Market outlook for the day – Wednesday 10 March 2010

South African stocks are marginally weaker today in line with slightly negative to flat trading in most global markets this morning. European stocks are trading flat while benchmark indices in Japan, Australia and China were uncharacteristically, basically unchanged this morning. With no clear direction being provided by global markets or commodities today, no exciting moves for the local indices are expected to be seen in early trade.

 

Other news:

Metropolitan (MET)

Metropolitan Holdings posted lower 2009 profit after more consumers defaulted or cancelled life insurance policies and the value of its investment assets dropped. The country's fourth-biggest insurer said on Wednesday diluted core headline earnings per share for the year to end-December fell 7 percent to 141 cents from 151 cents in 2008, in line with its own forecast of a 5-10 percent drop.

   

Transnet

South Africa's Transnet said on Tuesday its port division was not planning to build a new coal terminal, denying claims by industry sources who said the facility would be built and operational by June this year.

 

News in the press:

Business Day

- IMF warns South Africa against policy to curb rand

- Firstrand hopes for profit growth in second half

 

Business Report

- World Cup's main beneficiary is Fifa, and South Africa's slice slims

 

What happened yesterday?

South African Markets

South African assets dipped on Tuesday, knocked by a global drop in risk appetite and lower commodity prices that took the rand and stock market off multi-week highs. Government bonds also retreated slightly as a regular bond auction attracted less demand than in previous weeks. The resource-heavy blue chip Top-40  was off 0.89 percent at 25,032.64 points, retreating from Monday's near 7-week high, and the broader All-share index dipped 0.78 percent to 27,898.14 points.

 

Wall Street

One year to the day after stocks fell to their worst close in more than 12 years, the U.S. market spent most of Tuesday spinning its wheels. The Dow Jones industrial average  gained 11.86 points, or 0.11 percent, to 10,564.38. The Standard & Poor's 500 Index  edged up 1.95 points, or 0.17 percent, to 1,140.45. The Nasdaq Composite Index rose 8.47 points, or 0.36 percent, to 2,340.68.

 

Global Markets

Asian stocks hovered near six-week highs on Wednesday as Chinese data showed exports and imports in February were better than expected, while the euro and the pound suffered on renewed concerns about Europe's fiscal problems. The MSCI index of Asian shares outside Japan were up 0.2 percent after rising as much as 0.3 percent to a fresh six-week high. But Shanghai's main index was down 0.5 percent, little changed after the data, with economists wary of reading too much in the way of policy implications into the figures because of the timing of the Lunar New Year holiday and a low base of comparison in 2009.

 

Commodity and currency report

Gold steadied on Wednesday after the euro bounced slightly higher against the U.S. dollar though weaker oil prices could prompt new selling, traders said. Dealers noted early bargain hunting from Chinese speculators but gold prices were susceptible to sharp movements due to low volumes. Platinum and palladium slipped in early trade but held near recent highs.

 

Spot gold was at $1,122.00 an ounce by 0304 GMT, barely changed from New York's notional close on Tuesday, when it dropped to $1,108.55 an ounce, its weakest since Feb. 26, because of a resurgent dollar and falling oil prices. Gold was around 2 percent below a 6-1/2-week high near $1,150 hit in early March. Several attempts to revisit a lifetime high around $1,200 struck in early December were met by heavy profit taking but steady investor interest could lend support.

 

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings stood at 1,116.120 tonnes as of March 9, unchanged from the previous business day, but up from 1,111.556 in early March. U.S. gold futures for April delivery was little changed at $1,122.6 an ounce. The euro edged up against the dollar, trading just above $1.3600. The common currency had come under fresh pressure after Fitch ratings agency said it still has a negative outlook on Portugal's credit rating.

    

U.S. crude futures extended declines on Wednesday from an eight-week high after industry data showed a sharp build in U.S. crude inventories. In theory, weaker oil prices reduce gold's appeal as a hedge against inflation. Platinum held near its highest in more than a month at $1,607 an ounce hit on Monday, while palladium barely moved after being hit by a profit taking since rising to a two-year high at $480 late last week.

 

Platinum and palladium, primarily used in catalysts used in vehicle exhaust systems, has benefited from well-received February car sales numbers from China and the United States. The world's biggest palladium producer, Norilsk Nickel, also told the Reuters Global Mining and Steel Summit that the metal is an appealing investment because future jewellery and industrial demand will be strong.