Article / 16 September 2015 at 0:26 GMT

Today's Trade: ASX higher on solid Wall St lead

Trading Desk / Saxo Capital Markets
  • Local markets opened higher; the ASX 200 was up 1% in early trading
  • Overseas markets rose with US equities recording gains above 1%
  • Base metals were generally up, with copper advancing 0.7% to $5,332
  • After dipping below 0.7100, AUDUSD rebounded as the US trading session began

By Saxo Capital Markets (Australia)

Local trading

Local markets opened higher on strong leads from Wall St and Europe. In early trading, the ASX200 was up 1% to 5066 with materials and healthcare stocks leading the charge.

Overnight news and developments

  • It was a night of gains across Europe and the US with US equities outperforming with gains above 1%
  • The Dow Jones Industrial Average gained 228.89 points, or 1.4%, to 16599.85, the highest close since August 28. The S&P 500 gained 25.06 points, or 1.3%, to 1978.09. The Nasdaq Composite rose 1.1% to 4860.52
  • Financial and industrial stocks rallied the most: Caterpillar gained 2.5% to $74.58. JP Morgan Chase rose 1.9% to $63.58, while Goldman Sachs Group shares rose 1.9% to $187.45
  • The Dow transports closed up 1.85%, with UPS jumping 3.6 % to lead nearly all constituents higher. Alaska Air was the greatest laggard
  • The CBOE Volatility Index (VIX) traded near 22.5
  • Data last night in the US showed that US retail sales rose 0.2% in August from a month earlier, meeting expectations and giving the Fed another piece of good news
  • In other economic data: July business inventories gained 0.1%. August industrial production data showed a decline of 0.4%, worse than the expected 0.2% drop. The Empire State Manufacturing Survey came in at negative 14.7 for September, versus August's read of negative 14.9
  • The energy sector jumped more than 1% following the gains in oil: Crude oil futures settled up 1.3% at $44.59 a barrel on the New York Mercantile Exchange. Earlier, US crude oil pared gains after the White House said it does not support a move by the US House of Representatives to repeal a 40-year-old ban on exports of crude oil
  • In Europe, the Stoxx 50 rose 1.01%, the FTSE 100 gained 0.87%, the CAC 40 added 1.13% and the DAX ended 0.56% higher
  • The closely-watched German ZEW economic sentiment index dropped to 12.1 points in September from 25.0 points in August. September's figure was well below expectations, with weakening emerging markets dampening the outlook for the Eurozone's biggest economy
  • Germany's RWE and E.ON slumped to close around 3.3% lower and 6.2% down respectively following a report from Spiegel Online that energy companies were short of as much as EUR 30 billion ($34 billion) needed to build a disposal site for nuclear waste as part of Germany's exit from nuclear power
  • European auto stocks were aided higher by data from the Association of European Automobile Manufacturers showing new car registrations rose 11.5% year-on-year in August. Italy's Fiat Chrysler rallied 2.7% while BMW also performed strongly, closing 2.2% higher.

 Iron ore lost traction, down 1.4% to $57.28, as excessive Chinese steel supply
 forced global prices down. Photo: iStock

