Tuesday, July 9, 2013

Markets Live: Start of winter rally?

10:11am: The market has opened higher, with the benchmark S&P/ASX200 jumping 31.1 points, or 0.6 per cent, to 4912.9. While the broader All Ords inched up 29.9 points, or 0.6 per cent, to 4896.4.

10:10am:Is the winter rally finally on the cards? Is US macro data actually trickling down into corporate earnings? The markets seem to think so, says IG's Evan Lucas:

What is fuelling the optimism is the confession session of the last six weeks, both here and abroad, which has seen massive earnings downgrades. In the US, analysts have lowered their profit growth forecasts to 1.8% from 8.3% at the start of the year for this quarter. We know from the data dumps out of the US over the last three months that earnings are not going to be that low. Building approval rates, consumer confidence and continued employment increases will have upside risk for US earnings and will flow through to the markets. Here in Australia, upside risk is certainly expected rather than a surprise. Downgrade after downgrade has had a clearing the decks effect for most corporates in Australia. The fact that macro noise has distracted investors from the bottom-up views of the market is also why upside risk to stock price is now a real possibility.

10:08am: Offshore overnight, the IMF added its voice to concerns about the China growth outlook. The Fund said China's slowdown was a particularly big risk, as the world's second-largest economy navigates a shift to consumption-led growth.

But the part which local investors and business will have noticed is that any slowdown could hit commodity exporters, such as Australia, as China is one of the world's biggest energy consumers.

Although there's nothing terribly new in that, it's at least another warning sign.

"After years of strong growth, the BRICS are beginning to run into speed bumps," said Olivier Blanchard, the IMF's chief economist. And while growth in emerging countries has slowed, inflation has not fallen with it, suggesting the economies are already growing close to their potential, he said.

Read more about this story here. "This has an important implication: that growth in emerging markets will remain high, but maybe substantially lower than it was before the crisis."

9:59am:The Greek government has submitted to parliament a bill containing fresh reforms to be undertaken by Athens in exchange for a new tranche of bailout loans.

The bill, posted on the parliament's website overnight, contained 109 articles including those detailing the redeployment of civil servants, which has sparked widespread protests.

Greece has committed to carrying out the reforms in exchange for about 6.8 billion euros ($9.66 billion) in fresh bailout funds from the troika of international creditors - the European Union, the European Central Bank and the International Monetary Fund.

The Europeans have agreed to pay out some 4.0 billion euros ($5.68 billion) of that sum ''in the coming weeks'' and a further 1.0 billion euros ($1.42 billion) in October. The remainder is to come from the IMF.

Greek Finance Minister Yannis Stournaras has reportedly said that parliament has to approve the bill by July 19 in order for the heavily indebted country to receive the first instalment of the rescue funds.

Greece needs to redeem bonds worth 6.6 billion euros ($9.38 billion) by mid-August.

9:47am: Looking ahead locally today, we get Westpac's consumer confidence survey for July at 10.30am. That will be watched closely by investors and economists following yesterday's weak reading on business sentiment from NAB.

And it comes ahead of tomorrow's official jobs data for June, which is expected to show the jobless rate has risen from 5.5 per cent to 5.6 per cent.

Internationally, investors will be looking at Chinese trade data, due at midday.

9:37am: Aussie stocks are expected to extend gains in opening trade after global equity markets extended rose on optimism among investors after a good start to the US earnings season.

In the US, nine of the S&P's 10 industry sector indexes were higher. Industrial and materials shares logged the biggest gains, though Alcoa closed down 0.01 per cent at $7.91 a share after opening higher. Alcoa said it sees solid growth in global demand this year.

Of the 23 companies in the S&P 500 that have reported results, 65.2 percent have beaten analyst expectations, 21.7 per cent reported earnings in line with expectations and 13.0 per cent reported results that were below expectations.

"I would think that the trend is going to be up," says Jeff Meyerson, head of trading for Sunrise Securities in New York.

"We could at any time have a substantial correction again, but I think we still have a trend that's doing OK. That will be determined by how the earnings come out in the next few weeks."

9:36am: For a comprehensive look at this morning's business news, check today's need2know. Here are this morning's key markets numbers:

SPI futures are 17 points higher at 4858 The $A is steady at 91.64 US cents In New York, the S&P500 was 0.72% higher at 1652.3 In Europe, the FTSE1The 00 added 0.98% to 6513.08 China iron ore added $US1.80 to $US123.70 a metric tonne Gold added 0.9% to settle at $US1,245.90 an ounce WTI crude oil added 39 US cents to $US103.53 a barrel Reuters/Jefferies CRB index added 0.34% to 283.6


Good morning folks. Welcome to the Markets Live blog for Wednesday.

Contributors: Thomas Hunter, Jens Meyer, Max Mason

This blog is not intended as investment advice

BusinessDay with agencies

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