The ASX 200 is up 52. ASX 200 Futures were up 5 this morning.

The Dow Jones finished down 9 but is expected to jump tonight after the speech by US Federal Reserve chairman Ben Bernanke this morning. The Dow was up 49 at best and down 41 at worst.

The Dow Futures were up from+21 to +101 this morning in the wake of the Bernanke speech after-hours in the US. The Bernanke message is that even if unemployment hits 6.5% they won’t necessarily raise rates… in other words policy could remain highly accommodative a lot longer than the market expects. It sort of passes the message that tapering of QE is somewhat less likely but he didn’t say that. The US$ has fallen (A$ up), Gold is up. See below for more.  The A$ bounced this morning on Bernanke’s speech. The Gold price has bounced as well.

The Chinese market jumped 2% yesterday on talk that the Chinese Central Bank would respond to yesterday’s weak import export numbers by cutting interest rates and bank reserve requirements.

The FOMC minutes out overnight saw about half of the Fed members believed it would be appropriate to bring asset purchases to a close late this year whilst others wanted to see more signs of improvement in the economy. The Minutes didn’t rule out tapering and gave the impression the Fed are on ‘data watch’. US Wholesale inventories were down 0.5% in May – the biggest decline since September 2011.

Best sectors — health care, technology, utilities. Worst sectors — energy, financials, materials.

France’s industrial production was down 0.4% in May — annual growth was back into positive territory at +0.4% for the first time in over a year. Italy’s industrial production was up 0.1% in May but was still down 4.2% over the year. European markets mostly down — UK FTSE down 0.12%, Germany up 0.11%, France down 0.08%, Spain down 0.25%, Italy down 0.72%, Greece down 2.24%.

Metals mixed — copper down 0.68%, nickel down 1.24%, zinc up 0.33%, aluminium up 0.20%. Spot iron ore was up 20c to $123.90. Gold was up $15.70 to $1261.60. Oil was up $2.64 to $106.71. The A$ is at 92.44c.

Announcement and stories:

  • Australia’s unemployment rate rose to 5.7% from 5.5% in May above an expected 5.6%.
  • Jumbo Interactive (JIN) — Up 8.2% after announcing that their German subsidiary has been awarded licenses for five years in all 16 German states. This permits the company to begin selling official German lotteries across the whole country via web and mobile.
  • Western Desert Resources (WDR) — Successfully completes $17.4 million capital raising. WDR is down 12.14% to 61.5c.
  • Troy (TRY) – To proceed to compulsory acquisition of Azimuth. TRY is up 11.1% to 155.5c.
  • From the FOMC Meeting minutes —– Tapering seems slightly less likely. Although several members of the FOMC said a reduction in asset purchases “would likely soon be warranted” the minutes also saw a lot of Fed Governors saying they want to see more tangible signs of US economy recovery before they would support a cutback of US Fed asset purchases (QE). The wash up seems to be that the Fed are on “data watch” and tapering depends on how that turns out. Strong jobs numbers last Friday suggest tapering is inevitable if the US economy continues to improve. Otherwise the minutes were a repeat of the statement at the time. Some commentators are saying the market has got well ahead of itself talking about tapering.
  • Magellan Financial Group (MFG 1204c) — The stock that keeps going up. This time last week the stock opened at 980c. Since then JP Morgan put an Overweight recommendation on it with a target price of 1100c. The stock is now trading at 1204c and is just a whisker away from a $2 billion market capitalisation. The company revealed on Friday that it was entitled to estimate performance fees of $23.1 million for the six months ending June 30. Trading on a PE of +51x – it’s looking a bit too expensive at its current level, to jump in now. It benefits from a fall in the A$. It is down today.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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