NEW YORK - Wall Street shares vaulted higher, with investors optimistic that the US congress was on the verge of a deal on a massive rescue plan for the financial sector.
The Dow Jones Industrial Average gained 196.89 points, or 1.82 per cent, to 11,022.06.
The Nasdaq composite added 30.89 points, or 1.43 per cent, to 2,186.57, and the Standard & Poor’s broad-market index increased 23.31 points, or 1.97 per cent, to 1,209.18.

LONDON - The London FTSE index rose 101.4 points, or 1.99 per cent, to close at 5,197.02 points.

FRANKFURT - The DAX added 120.16 points, or 1.99 per cent, to close at 6,173.03 points.

PARIS - The CAC 40 gained 112.27 points, or 2.73 per cent, to 4,226.81 points.

TOKYO - The Nikkei lost 108.5 points, or 0.9 per cent, to close at 12,006.53 points.

HONG KONG - The benchmark Hang Seng Index closed down 27.56 points, or 0.15 per cent, at 18,934.43.

WELLINGTON - The benchmark NZSX-50 index closed down 21.964 points, or 0.67 per cent, at 3237.715 points.

SYDNEY - The Australian stock market is expected to open stronger today after US political leaders struck an agreement in principle on a $US700 billion plan to revive the crippled financial system.
It is hoped both houses of US congress will vote on the plan within days.
Wall street and European markets have reacted positively to the news, with major indices recording gains of around two per cent.
At 0735 AEST, the Sydney Futures Exchange’s December Share Price Index contract was up 63 points at 5,057.
In news today, Greater Bendigo Gold Mines holds a general meeting.
Heritage Gold NZ, a company listed in both Australia and New Zealand, holds its annual general meeting in Auckland.
The Emissions Measurement and Information Systems conference continues in Sydney.
Yesterday, the benchmark S&P/ASX200 closed down 54.5 points, or 1.09 per cent, at 4927.4, while the broader All Ordinaries lost 47.4 points, or 0.95 per cent, to 4960.8.

NYMEX
Crude oil rebounded on hopes that the $US700 billion bank bailout plan would stabilise the teetering US economy and boost domestic energy demand.
New York’s main contract, light sweet crude for November delivery, rose $US2.29 to settle at $US108.02 a barrel.
In London, November Brent crude rose $US2.15 to settle at $US104.60 a barrel.

COMEX
Gold prices fell as an agreement in principle on a US government financial rescue package prompted investors to sell safe-haven assets in favour of stocks.
Gold for December delivery fell $US13 to settle at $US882 an ounce on the New York Mercantile Exchange, after earlier falling as low as $US868.80.
Other metals traded mixed. December silver fell 16.5 US cents to settle at $US13.275 an ounce, while December copper rose 2.8 US cents to settle at $US3.1345 a pound.

NEW YORK - Wall Street lost ground in a late-day selloff as traders feared the US government’s banking sector bailout faces delays at it passes through congress.
The Dow Jones Industrial Average closed down 161.52 points, or 1.47 per cent, to 10,854.17.
The tech-heavy Nasdaq composite slumped 25.64 points, or 1.18 per cent, to 2,153.34 and the broad-market Standard & Poor’s 500 index lost 18.87 points, or 1.56 per cent, to a close of 1,188.22.

LONDON - The FTSE 100 share index closed down 100.2 points, or 1.91 per cent, at 5,136.1, as investors waited for US congress to pass the bailout measures.

FRANKFURT - the DAX shed 39.22 points, or 0.64 per cent, to close at 6,068.53 points.

PARIS - The CAC 40 fell 83.69 points, or 1.98 per cent, to 4,139.82 points.

TOKYO - Japan’s markets were closed for a public holiday.

HONG KONG - The benchmark Hang Seng Index closed down 759.35 points, or 3.87 per cent, at 18,872.85.

WELLINGTON - In a quiet day’s trade, the benchmark NZX-50 finished down 27.526 points, or 0.845 per cent, at 3228.189.

SYDNEY - The Australian stock market is expected to open lower today after US stocks fell again as investors worried that the US congress was beginning to doubt the need for a government bailout of financial institutions as a way to revive credit markets.
At 0802 AEST, the Sydney Futures Exchange’s December Share Price Index contract was down 71 points at 4,939.
In news today, retailer David Jones delivers its full year results.
Air New Zealand and the Australian Securities Exchange (ASX) hold annual general meetings.
Empire Oil & Gas NL holds a general meeting.
Mercer will host a briefing on sovereign wealth funds by Future Fund chairman David Murray.
The Department of Education, Employment and Workplace Relations releases its skilled vacancies survey for September.
Australian Bureau of Agricultural and Resource Economics executive director Phillip Glyde will speak at an Australian Business Economists briefing on the outlook for soft commodities.
The Industrial Foundation for Accident Prevention’s (IFAP) Safety 08 conference continues in Perth.
The Mining & Energy NSW exhibition concludes.
Yesterday, the benchmark S&P/ASX200 index closed 97 points lower, or 1.93 per cent, at 4923.5 yesterday, while the broader All Ordinaries lost 92.4 points, or 1.83 per cent, to 4957.7.

NYMEX
Oil prices pulled back after a record rally on Monday, dropping for the first time in five days of trade as uncertainty over the US financial bailout plan and a stronger dollar led investors to shed commodities.
Light, sweet crude for November delivery fell $US2.76 to settle at $US106.61 on the New York Mercantile Exchange, after earlier dipping as low as $US104.05.
In London, Brent North Sea crude for November shed $US2.96 to settle at $US103.08 a barrel.

COMEX
Gold for December delivery fell $US17.80 to settle at $US891.20 an ounce on the New York Mercantile Exchange.
December silver fell 28 cents to settle at $US13.17 an ounce on the Nymex, while December copper lost 10.3 cents to settle at $US3.152 a pound.

It sounds like more of the same from the past few weeks: sharemarkets rattled, financial stocks rattled and commodities on the slide. 

Well, it was up till Friday when it suddenly became a very different story.

And this morning, a switchback, with oil under the $US100 a barrel mark in New York trading early today as damage from Hurricane Ike wasn’t as bad as feared.

The US dollar fell Friday as the slide in the euro came to an end; the Australian dollar bounced a couple of cents; gold, copper and several other commodities rose and Hurricane Ike was the big influence.

But the big question was whether Friday’s bounce was due to Ike coming ashore and apparently not leaving too much damage to the oil and gas producing, refining and distribution facilities along the Texas coast between Houston and Galveston.

At least 13 refineries in Texas were shut for the passage of Ike.

That was 3.64 million barrels a day of refining capacity.

But as we have seen after storms in the past month, once the situation is clarified, then the prices of oil, petrol and gas will ease quite quickly.

And that’s what seems to have happened after Ike as oil fell in early electronic trading in new York to $US99.25 after dropping to $US98.75 a barrel early this morning, our time.

The October New York contract briefly dipped to $US99.99 on Friday, falling under the $US100 level for the first time since April 1.

But Nymex crude in New York rose 31c to close at $US101.18 a barrel.

In London, October Brent North Sea crude eased 6c to settle at $US97.58 a barrel.

Oil prices are down $US47.29 a barrel since the peak of $US147.47 on July 11.

For all the sound and fury of Ike, the real story remains the continuing dip in American consumption of oil-based energy products.

US energy consumption is down 3.8% over the past four weeks compared with the same period in 2007, while petrol consumption is down 2.1%.

 

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On the Chicago grain markets, the emphasis is shifting as the harvest gets underway and the yields of wheat, corn, soybean and other crops becomes clearer.

The United States Department of Agriculture said on Friday that the hugely important corn harvest won’t be as big as thought because of widespread dry, warm weather last month.

The USDA said farmers will harvest 1.8% less corn than forecast last month, while the soybean harvest will be down 1.3%, but wheat output will be higher in both the US and globally.

The USDA forecasts steeper increases in corn and soybean prices, which have eased from the record levels set earlier in the year.

December corn rose 30 USc, or 5.6% on Friday to $US5.6325 a bushel in Chicago. That pushed prices up 2.7% this week. That left the price of the most active contract down 30% from the all time high of $US7.9925 in late June.

November soybean futures rose 26c, or 2.2%, to $US12.02 a bushel in Chicago. The price rose 2.1% last week. Beans are down 27% from the all time high of $US16.3675 hit in early July

The USDA said the average cash corn prices in the crop year that began September1 were $US5.50 a bushel, compared with $US5.40 estimated in August and $US4.20 in the most recent year.

The Department said cash soybean prices will average $US12.35 a bushel this crop year (which started on September 1), up from last month’s estimate of $US2.25 and up from $US10.15 in the previous year.

 

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Wheat was the odd one out with prices falling for a third straight week after the USDA made no change in its estimate of US domestic stocks in the coming year, suggesting that there might be more grain than the market thought.

The USDA said it expects US carryover stocks on May 31 (the end of the wheat crop year) will be around 574 million bushels, while exports will total 1 billion bushels, matching the forecasts made in August by the USDA.

December wheat futures fell 7c to $US7.1925 a bushel on Friday, down 4.3% over the week and 19% this year.

The USDA also increased its estimate of global production to a record 676.3 million tonnes, up from last month’s forecast of 670.8 million tonnes.

