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Weak outlooks doom Dow to worst day in 4 months
The New York Stock Exchange seen with a Wall street sign in front
* Dow off 1.8 pct, S& P 500 off 1.4 pct, Nasdaq off 0.9 pct
* DuPont drops sharply on results, UTX modestly lower
* Apple launches tablet shares end lower
* About 63 pct of S& P companies miss revenue expectations
By Caroline Valetkevitch
NEW YORK, Oct 23 (Reuters) - U.S. stocks fell on Tuesday, driving the Dow industrials to the biggest drop since June 21, as weak results from index members DuPont and United Technologies showed profit growth is slowing.
This earnings season has so far produced a string of disappointments from companies falling short of Wall Street's expectations. With results in from 29 percent of S& P 500 companies, 37 percent have exceeded revenue forecasts, far short of the 62 percent average, and just 57.2 percent of the S& P 500 names reporting so far have beaten earnings forecasts, according to Thomson Reuters data.
That would be the worst percentage of companies beating earnings estimates since the fourth quarter of 2001 - should it stay at the current level, the data showed.
" We've had a series of misses, topped off by DuPont's pretty dismal earnings this morning," said Bruce Zaro, chief technical strategist at Delta Global Asset Management, in Boston.
" Expectations were low and results have been coming in generally lower, and that's why we're seeing weakness here," he said.
Zaro sees the S& P 500 possibly falling as low as the 1,390 to 1,400 range in the near term.
DuPont's stock lost 9.1 percent to $45.25 after the chemical company reported lower-than-expected quarterly profit and announced 1,500 job cuts. The stock was responsible for a 33-point drag on the Dow, which ended down more than 240 points.
The S& P materials sector index fell 3 percent, largely because of DuPont.
Outlooks have been weak as well. DuPont, United Technologies and 3M Co all cut their outlooks on Tuesday.
Apple's Chief Executive Tim Cook announced the iPad and iPhone maker was launching a smaller, cheaper tablet. Its 8-inch tablet is expected to compete in a market staked out by Amazon.com Inc and Google Inc. Apple shares dropped 3.3 percent to $613.36.
Shares of elevator and air conditioner manufacturer United Technologies were down 1 percent at $77.07 while 3M shares were down 4.1 percent at $88.73.
The Dow Jones industrial average slid 243.36 points, or 1.82 percent, to close at 13,102.53. The Standard & Poor's 500 Index fell 20.71 points, or 1.44 percent, to 1,413.11. The Nasdaq Composite Index dropped 26.49 points, or 0.88 percent, to end at 2,990.46.
After the bell, shares of Facebook shot up 8.6 percent to $21.18 as the world's No. 1 online social network company posted a 32 percent jump in third-quarter revenue. Facebook ended the regular session at $19.50, up 0.9 percent.
Shares of Netflix lost 16.5 percent to $57 after the bell after it reported subscriber additions at the lower end of its forecast for the U.S. TV and movie streaming business. Netflix ended regular trading at $68.22, up 0.5 percent.
One outlier from the regular session was United Parcel Service, which gained 3 percent to $73.73 despite earnings that were viewed by some as disappointing. The Dow Jones Transportation Average rose 0.9 percent.
Overall earnings for S& P 500 companies are expected to fall 2.5 percent in the third quarter from a year ago, Thomson Reuters data showed.
In a development reviving investors' worry about Europe, Moody's downgraded five key Spanish regions by one or two notches late on Monday, citing their limited cash reserves and forthcoming bond repayments.
Volume was roughly 6.6 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of 6.52 billion.
Decliners outnumbered advancers on the NYSE by a ratio of about 11 to 4. On the Nasdaq, about five stocks fell for every three that rose.
Actually, Obama Is A Lot Closer To Winning The Election Than You Think
Getty Images
With two weeks to go until the election, it seems safe to say that nobody knows who will win the presidential race at this point. Most polls show President Barack Obama and Mitt Romney in a virtual dead heat, with no obvious moments for either candidate to break away before November 6.
The race will now likely come down to the campaigns' respective " ground games" — grassroots field organizing that focuses on identifying voters, persuading them to vote for your candidate, and then making sure they cast their ballot, either on or before Election Day.
The conventional wisdom is that the Obama campaign holds a big lead in this realm of campaigning. Democratic turnout operations have traditionally been stronger than those of Republicans, largely due to union organizing efforts. The Obama campaign built up this advantage with its famously massive 2008 field organization, and many of the field offices established four years ago just never closed.
In this race, Obama campaign has an overwhelming advantage over Romney in the number of field offices the campaigns have opened, both nationally in key swing states.
In Ohio, for example, the Obama campaign has about 122 field offices across the state. The Romney campaign has 40. In Florida, Obama has 102 local offices, compared to 48 for Romney.
Now, as the momentum in the race continues to favor Romney, the Obama campaign is highlighting this ground game advantage as evidence that the president is actually winning the race where it counts.
On a conference call with reporters this morning, Obama campaign manager Jim Messina pointed to the president's advantage among early voters as evidence of the campaign's superior organization. Significantly, Messina noted that, in battleground states, the campaign is beating Republicans in turning out " sporadic voters" — an term he used to describe voters who are voters who are not likely to get themselves to the polls on Election Day.
" Early vote is not taking a final universe of voters and only changing the day they vote," he explained. " If that were what we were doing, that would be concerning. What early vote does is help us get out low-propensity voters – voters called “sporadic” voters – which broadens are universe and freezes up more get out the vote resources later and especially on Election Day. And let’s be very clear, more sporadic Obama voters are voting than sporadic Republicans in the battleground states, and that is both a sign of enthusiasm, but also organizational strength that is going to matter down here."
It is virtually impossible to verify Messina's claims. But if he is correct, than it stands to reason that public polls may not accurately reflect Obama's standing in the race because sporadic voters — including those who end up voting on Election Day — would be passed over by at least some " likely voter" models.
Take, for example, the daily Gallup tracking poll, which has shown Romney with a significant lead since the poll began measuring " likely" voters at the beginning of October. Gallup's likely voter model is known to be particularly selective, so it seems safe to assume that fickle voters are not included in those results and among registered voters, Gallup has found the race in a virtual deadheat.
Messina's argument only stands if Republicans are not making an effort to mobilize " sporadic" voters as well. But the GOP has made significant strides in its voter turnout operations since 2008, and Republicans tell Business Insider that they are outperforming their voter registration numbers in early voting in key battleground states, and have increased their share of early voting from 2008. The Romney campaign also pointed out that volunteers have made contact with 44.8 million voters, and knocked on over 9 million doors this election cycle. (Democrats claim these numbers are inflated because they include automated messages.)
Moreover, while the Romney campaign organization does not approach the scale of the Obama network, the Republican National Committee has built up its ground organization since 2008, as evidenced by the 2010 midterm elections and, to a lesser extent, the Wisconsin recall races of 2011 and 2012.
