Overnight
US stocks slipped Thursday as investors focused on negotiations over Greece’s bailout and a renewed decline in oil prices.
The Dow Jones Industrial Average fell 44.08, or 0.2%, to 17,985.77. The S&P 500 index eased 2.23, or 0.1%, to 2097.45. The Nasdaq Composite rose 18.34, or 0.4%, to 4924.70. The Dow is just 0.1% below its record of 18,053.71 and the S&P 500 is 0.4% away from Tuesday’s closing record of 2100.34. The Nasdaq Composite, meanwhile, is 2.5% off its high of 5048.62 last reached in March 2000.
Energy stocks eased after oil prices extended their recent slide. Crude-oil futures have fallen 4.4% in the last two sessions, settling Thursday at $51.16 a barrel. Oil prices have tumbled by more than half since the middle of last year.
Over in Europe, markets fluctuated but settled higher, with Athens’s main index closing 1.1% higher. Broader European stocks also shrugged off the news, with the Stoxx Europe 600 adding 0.3% to its highest close since late 2007.
Medibank Private's half-year results will be under the spotlight today. Photo: iStock
Local Markets
- The S&P/ASX 200 Index futures contract rose 0.2% to 5877; futures relative to estimated fair value suggest an early gain of 0.3%
- Bank of New York Australia ADR Index -0.8%; BHP Billiton ADR -1.2%, Rio Tinto (LONDON:RIO) ADR +0.5%
- Gold futures gained most this month in New York, the most actively traded contract, for April delivery, rose $7.40, or 0.6%, to settle at $1207.60 a troy ounce on the Comex. Stocks to watch: NCM, NST, AQG, EVN, KCN, RMS, SLR
- Oil declined after a government report showed US crude inventories surged a sixth week, adding to a global supply glut: Brent for April settlement fell 32 cents, or 0.5%, to end the session at $60.21 a barrel, West Texas Intermediate for March delivery dropped 98 cents, or 1.9%, to settle at $51.16 a barrel. Stocks to watch: WPL, STO, SEA, BPT, OSH, HZN, DLS, AWE, KAR, ORG, SXY
- Auckland Airport (AIA): 1H revenue up 5.4%, lifts FY guidance
- James Hardie (JHX): Sees FY profit meeting estimates
- Macquarie Atlas (MQA): Group of lenders said to seek sale of UK M6 toll road loans
Data points
Friday
- Europe: French, German and EUR Flash Manufacturing / Services PMI
- United Kingdom: Retail Sales m/m, Public Sector Net Borrowing
- US: Flash Manufacturing PMI
Corporate news
Friday: Half-year results for Medibank Private, Transpacific Industries, Duet Group, Cabcharge, Bega Cheese. Full-year results for Santos. Third-quarter results for James Hardie
Current Trades
- AMP Limited (Ticker: AMP:xasx): Entered long position February 6 at AUD 6.10. First profit target was reached on February 18 at AUD 6.49 (+6.4%) and second profit target at AUD 7.12 (+16.7%) and third and final profit target at AUD 8.00 (+31%) remains in place. Stop loss trailed to entry price of AUD 6.10.
- (21/1) Accumulation of the big four banks. Buying is coming back in the past couple of days and it appears as if our dividend-yielding banks are back on investor radars: ANZ, CBA, NAB, WBC
Broker Upgrades
- AMP (AMP): Raised to neutral vs underweight at Commonwealth Bank; cut to neutral vs outperform at Credit Suisse
- Challenger (CGF): Raised to buy vs hold at Shaw Stockbroking
- CSL (CSL): Raised to buy vs hold at Morningstar
- G8 Education (GEM): Raised to accumulate vs hold at Ord Minnett
- Investa (IOF): Raised to neutral v underweight at JPMorgan; cut to underperform vs neutral at Credit Suisse
- Super Retail (SUL): Raised to neutral vs underweight at Commonwealth Bank; cut to underweight vs neutral at JPMorgan
- Tatts (TTS): Raised to overweight vs neutral at JPMorgan
- Webjet (WEB): Raised to buy vs hold at Credit Suisse Emerging
Broker Downgrades
- Wesfarmers (WES): Cut to underperform vs neutral at Credit Suisse
- Woodside (WPL): Cut to underperform vs sector perform at RBC Capital
- Independence (IGO): Cut to sell vs hold at Argonaut Securities
- Insurance Australia (IAG): Cut to hold vs buy at Shaw Stockbroking
- Crown (CWN): Cut to neutral vs overweight at JPMorgan
- Drillsearch (DLS): Cut to neutral vs buy at UBS
- Fairfax (FXJ): Cut to neutral vs buy at UBS
- Slater & Gordon (SGH): Cut to hold vs buy at Ord Minnett
- Decmil (DCG): Cut to sell vs hold at Argonaut Securities
AUDUSD
Yesterday’s comment from S&P on a possible downgrade on Australia’s AAA rating pushed the Aussie dollar down to 0.7756 from the resistance level area 0.7843. However, this did not last long as the AUDUSD bounced back up to 0.7800, which now seems to be the interim resistance level.
We would not touch the AUDUSD at the current levels as we do not see a good trading set-up here, however happy to wait and enter at the support level of 0.7731 if it gets there.
Buy AUDUSD
Entry: Limit 0.7733 Target: 0.7755 Stop loss: 0.7722
AUDUSD weekly chart
ASX/S&P200
Although we thought our stop loss was wide enough (stop was 5948 and the high was 5953) it was disappointing and a bit unlucky that yesterday’s trade was stopped out due to the massive spike seen in the early session yesterday.
ASX/S&P200 had a choppy overnight trading session hovering at around 5922 and we believe the uptrend line should hold up and as the ascending triangle is forming we would expect a soft start to the session but see a lift in the afternoon.
Buy ASXSP200
Entry: Limit 5897 Target: 5935 Stop loss: 5886
ASX/S&P 200 weekly 