Canadian farmers will harvest 25.4 million tonnes, up slightly from the August forecast of 25 million tonnes; European Union output will be 147.2 million tonnes, up from 143.2 million tonnes in the August forecast and these will offset declines in Australia and Argentina: Australia will produce 22 million tonnes, down from the 25 million tonnes in the August forecast and Argentina growers may harvest 12.5 million tonnes, 1 million tonnes down on the August estimate.

According to the USDA’s forecast, the US is expected to be the largest exporter of wheat, followed by Canada, Russia, Australia, Ukraine and Argentina.

 

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Copper had its best week in three, rising sharply on Friday as the US dollar lost ground against the euro.

Comex December copper futures added 7.15 USc, or 2.3%, to $US3.194 a pound. The price was up 3.1% last week

The metal climbed from Wednesday-Friday, as signs of declining mine output increased concerns that supplies may be tight next year. Some analysts, especially at Citigroup, are forecasting demand to run ahead of production next year.

Copper was also supported Friday by a fall in Chinese stocks.

Stocks overseen by the Shanghai Futures Exchange dropped 29% to 13,554 tonnes, the lowest level since 2003.

On the London Metal Exchange, three month copper rose $US192, or 2.8%, to $US7,122 a tonne, or $US3.23 a pound.

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Gold jumped Friday, ending a nine-day losing streak, thanks to the US dollar’s fall against the euro.

The euro rose as much as 1.5% against greenback, but ended off 0.3% for the week.

The Australian dollar finished at $US82.36 in New York, up from $US80.48 in Sydney on Friday afternoon and $US81.64 in Sydney the week before.

It was a rare gain for the currency, the first for a month or more over the week and the strongest daily performance for weeks.

Gold fell 4.8% over the week, despite a $US19 dollar an ounce rise on the day.

Comex December gold rose $US19, or 2.5% to $US764.50 an ounce in New York. The metal had fallen 11% from the end of August to last Thursday

Silver also had a rare rise, finishing up 24c, or 2.3%, to $US10.795 an ounce for the December contract. The metal still dropped 12% last week and is down 28% this year.

Gold is down 26% from the record $US1,033.90 reached in March and is off 8.8% in 2008.

 

 .

Midday Market Roundup 18/08/08
August 18 2008 - Australasian Investment Review – (AIR)

 

We have started off the week OK – up 36 – the SFE Futures suggested an 8 point fall in the market this morning. Resources up 1.4%, Financials up 0.4% after another 6% fall from Babcock & Brown this morning with Babcock & Brown Power down 30.6% on news of a big provision. MQG also down 2.6%. Market is waiting for BHP Billiton’s result – Last year they came out at 3:55pm. Expecting record $15.7bn profit. Commentary on China all important and will set tone for the resources sector which has fallen over 25% since May 19th.

 

Wall Street finished higher on Friday – up 44 – The main point was oil and commodities down again on a rising US dollar. Goldman Sachs says the US dollar has bottomed. Continuing credit-related concerns amidst multi-billion-dollar buybacks of Auction Rate Securities plus some weak economic numbers.  Wachovia announced it will buyback $8.5bn worth of auction-rate-securities and pay $50m in fines, retailers close up 1.8% on better-than-expected 2Q results and the University of Michigan’s July consumer sentiment figures were up less-than-expected – suggest an economy still under pressure.

 

• Both BHP and RIO down 1.77% in ADR form on Friday.
• Metals mixed – Zinc up 1.33%, Aluminium up 0.22% and Nickel down 2.2%. Copper down 0.04%.
• Oil price down $1.59 to $113.46 on growing concerns about demand in industrial nations and the stronger dollar. Woodside up 122c to 5542c.
• Gold down $22.30 to $788.40. Newcrest up 40c to 2483c.
• US Bonds up with the 10 year yield down to 3.84% from 3.90%.

 

We have a busy week ahead with a host of results as we get into the guts of the reporting season. Most notable companies reporting include: Tuesday: CSL, Boral, Newcrest Mining, Wednesday: Coca-Cola Amatil, Perpetual, AGL Energy, Thursday: Amcor, Tabcorp Holdings, QBE Insurance and on Friday we have Wesfarmers, Caltex and Boral.

 

Results Today…

 

• Ansell’s (ANN) – GOOD - Final result has come in better-than-expected. FY net profit up 2.6% to $102.6m, better than $97.2m analysts’ had expected. Declared a final dividend of 15.5c. ANN up 5c to 1129c.
• Seek (SEK) – BELOW EXPECTATIONS - Has announced a 37.4% increase in FY net profit to $76.3m, stronger than UBS Warburg’s forecasts of $75m but below Credit Suisse’s bullish prediction of $80.7m. GSJB Were expected $78.1m. SEK up 5c to 514c.
• BlueScope Steel (BSL) – GOOD - Announces an underlying profit of $816m, up 27%. UBS Warburg expected $728m. After significant items, FY profit came in at $596m, down 13%. Declared a 27c final dividend, up from 26c last year. BSL unchanged at 1329c.
• Sino Gold (SGX) has posted a net loss of $2.6m compared to the $3.12m loss announced last year. Revenue of $100.2m. No dividend. SGX down 13c to 421c.

