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CMC Markets – Evening Update 18/02/13

By Donal Nee
CMC Markets Singapore

Asia stocks traded mostly higher today with Japan’s Nikkei continuing its strong performance as it climbed over 2% during today’s sessions. These gains came amid commitments made by finance ministers during the G-20 meeting In Moscow over the weekend, that the Japanese economy had scope to keep stimulating its stagnant economy. With that in mind currency sensitive stocks were the big winners today with Toyota Motors, the world’s biggest carmaker, jumping 1.6%, boosting the earnings prospects for Japanese exporters.

The G20 meeting in Moscow was the big talking point over the weekend, as the powers that be pledged to crack down on tax avoidance by multinational companies saying members were determined to develop measures to stop firms shifting profits from a home country to pay less tax elsewhere however the G20 finance ministers stopped short of singling Japan out for criticism over the recent weakness of its currency, which has aiding its exporters. IMF chief Christine Lagarde also came out and stated that global growth was still weak and unemployment was outrageously high in many countries, and that policies should be directed towards creating jobs and growth. In the U.S on Friday night, the share market closed on a mixed note with the Dow adding 0.1% however the S&P 500 shed 0.1% as the index finishing with its seventh consecutive week of gains, the longest string of wins since January 2011, and hit its highest level since October 2007. Contributing to the early strength was an upbeat January consumer sentiment survey from the University of Michigan. According to the preliminary reading, the survey rose to 76.3 from its prior reading of 73.8. The report surprised to the upside as the market consensus had expected the survey would climb to 73.5. With the 1st of March deadline quickly approaching in the latest Washington budget battle, a key question is whether the likelihood of federal spending cuts will force a correction in a stock market sitting at multi year highs.

In Australia, the local share market closed out the day with a solid performance, up over 0.6% which was led by the major banks. Among these banks were ANZ which rose over 2.6% to $28.50, Westpac also jumped 3.6% to close out the session at $30.20. Bendigo and Adelaide Bank was3.2% higher as it said interest rates on deposit accounts may be about to fall as other sources of funds become cheaper and more accessible for banks. BlueScope Steel managed to post a $12 million loss for the first half of the financial year; the manufacturer’s loss in the six months to December 31st was an improvement from a $530 million loss in the same period in the previous year. The previous corresponding period’s loss was a result of massive restructuring within the business, including job cuts, aimed at overcoming the impact of the high Australian dollar and strong competition from overseas. As a result of the big turnaround in performance, Bluescope managed to close out the day up over 15% In Hong Kong, the share market edged down 0.3% with logistics firm Li & Fung Ltd who serving Wal-Mart Stores Inc. was among today’s losers closing down 1.2% after reports that a Wal-Mart executive calling the U.S. retailer’s February sales “a total disaster” in an internal email. Resources also took a hit with Chalco, down 1.4% as base-metal prices lost ground on the London Metal Exchange, while energy major PetroChina fell 1.3%.

Gold managed to trade fractional higher around the $1614.20 an ounce level today as the precious metal moving off a multi-month low reached in the previous session. On Friday, gold dropped 1.6%, to settle at $1,609.50 an ounce, this was the lowest settlement price since Mid-August.

Reporting season gets in full swing this week, with BHP and Fortescue Metal due to report mid-week in Australia not to mention Capitaland and Sembcorp Marine’s quarterly results also due out at the end of the week. 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.