Capio Capital Market Overview and Trade Ideas Asian stocks are trading weaker this morning with Hong Kong shares falling to their lowest level this week, as weakness in the Chinese financial sector dragged on the market after a private preliminary survey showed that factory activity contracted in January for the first time in six months. Australian stocks are lower with disappointing local CPI data weighing on the market. Insurance Australia Group lost 2.9% after the company reduced its gross written premium growth guidance. Rival Suncorp Group Ltd lost 2.3%. The mining sector was also under pressure as the copper price fell and iron ore fell to its lowest level in more than six months. BHP Billiton is down 1.66%, and Rio Tinto is down 1.09%. After the release of strong jobs data in London, the FTSE 100 retreated off earlier highs as the prospect of interest rate hikes and concerns about weak company earnings and high valuations weighed on their market. Royal Bank of Scotland lost 3. 1 % after UBS downgraded the stock to sell from neutral. SAB Breweries remained under pressure, after the disappointing sales figures reported on Tuesday, resulted in further downgrades from a number of brokers. European stocks ended the day with small gains, with the Stoxx Europe index rising 0.09%. Peugeot climbed 5.8% after Moody’s investors Service stated that the auto makers planned 3 Billion euro capital increase was positive for its credit rating. US markets ended the day almost flat, with the S&P500 closing up 0.06% and the Nasdaq rising 0.41%, while the Dow fell 0.25%. IBM disappointed, losing 3.3% after the tech giant missed revenue expectations amid weakening demand, particularly in China. On the upside, United Technologies rose 1% after reporting fourth quarter earnings which beat expectations. After the market close, both Netflix Inc and eBay Inc reported results which pleased the market and were up 17% and 11% respectively in after-hours trading. JSE’s top 40 index (+0.16%) ended the day slightly firmer, with platinum and gold stocks leading the gains (Harmony +3.38%; Impala Platinum +2.81%). Anglo American platinum (+3.44%) rallied after releasing a positive trading statement ahead of planned strike action, which is expected to start today. Retailers and Banks rebounded after recent weakness, with Shoprite (+2.73%), Tiger Brands (+2.39%) and Standard Bank (+2.17%) amongst the better performers. BHP Billiton (-0.66%) closed weaker after reporting weaker than expected second quarter iron ore output, the stock was also cut to neutral from overweight at HSBC. The value traded at 5pm was around R12 bn with the currency at R10.87 vs. the USD. Trade Ideas 1) Long: LHC off R38, stock has support at the R37.80 level. We have a short term target price of R42, stoploss at R37. 2) Keep an eye on Tencent, stock looks tired and if it brakes support at the 520 level it would be worthwhile shorting NPN.
Posted on: Thu, 23 Jan 2014 07:05:14 +0000
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