 

Other Announcements

 

• Babcock & Brown Power (BBP) announced it will take a total impairment charge of $452m relating to the takeover of Alinta. Reaffirmed EBITDA and has realized $40m from its decision to sell its Tamar power stations project. BBP down 30.6% to 30c.
• Babcock & Brown (BNB) has also confirmed its interim result guidance saying the guidance (profit warning) last week included the impact of the impairment charge. BNB down 19c to 426c.
• Talk of Commonwealth Bank of Australia making a $6bn plus takeover offer for BankWest having pulled out of the race to buy ABN AMRO’s Australian investment banking operations. CBA down 104c to 4265c.
• Straits Resources (SRL) announced they will sell their coal assets – Madagascar and Brunei - to its subsidiary Straits Asia for US$100.3m. SRL down 12c to 488c.
• Emeco Holdings (EHL) has successfully executed a 3 year $630m senior debt package. Cost of debt up 130bps after the refinancing. EHL up 0.5c to 109.5c.
• Perpetual (PPT) says funds under management fell slightly in July to $30.2bn from $30.3bn in June. PPT up 205c or 4.6% to 4705c. 
• Allco Finance Group (AFG) announces Credit Suisse Group has agreed to waive Rubicon America Trust’s (RAT) financial covenants and obligation to make a debt repayment until August 22. AFG unchanged at 48c.
• GSJB Were maintain their OUTPERFORM recommendation on Crown (CWN) and 1060c target price ahead of its result tomorrow. CWN down 1c to 825c.
• Fairfax Media (FXJ) only down 2c to 273c despite Citi cutting its target price on the stock by 22% to 291c from 371c. They say advertising outlook in New Zealand and regional Australia looks soft. FXJ down 2c to 273c.
• No indication from Treasurer Wayne Swan as to whether the government will approve Westpac’s (WBC) bid for St. George (SGB). He has also told the banks to follow the RBA’s lead and cut rates if the RBA does reduce interest rates at their next meeting.

 

The key word in the title of this article is “Finding”.  “What is the best market to trade in ?” This seems like a very reasonable question and people become frustrated when the answer is “It depends”.

Imagine if you will, that the time had come to replace your car and that you had the opportunity to ask Michael Schumacher for his opinion as to the best car you could get. What might his possible answers be?

• A Ferrari
• Something with maximum power to weight ratio
• Anything red with superb traction in corners

 

Or he might say “It depends. What do you want it for, how much do you want to spend, what trade-off can you accept between performance and running costs, do you want spare parts and servicing available promptly, anywhere?

Back to trading again, there are specific characteristics of different markets be they stocks, currencies, index futures or commodity futures that can work better or worse with different trading plans but unfortunately there is not a brochure that neatly tabulates the features for comparison.

Finally, there is the unfortunate fact that the markets are greatly affected by human emotion and mass psychology so they can be capricious and change their character for no obvious reason. For example on the 11th July Oil touched 147 USD and yet on the 5th August reached as low as 120 USD, an 18% decline in 16 trading days. Does it seem likely that the world’s energy demand fundamentals have changed this quickly? No of course not, but as traders we don’t particularly care so long as we know how to capture some of that short but highly profitable move.

Closely related to our first question, is “How do I get more consistent results from my ABC Trading Plan as taught in the Smarter Starter Pack?” Often, this is a question arising from having expectations which exceed our current level of study and experience. Would we give our children the keys to a car, point out the steering wheel, the “go” pedal, the “stop” pedal, and tell them to read the RTA book of road signs and expect them to drive safely in the city and the country, in day and night, in sun fog or snow and to watch out for drivers who break the rules?

It is common sense that we would not do this, but every week people excitedly rush into their first trade having not completed the reading, watching or practicing aspects of their education, having not spent enough time understanding the powerful software tools they own, and having not tested their plan on their chosen market.

Yet the excitement and desire to be successful dulls our perception of danger. We have all been there but as independent, self-directed traders and investors we owe it to ourselves to note W.D. Gann’s words in “Speculation, A Profitable Profession” – “Remember that the harder you work, the more knowledge you will get, and the more profits you will make.”

Rather than being a “One Size Fits All” proposition, the “ABC Trading Plan” is in fact a framework of trading plan options that can be shaped to specific goals. It is essential that we each make it our own so in future articles I will further explore some of those choices.