growth may not be driven by the US economy, write Richard Yetsenga* and David Bloom*.

Ben Potter, research analyst for IG Markets filed these comments to sum up the week’s action on local and regional equities markets:

Across Asia, regional markets are mostly weaker after a negative set of leads from overnight trade weigh and energy and commodity stocks retreat following a bounce in the US dollar. The Shanghai Composite is the biggest faller, down 1.2 per cent while the Nikkei and Kospi are 0.3 per cent and 0.2 per cent weaker respectively. The Hang Seng is up 0.1 per cent.

In Australia, the ASX 200 closed 0.9 per cent lower at 4706.4 after trading as low as 4690.9 this morning. There were very few local catalysts today so we basically mirrored weak US leads with the highly cyclical materials and financials detracting the bulk of the points. The defensive sectors were the best performers, benefitting from inflows as traders positioned themselves for a few days of weakness.