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RBS - Round Up - 180510
RBS - Round Up - 180510
This material has been produced by RBS sales and trading staff and should not be considered independent.
The Round Up
18 May 2010
Issue No. 333
Equities
Move Last % Move Range Volume
ASX 200 -143.9 4467.2 -3.1% -144 to + $6.6 bn(A)
SPI - yesterday -115.0 4495.0 -2.5% -143 to -58.u.c 39,406(H)
Dow Jones +5.7 10625.8 +0.1% -184 to +41 High
S&P 500 +1.3 1136.9 +0.1% -21 to +6 High
Nasdaq +7.4 2354.2 +0.3% -43 to +18 Avg
FTSE -0.3 5262.5 -0.0% -31 to +65 Avg
Commodities
Move Last % Today % Past Month
Oil-WTI spot -1.10 70.51 -1.5% -15.3%
Gold Spot -11.08 1222.10 -0.9% +7.4%
Nickel (LME) -38.78 935.63 -4.0% -22.6%
Aluminium (LME) -5.17 89.13 -5.5% -18.2%
Copper (LME) -20.80 291.91 -6.7% -16.7%
Zinc (LME) -7.09 84.75 -7.7% -21.8%
Silver -0.46 18.89 -2.4% +6.5%
Sugar -0.24 13.89 -1.7% -12.9%
Equity Structured Products and Warrants
Overnight Commentary
The US eked out a gain of 6pts thanks to a bounce in the Euro off a 4 year low. Energy shares led the Dow down 185pts
early as oil dipped under $70 for the first time this year. The S&P added 0.1% and the Nasdaq rose 0.3%.
Eco - Empire Manufacturing was well below expectations at 19.11 vs 30 expected and down from 31.86 prior but
importantly still expanding. NAHB Housing Market Confidence Index was 22 vs 20 expected and up from 19 prior.
Growth Proxies - Caterpillar was off 1.7% thanks to the weakness in NY manufacturing data. Alcoa fell 2.1% to be the
worst on the Dow and together they took 10pts off the Dow.
Retail - Lowe's was off 3.1% after forecasting 2Q earnings below analyst expectations. The CEO said consumers are still
concerned about unemployment and home foreclosures. Home Depot rose 1.1% after being weaker early. Wal-Mart rose
1.2% ahead of earnings later this week.
Homebuilders - The NAHB index showed consumers rushed to sign contracts before a April 30 deadline for an up to
$8,000 tax credit helping trim inventories. DR Horton was up 1.5%, Pulte rose 0.5%, KB Homes added 0.9% and Lennar
ended 0.1% higher.
The FTSE finished the day 0.3 points below were it started as early gains were eroded by miners and travel firms with
global demand concerns and the Icelandic ash cloud the big issues. The market finished the day flat while the DAX added
0.2% and the CAC lost 0.5%.
Banks - Banks were under continued pressure as Euro debt concerns and possible new financial legislation, aimed at
reducing Britain's deficit, weighed on the sector. Barclays, Lloyds and RBS the biggest underperformers, off 0.7% to 1.4%,
as JPMorgan released a report identifying the 3 as the most likely to be effected by new provisioning requirements.
The FTSE Eurofirst 300 closed 0.1% lower as the Euro hit 4 year lows and copper and oil prices flirted with key support
levels. Airlines were weaker as the Icelandic volcano continues to spurt ash, grounding 1000 flights throughout Europe,
Ryanair -3.5%, KLM Air France -3.6%. Travel giants TUI and Thomas Cook were unable to escape the selloff shedding
2.9% and 3.2% as they claimed profits would be lowered by 70m pounds. Hochtief, the German construction group fell
7.7% after reporting lower than expected new orders and rumours circulated about faulty support structures in a 500m
euro project in Hamburg.
Equity Structured Products and Warrants
Commodities Commentary
Miners - Miners were the biggest weights on the market tracking substantially commodity prices lower on the back of
global demand fears. Concerns that Chinese demand may have already peaked triggered a selloff across the board. BHP,
RIO, Fresnillo, Kazakhmys and Xstrata off 1% to 3% removing over 10 points from the broader market.
SPI Commentary
The SPI traded down 112pt to 4495. Open at 4607 with a high of 4611 and a low of 4467. Volume 44,855 Overnight the
SPI traded up 20pts 4524.
*SPI report taken from the 9:50am open to the 4:30pm close on the previous trading day. Charts taken from IRESS
Source: IRESS
Investment view
Prior to the initial bid, our preference was for NCM over LGL for gold exposure due to diversification by mine and
geography, its strong growth pipeline, management strength and a relatively low P/NPV multiple. Should the merger be
successful we are of the view that NCM's management team will be able to extract greater operational synergies over
time than the A$85m currently factored in to our numbers, and remain buyers on a long term view. We maintain our view
that a competing bid for LGL is unlikely but would continue to hold that stock with a view to NCM exposure now that a
timeline for the merger has been established.
Source: IRESS
Source: IRESS
During the peak of US reporting, we are generally inundated with results on a daily basis, some of which have more
relevance than others for the Australian market. To help prioritise the US results, we have surveyed the RBS research
analysts and asked them to identify which are the key US stocks to watch in their sectors. These are presented in the
table below, along with their expected reporting date and key forecast expectations.
Equity Structured Products and Warrants
Equity Structured Products and Warrants
For further information please do not hesitate to contact us on the details below
Disclaimer
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Equity Structured Products and Warrants
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