CMC Markets – Evening Update 15/02/13

By Donal Nee
CMC Markets Singapore

Asian markets took a bit of a breather today in what was a muted session, with most of the regional indices trading lower. Markets were not helped after reports yesterday showed the recession across the Eurozone economy deepened in the last 3 months of 2012 with Germany faltering in the face of weak demand across the debt-ridden region. The EU’s statistics office showed that the Eurozone economy shrank by 0.6% in the three months from October to December from the previous 3 month period. The decline was bigger than the 0.4% drop expected by the market. It showed the biggest fall since the first quarter of 2009 when the global economy was in its deepest recession. On the back of these less than impressive figures, the DAX closed down over 1% while the French CAC closed out the session down 0.7%. In the U.S, stocks managed finished the day flat, with S&P 500 closing out the session up 0.07%.

With that in mind, the Australian share market finished slightly lower today as it capped off an impressive week of gains of over 1.2% with the ASX 200 settling above the 5000 level for the third straight session. The best preforming sector today was the Financials which rose 0.2%. Materials however slumped 1.1% with Rio Tinto falling 2%, the drop came after the mining giant reported a substantial full-year loss after writing down the value of its coal and aluminium businesses. The company made a $3bn net loss for the year to 31 December 2012, compared with a $5.83bn profit the year before. The major news however out today was Australia & New Zealand Banking Group Ltd. who reported a 20% drop in first-quarter profit, citing weakness in its domestic markets and lower earnings from its investments. Cash profit was A$1.53 billion in the quarter, up 6.2% from a year earlier. With reporting season starting to heat up, today’s results by ANZ was a more sombre tone than rivals Commonwealth Bank of Australia , who provided a bumper earnings update earlier in the week with first-half cash earnings surged 6% to A$3.78 billion.

On the local Singapore market, all the talk today was on OCBC who reported its 4th quarter earnings with net profit rising 12% from a year earlier which was helped by strength in its life-assurance and wealth management businesses. Net profit for the three months ended the 31st of December rose to S$663 million, up from S$594 million a year earlier, For 2012, net profit rose to S$3.99 billion from S$2.31 billion in 2011, this reading beat the full-year estimate of S$3.59 billion. Despite today’s positive numbers, the Straits Times index closed down 0.4% as it rounded out the week up over 0.2%.

In Hong Kong markets finished the day flat as it rounded out its short week of trading up over 1%. Today’s muted session came as caution grew after the poor economic data from Europe. Shares of China Construction Bank dropped 0.5% along with Ping An Insurance falling 0.7%. Sino Land also shed over 1%. Japan was the worst preforming market, plunging over 1.2% led by banks and exporters, as investors weighed on whether Group of 20 nations will express their growing concern about the yen’s depreciation over the last number of weeks. Currency-sensitive auto stocks were among the worst performers with Mazda down 5.9%. Technology exporters’ losses included a 2% drop for Casio Computer and a 3.4% loss for Panasonic while shares in Sony fell 4.6%.

The US dollar slipped to ¥92.27 against the Japanese yen today, down from highs of ¥92.90 witnessed from the previous session however it managed to rebound to ¥92.58 late in today’s session. This come as the Yen will most likely to be a particular focus for the G20 meeting which kicks off today, given that it has fallen by more than 6% against the dollar in about six weeks.

U.S Crude Oil futures traded lower falling to $97.20 a barrel after hitting highs of $97.50 earlier in the session, Crude has managed to hold its ground above $97 a barrel after finding support with a drop in weekly U.S. jobless claims earlier in the week.

Tonight we see finance leaders of the Group of 20 major economies will be gathering in Moscow, as they kick off a 2 day summit which is reported to include discussions to back a pledge to refrain from competitive devaluation. With this weekend G20 summit sure to capture our attention, next week will not be without its excitement’s as reporting session across the Asian region begins to heat up however on Tuesday we will have Australia’s Monetary Policy Meeting Minutes, with many searching for details to see if there will be any potential rate cut in the near future. On Wednesday night we will have the FOMC Meeting Minutes out of the U.S followed by U.S Existing Home Sales on Thursday.


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