In addition, outside conservative groups, like the Tea Party-affiliated Freedomworks and Americans For Prosperity, have made significant strides in voter mobilization since 2009, as have social conservative groups like Ralph Reed's Faith and Freedom Coalition.
Still, it is impossible to predict the effectiveness of these disparate Republican turnout efforts, or how they will compare to the well-oiled Obama campaign.
" We know what we know and they know what they know," Obama's senior campaign strategist David Axelrod told reporters Tuesday. " We'll know who is bluffing and who isn't in two weeks."
STOCKS GET CRUSHED: Here's What You Need To Know
YouTube Screenshot
Earnings announcements are getting uglier, and traders and investors are getting worried.
First the scoreboard:
Dow: 13,103, -242.3, -1.8 percent
S& P 500: 1,413, -20.1, -1.4 percent
NASDAQ: 2,990, -26.2, -0.8 percent
And now the top stories:
- Chemical giant and Dow component DuPont tanked today after an ugly earnings announcement. Both revenue and earnings fell short of expectations. Management blamed declines in their electronics, communications, and performance chemicals business. They also noted Asia was particularly weak. The company also slashed full year earnings guidance and announced a new restructuring plan, which will include 1,500 layoffs.
- Other huge companies to slash guidance included Dow component 3M and semiconductor behemoth Texas Instruments.
- One notable area of strength today was the Dow Transports, aka the " trannies." Leading the trannies today is Ryder System, the trucking and logistics company that blew away earnings expectations and raised full-year guidance. UPS was also up.
- Yahoo! announced a stellar Q3. This was the company's first earnings announcement with new CEO Marissa Mayer at the helm. Tech companies were among the leaders in today's market action. Semiconductor giants AMD and NVIDIA were both up significantly.
- Apple unveiled a slew of new products today including the iPad Mini, a new iPad, and several new iMacs. It's worth noting that Apple shares immediately dropped by $8 after management announced the iPad Mini would be selling for $329.
- Norfolk Southern, Netflix, and Facebook are among the big names announcing earnings after the bell today. Follow the releases LIVE at BusinessInsider.com.
- Don't Miss: The 20 Worst Economies In The World >
5 hours ago October 23, 2012 19:15 UTC+8
Crude Palm Oil Falls on Profit-Taking Downside Limited
Crude palm oil futures on Malaysia’s derivatives exchange ended lower Tuesday as investors booked profits but the downside appeared limited by concerns that annual floods in key growing regions could disrupt harvesting.
The benchmark January contract at Bursa Malaysia Derivatives ended 1.4% lower at 2,540 ringgit a metric ton after moving in a range of MYR2,520-MYR2,560/ton.
A disruption of harvesting at a time of strong export demand may prevent a further buildup of stockpiles, which hit an all-time high of 2.48 million tons at the end of September.
Prices aren't likely to fall further because palm oil's narrowing premium to crude oil has increased palm oil's appeal for use in biodiesel.
Palm oil generally trades at a premium of $10 a barrel to crude oil, but it has narrowed to $5.80 a barrel, making it viable for biodiesel, Alvin Tai, a senior analyst at OSK Investment Bank, said in a note.
" Unless external market conditions turn bearish, we think palm oil could trade around MYR2,400-MYR2,550/ton for the rest of holiday-shortened week," a physical market broker in Kuala Lumpur said. " Indian buyers have been buying Malaysian CPO so that has helped to underpin the market."
In the cash market, refined palm olein for November was offered at $830/ton. Cash CPO for prompt shipment was offered at MYR2,420/ton, free on board Malaysian ports.
Indonesian physical crude palm oil was offered at $752.50/ton, a broker at Singapore-based Commodity Links said.
Open interest on the BMD was 151,330 lots, versus 151,660 lots Monday. One lot is equivalent to 25 tons.
A total of 33,116 lots of CPO were traded versus 37,259 lots Monday.
Ending BMD Crude Palm Oil (CPO) futures prices in MYR/ton:
Month Close Previous Change High Low
Nov'12 2,437 2,469 -32 2,445 2,418
Dec'12 2,496 2,528 -32 2,525 2,483
Jan'13 2,540 2,577 -37 2,560 2,520
Feb'13 2,571 2,597 -26 2,589 2,553
Write to Shie-Lynn Lim at shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
October 23, 2012 07:15 ET (11:15 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.
Will an OPEC Nation’s Runaway Inflation Spark an Oil Bull Market?
October 23, 2012 By
Jeremy
By Marin Katusa,
Casey Research
In the third century, greed got the best of Rome’s emperors. As they spent through the silver in the treasury, one emperor after another reduced the amount of precious metal in each denarius until the coins contained almost no silver whatsoever.
It was the world’s first experience with currency debasement and hyperinflation. As people saw the value of their savings evaporate, society grew angry and demanded a scapegoat. Christians became that scapegoat, and Romans turned on them with incredible violence.
This pattern – currency debasement leading to social upheaval and violence – would repeat many times over.
In medieval Europe, the number of women on trial for witchcraft climbed in sync with the debasement of currency. In revolutionary France, the Reign of Terror that slaughtered 17,000 wealthy counterrevolutionaries aligns perfectly with the deterioration of the purchasing power of the assignat note.
And in the most vile example: dramatic hyperinflation in Germany in the 1920s allowed Hitler to rise to power by blaming Jews for the country’s economic woes.
The connection between currency debasement and social upheaval makes sense – hyperinflation only occurs in times of domestic drama. For example, in 1946 Hungary experienced the greatest episode of hyperinflation on record – in the context of a small, economically limited nation wracked by the Great Depression and then Nazi occupation in World War II. Zimbabwe earned second place in hyperinflation’s record books when its dollar inflated 7.96 billion percent from early 2007 to late 2008. The cause? Robert Mugabe’s land-reform policy slashed agricultural output and destabilized a fragile society.
That brings me to today… and to Iran, where that volatile mix of domestic drama and hyperinflation is pushing a fragile society to the brink of revolution.
If history repeats itself and Iran descends into revolution, the outcome is both unclear and obvious. In the unclear category: the details of the resulting regime and how far an Iranian revolution might spread through the Middle East. What is obvious, though, are the generalities: a post-revolution Iran would remain Islamist and vehemently anti-US.
Another generality is also crystal-clear. An Iranian revolution – and the potential for that to spawn a new set of Shia-based alliances across the Middle East – would be very good for oil.
And if Iran’s currency continues its dramatic nosedive, that revolution – and oil-price spike – might be just around the corner.
Dark Days for Iran’s Rial
On October 3, riot police converged on Tehran’s Grand Bazaar. With water cannons and batons, they dispersed a large crowd of demonstrators who were calling President Mahmoud Ahmadinejad a traitor for his mismanagement of Iran’s economy.
The location was significant: The Grand Bazaar is often described as Tehran’s economic heartbeat, and its merchants kick-started the 1979 revolution that ended Iran’s monarchy and ushered in the Islamic Republic.
The spark that lit the protest flame this time? The Iranian rial had lost a third of its value against the dollar in the three previous days.
But that was simply the latest drop in a currency devaluation that has been both rapid and profound.
The rial had been slowly losing value against the US dollar since international sanctions against the country’s nuclear program took effect in mid-2011. The devaluation was gentle for the first year, but picked up speed in June. A few months later, the currency started to free-fall.
On the weekend of September 8-10, the rial lost 9.7% of its value. On October 1 alone, the rial declined 17%. By the next day the black-market exchange rate reached 35,000 rial to the US dollar, marking an 80% decline in the past year.
The massive devaluation is fanning the flames of Iran’s burning fiscal situation. International sanctions over Iran’s nuclear program have accomplished one desired aim: major inflation. The Iranian government says inflation stands at 25%, but unofficial estimates put it much higher, between 50-70%.
It all translates into far higher prices on staples like food and fuel. Iranians now pay three times as many rial for meat as they did a year ago. Iran’s farmers rely on animal feed and vaccines that are imported and therefore priced in US dollars, and they have to pass on the increased costs to consumers.
In the meantime, unemployment is also rising unchecked. Overall unemployment is close to 15%, while youth unemployment is almost 30%.
The Iranian Influence
Soaring food prices, deteriorating employment prospects, and heavy-handed police tactics kicked off a revolution in another Middle Eastern country not long ago. Tunisian vegetable vendor Mohammed Bouazizi set himself on fire in December 2010 to protest precisely those problems the ensuing riots started his country down a rapid road to revolution. Tunisia’s transition turned heads across the Middle East, and the Arab Spring was born.
Iran’s ayatollahs are now facing a very similar situation. The rial is dying and hyperinflation is creating real potential for full-fledged economic panic. Continued protests like the one in Tehran’s Grand Bazaar would represent a real threat to the ruling regime.
The response from above is easy to predict. Iran’s ruling clerics did not hesitate to use force to repress the widespread discontent sparked by President Ahmadinejad’s re-election in mid-2009, and used the same riot police in the Bazaar last week to silence dissidence. Bigger protests will almost certainly draw an even more aggressive response.
The regime will also likely offer up a scapegoat. Ahmadinejad is the most likely candidate – he has been clashing with the conservative elite for several years now, and his second and final presidential term ends next summer anyway.
Will a combination of repression and Ahmadinejad’s head silence the masses? Maybe, maybe not. When people see their life’s savings evaporate –
Poof! – in a pile of worthless paper, they get really mad. And really mad people with little to lose is precisely the fuel that feeds revolutionary fires.
However, don’t let Western ideals like democracy and the separation of church and state cloud your idea of a reformed Iran. A new regime in Iran would still be Islamist indeed, the country would almost certainly remain guided first by religion and second by politics. Generations of Iranians have been taught to believe in Shia Islam above all else, with hatred of the United States coming in a close second. Those pillars of Iranian culture would remain.
As such a new Iran could closely resemble the old Iran – but in the meantime, instability could easily spill across the country’s borders. Shia populations in other parts of the Middle East could well gain confidence from Iran’s uprising and begin uprisings of their own, destabilizing the region’s delicate Shia-Sunni balance.
Suddenly, Shia populations in eastern Saudi Arabia, Syria, Lebanon, Iraq, and Bahrain could demand greater recognition, an end to discrimination, maybe even some form of autonomy. The significance of this cannot be understated. The Middle East is a balancing act on many levels, but maintaining peace between Shia and Sunni Muslims is perhaps the most important balance of them all.
Iran, unsteady after a regime change and constrained by international sanctions, would undoubtedly reach out to these Shia populations. Shia connections around the Middle East, long held back by Sunni rulers, would strengthen. A pan-Shia block of allegiances could emerge, replacing the Iran-Syria-Hezbollah partnership with a bigger, stronger group standing against Saudi Arabian – and American – interests in the Persian Gulf.
Truly, a riled-up Shia population connected through a new, Iran-based set of allegiances stretching across the Middle East is a recipe for regional disaster.
Disaster in the Middle East is a recipe for high oil prices.
Whether the drama remains confined to Iran – where a popular revolution puts a new leader in place who blockades the Strait of Hormuz as a show of strength – or spreads to Saudi Arabia, where a marginalized Shia population finally rises up against their Sunni rulers, Iran’s currency woes mean instability and infighting in the world’s most important oil region.
To say on top of developments in energy, precious metals, and the big-picture economic and political trends that will influence investing decisions, subscribe to the enormously popular and absolutely free Casey Daily Dispatch.
Fed likely to send wait-and-see signal at meeting
Six weeks ago, the Federal Reserve unveiled its latest plan to invigorate the U.S. economy. This week, the Fed will likely send a simple message:
Give that plan time to work.
No major announcements are expected when the Fed’s latest two-day policy meeting ends Wednesday. Instead, officials will likely affirm their plan to buy mortgage bonds as long as necessary to make home buying more affordable, keep short-term interest rates at record lows through mid-2015 and take other stimulative steps if hiring doesn’t pick up.
Those policies are intended to support an economy that’s shown flashes of strength but isn’t growing fast enough to create many jobs or to increase Americans’ income. The economy grew at a meager 1.3 percent annual rate in the April-June quarter.
Economists think it grew slightly faster in the July-September quarter. Yet many employers remain wary of hiring, in part because of tax increases and spending cuts set to kick in next year and in part because of a slowing global economy.
The $40 billion-a-month in bond purchases the Fed launched last month are designed to lower interest rates and cause stock and home prices to rise, creating a “wealth effect.” When consumers feel wealthier, they’re typically more willing to spend, thereby boosting the economy.
The Fed made clear it would likely hold rates low even after the economic recovery has strengthened. That was a signal that it will keep intervening until the economy grows fast enough to reduce unemployment sharply.
Now, the Fed likely wants to wait to assess the effects of its policies before deciding whether to take further action.
There’s another reason to stand down for now: A debate is raging inside the Fed over whether its actions are doing much, if any, good. The Fed’s moves last month were approved 11-1, with Jeffrey Lacker, president of the Richmond Federal Reserve Bank, dissenting. Since then, some other regional Fed presidents have expressed their discomfort.
The critics note that interest rates have already been at or near all-time lows. They worry that the Fed’s injection of steadily more money into the financial system will eventually ignite inflation or create dangerous bubbles in the prices of stocks or other assets.
Since the 2008 financial crisis erupted, the Fed has bought more than $2 trillion in Treasurys and mortgage bonds to try to drive down long-term borrowing rates and accelerate the economy. Its portfolio of investments stands at $2.85 trillion _ more than three times its size before the crisis.
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Since the Fed unveiled its latest plans last month, the average rate on a 30-year fixed mortgage has touched 3.36 percent _ the lowest since mortgage buyer Freddie Mac began keeping records in 1971. Cheap loans have helped lift home sales, prices and construction _ key pillars of the housing market’s gradual but steady comeback.
Super-low rates have shrunk many bond yields close to zero and led some investors to shift money into stocks, whose prices have surged. Higher stock prices may help explain some of the recent gains in consumer confidence and retail spending.
One part of the Fed’s drive to keep long-term borrowing rates down has been a program it began a year ago to sell short-term securities and use the proceeds to buy $45 billion in longer-term securities each month. This program is called “Operation Twist.”
When Operation Twist is combined with the mortgage bond purchases the Fed launched in September, the central bank is buying $85 billion in long-term bonds each month.
Operation Twist is to expire at year’s end, when the Fed will run out of short-term securities to sell.
Many analysts think the Fed may announce at its next policy meeting in mid-December that it will replace Twist with some other bond purchase program. Fed officials could decide to start buying enough new Treasurys to keep their total long-term-bond purchases at around $85 billion each month.
If the Fed decided instead to do nothing further, it might unsettle investors, said David Jones, chief economist at DMJ Advisors. A signal to financial markets that the Fed was reducing its bond purchases could send long-term rates up and stock prices down.
For now, investors seem pleased that the Fed is on a bond-buying spree.
The central bank is right to signal its commitment to support the economy until the job market strengthens, said Brian Bethune, an economics professor at Gordon College in Massachusetts.
Economic growth remains subpar despite the stronger housing market, a decline in the unemployment rate to 7.8 percent and retail sales in August and September that were the best back-to-back monthly gains in two years, according to Commerce Department data.
“We still have a weak economy, but it would have been flirting much closer to a recession if the Fed had not been as aggressive as it has been,” Bethune said. (AP:WASHINGTON)
By MARTIN CRUTSINGER
AP Economics Writer
10 Things You Need To Know This MorningGood morning. Here's what you need to know.
- In earnings news, Netflix is expected to report third quarter earnings of $0.04 per share. Meanwhile, chemical maker DuPont missed earnings and revenue expectations and is cutting 1,500 jobs.
- Yahoo! reported earnings of $0.35 per share, on net revenue of $1.09 billion beating expectations. During the conference call CEO Marissa Mayer said that half of Yahoo's engineers should be mobile engineers and that the company will make small acquisitions.
MARKET AVALANCHE GETTING WORSE: DOW NOW DOWN 248
Wikimedia Commons
UPDATE 10:14:
A day that's been ugly ever since the early morning continues to get uglier, as markets are plummeting around the world.
Most notably, the Dow is off 200 230 248.
The NASDAQ is at a 2.5 month low.
What's going on?
It's hard to pinpoint any one thing, but there are some ugly earnings (DuPont most notably) and jitters about Bernanke not stocking around, weather Romney wins or not.
UPDATE 9:30 AM ET:
The market has opened down over 150 points.
ORIGINAL POST: You can get a full roundup of what's happening in markets this morning here, but the basic gist is: Markets tumbling everywhere, lots of weak earnings.
First, the markets: Dow futures are off about 130 155, and the major indices are all down a little over 1%.
It's ugly in Europe as well. Germany is down 1.4%. Spain is down 1.1%. Italy is down 1%.
As for the micro, there are lots of ugly earnings this morning.
Dow Component DuPont is down 6% after a big whiff. 3M also cut its outlook. The stock is also off a few percent. There were also ugly reports in the UK, as luxury goods maker Mulberry announced an earnings warnings.
Then there's also the fact that there are hints that Bernanke won't stand for re-appointment in 2014.
So far, today isn't a disaster -- markets fall 1% all the time -- and this just gets us back to where we were yesterday during the day. Still, a squishy day.
STOCKS MAKE A BIG COMEBACK: Here's What You Need To Know
thecedricman via YouTube
Today was a fairly quiet news day and all eyes are on the final presidential debate.
First the scoreboard:
Dow: 13,345.89, +2.38, +0.02 percent
S& P 500: 1,433.80, +0.61, +0.04 percent
NASDAQ: 3,016.96, +11.34, +0.38 percent
And now the top stories:
Weekly Market Outlook: Oct 22-29
Last Friday, on the 25th anniversary of the 1987 Black Monday, we saw the Dow close roughly 200 points down. To make things worse, the NASDAQ has broken down from the bearish head-& -shoulders reversal pattern, as shown in the chart below. Google's earnings were pretty off, causing a huge plunge in its stock price, which added to the bearish sentiment.
Thankfully, we identified this bearish pattern in Apple last week, which served as a warning bell. This Thursday, we will be seeing Apple's quarterly earnings. Gold has been steadily heading lower, signifying a risk-off scenario, which is likely to be bearish for stocks in general.
Most of the key data next week will be on Wednesday and Thursday:
- Wednesday [4.00pm] - German Ifo Business Climate
- Wednesday [7.45pm and 10pm] - Draghi Speaks
- Thursday [10.00pm] - US New Home Sales
- Thursday [2.15am] - FOMC
- Thursday [8.30pm] - Unemployment Claims
On the local front, the banks are bearish, as highlighted by some graduates in our private forum, and this is a major bearish sign for the Straits Times Index (STI). Following last week's bearish outlook, the STI has continued to stay below the gap, and hence remains bearish. It is best not to go long at the moment or be very selective, and we have posted a few picks in the forum.
For the Forex markets, the EUR/USD and GBP/USD are bearish, while the USD/JPY and USD/CAD are bullish. The chart above is the daily chart of the USD/CAD, and looks like it could be reversing up for a bullish. Do note that there is a lot of important news for this currency next week, so we will be zooming in on a smaller timeframe to pinpoint optimal entries in our forum.
Source From:
http://synapsetrading.com/2012/10/weekly-market-outlook-oct-22-29/
Weekend Comment Oct 19: Set expectations low for 3Q
Tags:
Capitamalls Asia |
Cosco Corporation |
embCorp Marine |
Ezion Holdings |
First Resources |
IHH Healthcare |
Nam Cheong |
Neptune Orient Lines |
Sembcorp Marine |
Singapore Airlines |
STX OSV |
Suntec Reit |
Wilmar International
| Written by Goola Warden |
| Friday, 19 October 2012 22:03 |
 AS THE THIRD quarter results reporting season gets into full swing, Citi analysts prefer to err on the side of caution. “We expect more misses this quarter. With lowered expectations post-2Q12, misses make up approximately two-thirds of our coverage this time versus nearly 90% last quarter,” the analysts say in a preview report dated Oct 18. DBS Vickers is another research house which expects downgrades during the third quarter earnings season following consecutive cuts in Singapore’s GDP growth to 1.8% and 3.2% for 2012 and 2013 respectively. To keep things in perspective, the STI is up 15% this year, trading at 15 times forward P/E, which is just about at its historic mean. Forward price to book for the STI stands at 1.4 times. However, the STI has underperformed compared to some of its sub-sector components. Developers stocks are up 35% since the start of the year, while REITs and conglomerates have gained 34% and 29% respectively.