Local markets and commodities

  • The S&P/ASX 200 Index futures contract rose 1.1% to 5,047; futures relative to estimated fair value suggest an early gain of 0.9%.
  • Bank of New York Australia ADR Index -0.3%; BHP Billiton ADR +0.2%; Rio Tinto ADR -1.4%
  • Spot gold has drifted down 0.4% to $1,105 as the market waits the results of the FOMC rate decision. Once again gold traded with only a $7 range in the 24 hours. Gold stocks: NCM, NST, AQG, EVN, KCN, RMS, SLR
  • Crude oil rose with WTI and Brent up 2.1% and 0.7% to $45.12 and $46.63 respectively. The Iraq government has asked its oil companies to reduce capex for 2016 amid lower oil prices and weaker government revenue. Oil stocks: WPL, STO, SEA, BPT, OSH, HZN, DLS, AWE, KAR, ORG, SXY. WPL is looking to go straight to OSH shareholders following the board’s flat rejection of the takeover offer. The PNG government owns a 10% stake in OSH and will be an influential voter on the offer. WPL is planning to meet the PNG government this week
  • Iron ore lost traction when most other asset classes advanced, down 1.4% to $57.28. Excessive Chinese steel supply is forcing global prices down, with Japan's largest producer cutting its contract price from JPY 63,000/t to JPY 53,000/t. This is the first such cut made in almost a year. Even at this reduced price, Chinese steel is still about $120/t cheaper. This could be the beginning of another selloff in iron ore after a stronger-than-expected (and perhaps warranted) advance. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, ARI, BCI, SDL
  • Base metals were generally up, with copper advancing 0.7% to $5,332. However, zinc lost 0.5% to $1,738 as reserves at the LME jumped 7.9% in two days – the biggest gains in four weeks. Copper stocks: PNA, OZL, SFR; Nickel stocks: WSA, SIR; Aluminium stocks: AWC
  • BHP (BHP): CEO says China, other emerging markets will need to be open to prosper
  • CSL (CSL): Fluad seasonal flu vaccine wins FDA panel’s backing
  • Fonterra (FSF): ASB raises Fonterra payout forecast, eyes delay to next rate cut; whole milk powder average price rises to $2,495 a tonne
  • Ex-dividend: BRG, FLT, GEM, SEK, TPI, CAR

Open positions

Pending orders

Broker upgrades

  • Bendigo & Adelaide (BEN): Raised to buy vs hold at Morningstar
  • Sky Network (SKT): Raised to outperform vs neutral at Forsyth Barr
  • Suncorp (SUN): Raised to buy vs neutral at Goldman
  • Woodside (WPL): Takes pitch directly to Oil Search (OSH): investors: AFR

Broker downgrades

  • Coca-Cola Amatil (CCL): Cut to hold vs buy at Morningstar

Data points

  • AUS: RBA Assistant Governor Guy Debelle Speaks (930 AEST): Due to deliver a speech titled "Some Current Issues in Financial Markets" at the Actuaries Institute's Banking on Change Seminar, in Sydney
  • GBP Average Earnings Index 3m/y, Claimant Count Change, Unemployment Rate
  • EUR: Final CPI y/y, Final Core CPI y/y
  • US: CPI m/m, Core CPI m/m, NAHB Housing Market Index, Crude Oil Inventories

  • JPN: Trade Balance (950 AEST)
  • AUS: RBA Bulletin (1130 AEST)
  • BoJ Governor Kuroda Speaks (1635 AEST): Due to speak at the National Securities Industry Convention, in Tokyo
  • GBP Retail Sales m/m
  • US: Building Permits, Unemployment Claims, Current Account, Housing Starts, Philly Fed Manufacturing Index, FOMC Economic Projections, FOMC Statement, Federal Funds Rate, FOMC Press Conference

  • AUS: RBA Governor Glenn Stevens Speaks (930 AEST):Due to testify before the House of Representatives Economics Committee, in Canberra
  • JPN: Monetary Policy Meeting Minutes (950 AEST)
  • EUR: Current Account


AUDUSD could not quite get to the resistance level at 0.7184 that we mentioned yesterday, but we saw a decent pull back at 0.7165 as Shanghai Composite index declined. 

After dipping below 0.7100, AUDUSD rebounded as the US trading session began. Yesterday’s price actions indicate AUDUSD is resilient but at the same time the upside momentum appears to be fading. Unless we see a clear breakout above 0.7184, we would sell near 0.7150 level as the long-term uptrend (that started from 2001) should act as a resistance level now.
 Source: Saxo Bank


It was a bit of a déjà vu in AUS200, as it gapped up to 5,116 where it touched the downtrend in the early open then sold off sharply to break the recent double bottom level through 5,030 although it reversed at the key support level 4,986, which was mentioned in yesterday’s report. 

The afternoon selloff was initiated by the decline (-3.5%) in the Shanghai Composite index which closed just above the crucial level 3,000, but when US markets opened, AUS200 recovered about 61.8% of the Asian session’s losses. We expect the Shanghai Composite to extend the losses below 3,000 in the very near term, therefore we would sell at 5,080 where the downtrend merges with the 38.2% retracement level while the key resistance level is at 5,110.

 Source: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more 

– Edited by Gayle Bryant

Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets. Watch our daily morning call on Periscope at 0945am: #Saxostrats.
ajrafael849 ajrafael849
This comment has been redacted


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail