Market outlook for the day – Tuesday 9 February 2010

South African stocks are likely to trade marginally firmer in the early half of the trading session today. Despite the Dow falling below 10000 points last night, global equities still generally held their ground today thus supporting the likelihood of a moderately positive open locally. US futures were all positive this morning and European stocks could also be set for a slightly firmer open. Local Alsi futures were 100 points firmer just before 9am today.

 

Other company news:

Nedbank (NED), Mvela Group (MVG), Brimstone (BRT)

Investment banks that include Nedbank are preparing Life Healthcare, one of South Africa's biggest private-hospital operators, for a public listing later this year, people familiar with the matter said.

 

Adcock Ingram (AIP)

South African drugs maker Adcock Ingram has received a call option from Baxter Healthcare under which the U.S. based medical products maker would be entitled to buy 51 percent stake in Adcock's Critical Care unit, it said on Monday.

 

News in the press:

Business Day

- Anglo Platinum to cut debt in 12.5 billion rand ($1.62 billion) share sales

- Nedbank probed as Pinnacle Point minorities cry foul

- Harmony looking for prospects abroad

 

Business Report

- Comments by the Reserve Bank deputy governor Xolile Guma spark fears of rate hike

- Anglo Platinum set to dilute investors

 

What happened yesterday?

South African Markets

South African stocks broke two days of losses on Monday, on better-than-expected earnings, while the rand recovered some of its footing against the dollar after last week's heavy sell-off. The JSE Top-40 index of blue chips gained 1.11 percent to 23,367.21 points, while the All-share index rose 0.96 percent to 26,041.96 points.

 

Wall Street

The Dow industrials closed below 10,000 for the first time since November on Monday as investors sold bank shares due to heightened concerns about the euro zone's sovereign debt troubles. The Dow Jones industrial average slid 103.84 points, or 1.04 percent, at 9,908.39. The Standard & Poor's 500 Index dropped 9.45 points, or 0.89 percent, at 1,056.74. The Nasdaq Composite Index declined 15.07 points, or 0.70 percent, at 2,126.05.

 

Global Markets

Asian share markets struggled to hold firmer ground on Tuesday but won some respite from recent losses, while the euro rose tentatively as investors took a break from selling it off over fiscal concerns in the euro zone. The MSCI index of Asian shares outside Japan slipped 0.2 percent after dipping to a five-month low, although IT stocks gained, and shares in Shanghai and Seoul turned higher while S&P futures were flat.

 

Commodity and currency report

Gold prices steadied above $1,060 on Tuesday, but sentiment continued to be hurt by worries over fiscal stability in Europe, curbing appetite for riskier assets such as commodities. The precious metal's recovery from three-month lows hit last week has been limited due to technical selling and fund liquidation amid an uncertain economic outlook. Spot gold was at $1,068.70 per ounce as of 0545 GMT, up 0.6 percent from New York's notional close of $1,062.80. U.S. gold futures for April delivery firmed 0.3 percent to $1,069.10 per ounce, compared to $1,066.20 on the COMEX division of NYMEX. On Friday, spot gold traded as low as $1,043.75, its lowest since Nov. 2, as the euro fell on fears over the outlook for some euro zone economies.

 

Gold prices in euro terms picked up this week from a one-month low marked on Friday. The trough was over 5 percent below a record above 810 euros an ounce marked in December, according to Reuters data. Concerns about the fiscal stability of Greece, Portugal and Spain have been rattling global markets over the last two weeks. The euro inched up against the dollar but remained within sight of an 8-½   month low hit last week.

 

Japan's benchmark Nikkei share average edged down 0.2 percent to a two-month closing low on Tuesday. The U.S. Dow closed below 10,000 for the first time since November on Monday as investors sold bank shares due to heightened concerns about the euro zone's sovereign debt troubles. Among other precious metals, platinum was up 0.7 percent at $1,482.50 an ounce from New York's notional close of $1,472 and palladium  was up 0.3 percent at $405.25. Tuesday's news that Toyota Motor Corp will recall around 436,000 hybrid cars worldwide, including the 2010 Prius model, has had little impact on prices of these precious metals, which are partly used to clean vehicle exhaust fumes.

 

The announcement came on the heels of two other massive recalls. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, said its holdings were at 1,106.378 tonnes as of Feb. 8, unchanged from the previous business day. The holdings hit a record high of 1,134.03 tonnes on June 1. The holdings rose late last week for the first time since late December, suggesting investor demand was firm at lower price levels. The world's largest silver-backed exchange-traded fund, the iShares Silver Trust, said its silver holdings stood at 9,397.56 tonnes as of Feb. 8, up 0.5 percent or 45.79 tonnes from the previous business day.