Looking into specific sectors, banks could meet expectations, Citi figures, but not because their core business is booming. “This will likely be due to a combination of bond divestment profits and continued low provisions. Investors, however, should focus on weakening top-line operating trends, particularly sluggish loan growth and weaker NIMs (net interest margins),” Citi warns. “NIM pressure appears to be broadening and deepening, with QE3 likely providing more pressure on asset yields and high LDRs (loan to deposit ratios) placing a floor under cost of funds.” DBS Vickers also expects earnings downgrades from the banks because of slower loan growth and NIM pressure. Oversea-Chinese Banking Corporation will book a $1.15 billion one-off gain from divestment of its non-core F& B investments, which may add to market conjecture of capital management or M& A. Meanwhile, REITs results are likely to be watched by investors “in order to get a sense of the implications of a weaker macro operating environment on the commercial and industrial sectors”, Citi cautions. Upside surprise could fuel more confidence in the REIT space, particularly if other traditional yield stocks in Singapore post misses. DBS Vickers believes they still have value despite yield compression. It likes Suntec REIT, Frasers Commercial Trust and Far East Hospitality Trust. For developers, results would largely be a non-event as usual, given the unpredictability of the revenue recognition schedule, analysts say. The notable exception is CapitaMalls Asia as investors would be watchful on any potential impact of a weaker Chinese economy on retail spending. In additional, CMA is one of the STI’s top performers, up 45% this year. The physical property market could continue to display a good degree of resilience as rents and occupancies are likely to be sticky in the current business environment, Citi reckons. Elsewhere, Citi appears quite confident that IHH Healthcare Bhd will miss an overly optimistic consensus forecast. Also, the setting up of operations at newly-opened Mount Elizabeth Novena is turning out to be slower than expected. Offshore & Marine companies are likely to meet earnings’ forecasts, particularly the mid and small cap stocks. For the big caps, the key will probably be margins. These have been mediocre given that lower priced contracts are being recognised this year. “For 2012E, we are consistently below street estimates for Cosco Corporation and Sembcorp Marine due to lower margin assumptions,” the Citi report states. Indeed, it expects Cosco to disappoint on further provisions and lower profitability from shipping and ship repair. DBS Vickers thinks the offshore sector remains undervalued at 9.5 times P/E. Its top picks are S embCorp Marine, Ezion Holdings, STX OSV and Nam Cheong. For plantation stocks, they are likely be under pressure from high inventories and depressed CPO prices, DBS Vickers says, and it prefers to sell on strength. Citi thinks that Singapore-listed planters could do okay with First Resources slightly exceeding expectations. Wilmar International could miss forecasts, Citi adds. Finally, the consensus view on transportation is that Neptune Orient Lines makes a profit for the first time in six quarters while Singapore Airlines is likely to disappoint.
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Crude oil is holding still but poised for the smallest weekly gain in six, as traders await the outcome of the European summit later on Friday amid mixed sentiment over demand growth as supplies rose unexpectedly in the U.S. and Canada.
U.S. Crude for November delivery was up 0.54 percent at $92.10 a barrel as of 05:44 GMT, compared with the opening level of $92.05, recording a session high of $92.22 and low of $91.95. Brent Crude was little changed at $112.46.
European leaders are meeting for second day in Brussels after they agreed to take a bigger step towards establishing in a single supervisory body for euro zone banks during the course of the next year, according to a French government source.
Meanwhile, pressure faded on the imminent restart of Britain`s largest oilfield. Nexen, operator of Britain`s largest oilfield, North Sea Buzzard, said it resume production on October 21, weighing on Brent prices as inventories build up.
Moving to North America, TransCanada`s pipeline for repairs, which moves Canadian crude from Alberta to U.S. Midwest, was closed on Thursday. Data from the U.S. showed on Tuesday that crude supplies rose unexpectedly last week.
Tension in the Middle East somehow simmered since the European Union governments imposed rough sanction against some of Iran`s oil and gas companies, while forcing deeper restrictions on the central bank to prompt Tehran stop its nuclear program.
The U.S. dollar rose against six currencies on Friday, extending the biggest intraday gain since Oct. 9. The USDIX, which tracks the greenback against a six-currency basket, was around up a session high of 79.46 from a low of 79.32.
With dollar gains and rise in oil supplies in the U.S. and Canada, the outlook for oil prices remains vague however worries over supply disruption from the Middle East might escalate as long as Iran defies international demand to curb its nuclear program.
Precious-Gold tumbled for a second day on Friday, heading for a second weekly decline, as the dollar`s rebound took some shine off bullion as it damped demand on the metal as an alternative investment.
The shiny metal slipped for a second straight session to trade around $1735.60 an ounce, after recording a high of $1743.25 and a low of $1735.06, where eyes remain at the EU summit concluded today.
Yesterday, European leaders took a step towards creating a single banking supervisor as they discussed a deal that would allow the bloc`s rescue fund could start recapitalizing ailing banks starting from 2013, where the European Central Bank will be the main supervisor by January 1.
Leaders also hailed the efforts done by the Greek government to secure its coming installment, while the issue of providing extra aid for Spain was not discussed.
Moreover, gold faced pressure from the improvement in U.S. data which eased speculations of seeing additional stimulus in the coming period, thereby eroding the metal`s appeal as an inflation hedge.
Later in the day, the U.S. will release existing home sales for September where analysts refer to a 7.8% advance following a 1.7% drop in August.
Gold faced pressure last week as it neared $1800 levels which pushed the price down to halt the metal`s rally seen over the past four months when it rose from a low of $1526.89.
So far, the shiny metal has lost near 1% this week, heading for a second weekly decline amid uncertainty in the euro area and progress in U.S. data, ahead of the Fed`s awaited meeting next week.
The trading range for today is expected among the key support at 1720.00 and key resistance now at 1775.00.
On the flip side, the dollar rebounded against a basket of major currencies yesterday, as depicted by the dollar index, to hover around 79.35, where it managed to breach strong resistance at 79.30.
Crude oil for December`s delivery is currently trading higher around $92.68 a barrel from the day`s opening of $92.43.
Among other precious metals, sliver edged down to $32.56 from the day`s opening of $32.65, platinum retreated to $1633.60 from $1639.30 and palladium plummeted to $636.10 from $639.50.
The price has moved lower yesterday however failed to close a four-hour closing candle below 90.70 barrier, to settle back above 91.75. Thus, the previously suggested bullish scenario remains intact and likely, targeting mainly 95.20 and requires steady trading above 90.00 level.
The trading range for today is expected among the major support at 90.00 and the major resistance at 95.20.
The short-trend trend is to the upside with steady weekly closing above 78.00, targeting 104.65 and 110.55.
Support: 91.75, 90.70, 90.00, 89.50, 89.00
Resistance: 92.35, 93.05, 93.80, 94.45, 95.20
Recommendation Based on the charts and explanations above, we recommend buying oil around 91.75 targeting 93.35 and 95.20. Stop loss with four-hour closing below 90.70
ICN.com
Mixed headlines led to financial markets struggle yesterday. In the Asian session, economic data released in China was inline with expectations and gave some comfort to the market. However, concerns over the global outlook re-emerged as Germany and France clashed ahead of the EU summit. In the US, earnings results from Google disappointed and initial jobless claims unexpectedly climbed. On net, Wall Street slipped with the DJIA and the S& P 500 losing -0.06% and -0.24% respectively. In the commodity sector, crude oil prices fell as the US dollar rose. The front-month contract for WTI crude oil price stayed largely unchanged at 92.10 while the Brent crude fell further to 112.42, down -0.71%. The benchmark Comex gold contract for slipped -0.47%.
China's GDP grew +7.4% y/y in the third quarter. While this indicated a further slowdown in the country's economic growth, the result was inline with market expectations. From a quarter ago, GDP rose +2.2%, the highest in 4 quarters, in 3Q12. Premier Wen Jiabao said that China's economy has started to stabilized and he's confident of the reaching the annual target of +7.5%. Expansion in industrial production, retail sales and fixed asset investment also rebounded in September.
The EU summit is now underway in Brussels. Yet, ahead of the meeting, it's reported that French President Hollande and German Chancellor Merkel disagreed on formation of a fiscal union. While both agreed on the need to specify a clear and tight timeframe for a banking union, Merkel is keen to push towards a fiscal union but Hollande refused to bring the fiscal union into discussion at today's summit. Yet, we expect there would not be any major announcements from this EU summit but the post-meeting statement may include comments about the single supervisory mechanism for banks and Spain.
In the US, Google's disappointing earnings results for 3Q12 led a sharp decline in the technology sector stocks and upstaged a relatively upbeat report from Morgan Stanley. Meanwhile, initial jobless claims rebounded +46K to 388K in the week ended October 13. the 4-week moving average fell -5K to 3276K, the lowest level since May, last week. Moreover, continuing claims fell -29K to 3252K in the week ended October 6. Today, the US existing home sales probably dropped to 4.7M in September from 4.82M a month ago. In Canada, headline CPI might have climbed +1.2% y/y in September, unchanged from the prior month.
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Stocks Seeing Modest Weakness In Early Trading
Stocks have moved modesty lower in early trading on Thursday, giving back some ground after moving mostly higher over the three previous sessions. The major averages have slipped into negative territory, although selling pressure has remained relatively subdued.
The major averages have climbed off their lows for the young session but currently remain in the red. The Dow is down 15.79 points or 0.1 percent at 13,541.21, the Nasdaq is down 9.36 points or 0.3 percent at 3,094.76 and the S& P 500 is down 3.31 points or 0.2 percent at 1,457.60.
The early weakness on Wall Street is partly due to a disappointing report on weekly jobless claims, which inspired some traders to cash in on the recent strength in the markets.
The report showed that initial jobless claims jumped to 388,000 in the week ended October 13th after falling to a four-year low 342,000 in the previous week.
Economists had been expecting jobless claims to show a more modest increase to 365,000 from the 339,000 originally reported for the previous week.
The rebound from the four-year low set in the previous week was partly due to the normalization of distortions caused by seasonal adjustment challenges in California.
However, a positive reaction to a batch of largely upbeat Chinese economic data has helped to limit the downside for the markets.
China reported a 7.4 percent increase in third quarter GDP, which was slower than the 7.6 percent growth recorded in the second quarter but in line with estimates. The communist country also reported stronger than expected industrial production and retail sales growth in September.
Most of the major sectors have shown only modest moves to the downside, although gold stocks are seeing notable weakness amid a drop by the price of the precious metal.
Semiconductor, trucking, and electronic storage stocks are seeing more moderate weakness, while strength is visible among airline, networking, and railroad stocks.
In overseas trading, stock markets across the Asia-Pacific region saw considerable strength on the heels of the upbeat Chinese economic data. Japan's Nikkei 225 Index surged up by 2 percent, while Hong Kong's Hang Seng Index advanced by 0.5 percent.
Meanwhile, the major European markets are turning in a mixed performance on the day. While the German DAX Index is up by 0.3 percent, the U.K.'s FTSE 100 Index is down by 0.1 percent and the French CAC 40 Index is down by 0.3 percent.
In the bond market, treasuries are regaining some ground after ending the previous session firmly in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 1.4 basis points at 1.797 percent.
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TSX Flat At Open Thursday
Toronto stocks were little changed at open Thursday amid selling in metal stocks, with the S& P/TSX Composite Index edging up 2.39 points or 0.02 percent to 12,463.64.
The Diversified Materials Index was down nearly 1 percent, with Teck Resources surrendering over 2 percent. Inmet Mining and First Quantum Minerals were down around 1 percent each.
Among gold stocks, Goldcorp. and Barrick Gold were down over 1 percent each.
In the oil patch, Niko Resources lost close to 3 percent, while Cenovus Energy and Husky Energy were down around 1 percent each.
On the other hand, Lundin Petroleum and Encana Corp. gathered nearly 3 percent each
Telecommunications company Telus Corp. edged up 0.50 percent after announcing that its shareholders have voted strongly in favor of a proposal to exchange the company's non-voting shares for common shares on a one-for-one basis.
The price of crude oil was little changed Thursday morning as traders digest economic growth data out of China, the second largest energy consuming nation and inventories data from the U.S., the world's largest economy. Growth in China's overall national output continued to slow in the third quarter with the GDP recording a 7.4 percent year-on-year growth, data from the National Bureau of Statistics showed. This was in line with expectations but slower than the 7.6 percent growth recorded in the second quarter.
Crude for November delivery slipped $0.50 to $91.62 a barrel.
The price of gold was moving lower Thursday morning as traders were cautious ahead of the outcome of the two-day summit of the EU leaders at Brussels, beginning today. Gold for December lost $10.50 to $1,742.50 an ounce.
In corporate news from Canada, telecommunications company Telus Corp. said that its shareholders have voted strongly in favor of a proposal to exchange the company's non-voting shares for common shares on a one-for-one basis.
Electrical products distributor Wesco International Inc. said that it has agreed to acquire Canada-based rival Eecol Electric Corp. for about C$1.14 billion.
In economic news, Canadian wholesale sales rose by 0.5 percent to $49.7 billion in August, snapping their two consecutive monthly declines, Statistics Canada said. Economists expected whole sales to rise just 0.2 percent in the month. Higher sales in the food, beverage and tobacco sub-sector, and the machinery, equipment and supplies sub-sector, were the main contributors to the increase. Meanwhile, inventories rose for a ninth consecutive month, gaining 0.8 percent to $61.6 billion in August.
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European Stocks Mixed Ahead Of EU Summit
European stocks are moving sideways on Thursday, as investors paused for breath following recent gains awaiting cues from the two-day EU summit beginning today.
Commodities are little changed and the euro is trading below one-month high against the dollar after Spain's funding costs fell at an auction and data showed bad loans at Spanish banks surged to a new record high in August. The latest figures from the Bank of Spain showed that the value of loans at risk of not being repaid rose to EUR 178.6 billion or 10.5 percent of the total lending from EUR 173.2 billion in the previous month.
The Euro Stoxx 50 index of Eurozone bluechip stocks and the Stoxx Europe 50 index, which includes some major U.K. companies, are edging down marginally. Around Europe, France's CAC 40 is moving down 0.1 percent and Switzerland's SMI is losing 0.3 percent, but the German DAX is gaining 0.4 percent and the U.K.'s FTSE 100 is up 0.1 percent.
Akzo Nobel NV is tumbling 5 percent in Amsterdam after the paint maker reported a loss for the third quarter on the back of 2.5 billion euros impairment in its Decorative Paints business.
Cairn Energy Plc. is edging up 0.1 percent in London after issuing an interim management statement. Rolls-Royce Holdings is moving down 0.2 percent despite winning a contract to supply its Spinline digital safety instrumentation and control to the China Guangdong Nuclear Power Corp.
Shares of Nestlé S.A. are losing 2 percent in Zurich after the Swiss food and nutrition products giant reported 11 percent increase in sales for the nine-month period, with an organic growth of 6.1 percent, helped by continuous growth in all of its regions.
British energy giant BP Plc. is gaining 0.9 percent amid reports the company is nearing a deal to sell its 50 percent shareholding in troubled Russian oil producer TNK-BP to Anglo-Russian state oil firm OAO Rosneft.
In economic news, U.K. retail sales volume, including sales of automotive fuel grew 0.6 percent in September from a month ago, when it fell 0.1 percent, the Office for National Statistics said. Economists had forecast a 0.4 percent rise for September.
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Asian Stocks Rally On China Relief
Asian stocks rose across the board on Thursday after a string of Chinese economic data beat estimates, raising hopes for a rebound in the world's second largest economy. Fresh signs of recovery in the U.S. housing market and e-Bay's third-quarter results that were largely in line with estimates also helped lift investor sentiment ahead of the EU summit beginning in Brussels, Belgium tonight. Ahead of the release of China's economic growth data, Premier Wen Jiabao had said that the Chinese economy is stabilizing and should meet fiscal-year economic targets.
Japanese shares rose for the fourth straight session, boosted by encouraging Chinese data and speculation that the Bank of Japan may consider further monetary easing at its next policy meeting. With a weaker yen against both the euro and dollar lifting exporters, the benchmark Nikkei average jumped 2 percent to 8,983, its highest closing level since September 25. The broader Topix index rallied 1.7 percent.
Automakers such as Toyota Motor and Honda Motor rose 2-4 percent, heavyweight Fast Retailing advanced 2.8 percent and steelmaker JFE Holdings gained 1.9 percent. China-sensitive Fanuc and Komatsu rose by 1.2 percent and 4.7 percent, respectively on hopes for a year-end rebound in China. Canon jumped 3 percent, closing up for a sixth consecutive session, shares of Sony added 2.8 percent, Advantest climbed 6.2 percent and Yaskawa Electric soared 6.7 percent on a brokerage upgrade.
China's Shanghai Composite index rose 1.2 percent and Hong Kong's Hang Seng index gained half a percent after official data showed China's industrial production, retail sales and fixed-asset investment accelerated in September, signaling that the country is not at risk of hard landing.
Growth in China's overall national output continued to slow in the third quarter with the gross domestic product recording a 7.4 percent year-on-year growth during the period, data from the National Bureau of Statistics showed. This was in line with expectations but slower than the 7.6 percent growth recorded in the second quarter.
Industrial production grew 9.2 percent year-on-year in September compared to forecasts for a 9 percent rise, while retail sales grew 14.2 percent annually during the month compared to expectations for a 13.2 percent increase, data released by the statistical office showed. Fixed asset investment during the January to September period was up 20.5 percent, slightly faster than 20.2 percent growth forecast by analysts.
Australian shares hit a 15-month high, led by miners after a batch of Chinese economic reports beat estimates. The benchmark S& P/ASX 200 index rose 0.7 percent to 4,559, its highest close since late July 2011. Global miners BHP Billiton and Rio Tinto soared 3-5 percent, tracking firmer copper prices, while smaller rival Fortescue rose 2.7 percent and gold miner Newcrest added 1.2 percent. Gindalbie Metals jumped 10.5 percent after announcing the first commercial shipment of iron ore from its 50%-owned Karara iron ore project.
Oil & gas firm Woodside Petroleum advanced 2.4 percent after the company lifted its full year production target, mainly due to a better than expected performance at its Pluto gas project. Oil Search and Santos edged down modestly. Media firm Ten Network Holdings fell 1.6 percent, extending the previous session's loss after posting a full-year loss of A$12.9 million and launching another cost-cutting program. Banks ended mostly higher, with ANZ and Commonwealth ending flat, while NAB rose 0.6 percent and Westpac added 0.2 percent.
In economic news, Australia's international merchandise imports fell 3 percent on a seasonally-adjusted basis to A$20.6 billion ($21.3 billion) in September compared to A$21.22 billion in August, figures released by the Australian Bureau of Statistics revealed.
Seoul shares rose modestly on the back of stronger-than-expected U.S. housing data. The benchmark Kospi average edged up 0.2 percent, led by shipbuilders and oil stocks. Economy-sensitive shipbuilders extended gains for a second consecutive session on easing Eurozone concerns ahead of the two-day EU summit, where leaders are expected to discuss ways to strengthen economic and monetary union. Hyundai Heavy Industries and Daewoo Shipbuilding jumped 3-5 percent.
New Zealand shares rose to a fresh four-and-a-half-year high after Chinese GDP data came in line with expectations. Breaking through the psychological 4,000 level, the benchmark NZX-50 ended the session up nearly a percent at 4,002, its highest level since January 2008.
Among the prominent gainers, Fletcher Building, the nation's largest construction company, climbed 3.3 percent, utility Contact Energy rallied 1.9 percent and Telecom, New Zealand's largest telecommunications company, rose 0.8 percent. Fisher & Paykel Appliances added 2.4 percent after Chinese appliance maker Haier raised its takeover offer for the whiteware manufacturer. Goodman Fielder led the decliners on the exchange, falling 2.9 percent.
Elsewhere, India's benchmark Sensex was moving up 0.8 percent, Indonesia's Jakarta Composite index was up 0.4 percent, Malaysia's KLSE Composite rose 0.2 percent, Singapore's Straits Times index was gaining 0.4 percent and the Taiwan Weighted average edged up marginally.
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Several years after from the financial crisis of 2008, state pension funds continue to languish. According to data released this week by Milliman, Inc. and by the Pew Center on the States, there was a $859 billion gap between the obligations of the country’s 100 largest public pension plans and the funding of these pensions. Most of these are state funds, and state legislatures have attempted to respond to this growing crisis by making numerous reforms to try to combat this growing deficit. Based on the Pew Center for the States report, “The Widening Gap Update,” 24/7 Wall St. identified the
nine states with public pensions that were 60% or less funded as of 2010.
As always, here are the
top major media headline summaries from WSJ, FT, Bloomberg, and more. Today's
top analyst upgrades and downgrades were in shares of ALKS, NLY, AAPL, APOL, CMA, COP, DB, DUK, HOG, INTC, LINE, POT, SDRL, STJ, VVUS and Z. Here are the
top rumors of the day. The most important
financial news affecting the markets today.
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The weekly jobless claims are back to normalized reporting, and the report only
brings that 7.8% unemployment rate back on the debate table.
SanDisk reports earnings tonight. iSuppi showed a very cautious flash memory market in 2012, but
growing substantiually globally from 2013 to 2016.
eBay is trading higher now after earnings, but the valuation
sure looks a bit elevated here.
Strikes by Greek unions may be what eventually
breaks financial bonds with its neighbors.
The companies that
drive the Germany economy.
A problem without a solution --
student debt.
Have a great day!
JON C. OGG
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add jonogg@247wallst.com to your contacts. Not sure how? Click
here for instruction.
As I was focuing on the levels( posted yesterday), STI hit 50% fibo level yesterday( day high at 3066.59) and retraced, it then bounced back into 3055-3066 range( 38.2%-50% fib) again today. Kind of sideway consolidation mode.
In the short term, I expect more upside if STI can close above 3066( today high at 3063.55). Otherwise bulls should be stay alert for downside.
Wealth, health and morality, which is most important?
by Tommy Wong on October 17, 2012
Guru: Let me ask you a question. Wealth, health and morality, which is most important?
Tom: From the perspective of the rich and powerful, they’ll say wealth.
Guru: Can you bring wealth with you after the body is gone?
Tom: No.
Guru: Can you bring health with you after the body is gone?
Tom: No.
Guru: Can you bring morality with you after the body is gone?
Tom: This one, I’m not sure. Maybe, maybe not.
Guru: Okay, will morality be left somewhere after the body is gone?
Tom: You mean it could be attached to the name after the body is gone?
Guru: Very good. With good morality, you can leave a good name.
Tom: Forever and a day!
Guru: There’s a saying you know.
Tom: What is it?
Guru: If you lose your wealth, you lose nothing. If you lose your health, you lose something. If you lose your morality, you lose everything.
Tom: So morality is the most important.
Guru: Never trade your morality for wealth.
Tom: Yes, sir.
(Extract from Tommy Wong’s book, “
Wisdom on How to Live Life“)
Crude Palm Oil Ends Up Chinese Data, Demand Underpin
Crude palm oil futures on Malaysia’s derivatives exchange ended higher Thursday, holding on to gains after data on China’s economy met expectations.
Expectations for export demand to rise during the October-December quarter supported market sentiment as well, market participants said.
The benchmark January contract at Bursa Malaysia Derivatives ended 1% higher at 2,496 ringgit a metric ton after moving in a MYR2,475-MYR2,508 range.
" The market now expects palm oil exporters, particularly those with refineries overseas, to export as much oil as possible before the duty-free CPO export quota is discontinued at the end of the year," a trading executive at Kuala Lumpur-based OSK Investment Bank said.
Higher exports could help draw down stock levels that rose to an all-time high of 2.48 million tons in September due to seasonally higher production.
Malaysia last Friday announced that it would abolish duty-free CPO export quotas and reduce its export duty on the crude grade from Jan. 1, in a bid to help Malaysian refiners grab back market share from top palm oil producer Indonesia.
In the cash market, refined palm olein for November was offered at $830/ton, while cash CPO for prompt shipment was offered at MYR2,400/ton.
China's third-quarter growth data, a key data point to assess the state of the region's largest economy, came out at 7.4%, in line with a median forecast of 14 economist surveyed by Dow Jones Newswires
Open interest on the BMD was 151,863 lots versus 174,059 lots Wednesday. One lot is equivalent to 25 tons.
A total of 34,274 lots of CPO were traded versus 44,600 lots Wednesday.
Ending BMD Crude Palm Oil (CPO) futures prices in MYR/ton:
Month Close Previous Change High Low
Nov'12 2,396 2,393 +3 2,422 2,388
Dec'12 2,456 2,440 +16 2,478 2,440
Jan'13 2,496 2,471 +25 2,508 2,475
Feb'13 2,530 2,503 +27 2,532 2,505
Write to Shie-Lynn Lim at shie-lynn.lim@dowjones.com
(END) Dow Jones Newswires
October 18, 2012 07:09 ET (11:09 GMT)
Copyright (c) 2012 Dow Jones & Company, Inc.
Singapore shares closed unchanged on Wednesday.
The local bourse underperformed other regional bourses as investors were busy staying on the sidelines ahead of the earnings session.
The benchmark Straits Times Index (STI) lost 1.14 points, closing at 3,045.67.
Olam International finished 2.6 per cent higher at S$2.01 on news of expansion plans. The company is also considering growing arabica coffee in Indonesia.
At the same time, CapitaMalls Asia lost 1.7 per cent on profit taking to close at S$1.76. In contrast, Capitaland added 1.9 per cent to S$3.24, while City Developments was up 1.7 per cent to finish at S$11.78.
Separately, the Hang Seng Index closed at 21,416.64 while the Nikkei index ended higher at 8,806.55.
“Looking ahead to the rest of the week we have a Chinese Industrial Output, Retail Sales and GDP data due tomorrow which will give us insight into whether the slowdown is tapering off. The GDP data in particular is expected to show the seventh straight quarter of contraction and if it comes in at 7.4 per cent as analysts are predicting, would be the slowest pace of growth since the first quarter of 2009,” said David Fiander of CMC Markets.
“The other big thing to watch later this week will be the EU summit with negotiations expected to continue about the precarious situations in Greece and Spain, anything other than consensus and a firm game plan could bring uncertainty to markets once more,” he added.
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