AAP MARKETS WRAP for Friday, August 24 2001

AAP General News (Australia)
08-24-2001
AAP MARKETS WRAP for Friday, August 24 2001

MARKETS WRAP: Friday, August 24 2001




DOW JONES -47.75 10229.15 US2-yr bond up 1/32 3.70
S&P500 -3.22 1162.09 US10-yr bond up 3/32 4.88
NASDAQ -17.04 1842.97 US30-yr bond up 12/32 5.41
NIKKEI -269.51 11126.92 CRUDE Oct/$US +0.26 26.63
HANG SENG +156.81 11345.38 TSEG -2.5 4885.00
FTSE 100 -12.2 5396.5 GOLD US$oz +0.40 277.70
NZSE-40 +17.48 2038.16 COPPER/$US +18.5 1492.00
A/ORDS +9.1 3264.2 TIN/USt -35.0 3840.00
S&P/ASX200 +9.7 3320.7 LEAD/$USt +5.25 470.00
DAX +33.83 5254.04 ZINC/$USt +11.5 833.50
CAC-40 -2.64 4809.50 ALUMINIUM/$US +16.0 1405.00
$US/YEN *119.72 NICKEL/$USt +35.0 5675.00
$EUR/USD *0.9150 SILVER $USoz +0.012 4.220
$NZ/USD *0.4404
$AUD/USD *0.5327





* Still trading



Crude oil is the October contract price on the NYMEX. Gold is the December price on
COMEX. Silver is the September price on COMEX. Base metal prices are the afternoon cash
closing prices on the London Metal Exchange.

Overseas text sourced from Dow Jones Newswires.



SYDNEY, Aug 24 AAP - In NEW YORK, the stock market traded lower Thursday as skittish
investors saw little reason to buy in a business environment that shows slim chances of
improving anytime soon.

Stocks fell across sectors and the tech sector gave up slight gains made earlier when
some investors were searching for bargains.

"It's a hunt-and-peck type market. Bargain hunters are looking for specific issues,
and their timetable is extremely short. It is an in-and-out mentality," said Alan Ackerman,
executive vice president of Fahnestock & Co.

The Dow Jones industrial average, which has alternated between winning and losing days
all week, finished down 47.75 at 10,229.15. Investors were locking in profits from Wednesday's
102-point rally, which was inspired by a 145-point selloff on Tuesday.

Broader stock indicators, which have likewise fluctuated, also fell. The Nasdaq declined
17.04 to 1,842.97, while the Standard & Poor's 500 index slipped 3.22 to 1,162.09.

The market's struggle to advance and subsequent downturn wasn't surprising given the
lack of enthusiasm on Wall Street recently. Investors, tired of stock rallies that ultimately
fizzle on bad corporate or economic news, have become increasingly hesitant about making
commitments to the market.

Thursday's disappointing economic news was a report that jobless claims for the first
week in August rose to their highest level in nine years.

However, even positive events, namely Tuesday's interest rate cut by the Federal Reserve
- the seventh such move of 2001 - failed to inspire buying. Instead, investors, upset
by a pessimistic economic assessment accompanying the rate reduction, sold stocks lower
across the market Thursday.

Among blue chips, General Motors fell 99 cents to $56.21 and J.P. Morgan Chase slipped
48 cents to $40.72.



In LONDON, shares closed lower Thursday in another session characterised by low volumes
and a lack of corporate news, but technology stocks rose slightly around the close, following
a slight fillip in the Nasdaq.

The FTSE 100 ended down 12.2 points, or 0.2 per cent, at 5396.5, on a provisional market
volume of 1.4 billion shares.



In FRANKFURT, the Xetra DAX gained 33.83 points to 5254.04 on Thursday.



In PARIS, stocks ended flat Thursday with the week's technology losers making a modest
recovery on a technical rebound

France Telecom, however, bucked the trend. The telecom operator was down EUR1.90, or
4.7 per cent, at EUR38.20. It led the CAC decliners and crossed the EUR40 threshold for
the first time since February 1998.

The CAC 40 index of most actively traded stocks closed at 4809.50 points, down 2.64
points or 0.1 per cent. The Nouveau Marche growth stocks index fell 8.14 points, or 0.8
per cent, to 1083.16 points.

Alcatel was the blue-chip index's biggest gainer. Its shares closed up 49 cents, or
2.9 per cent, at EUR17.60.



In TOKYO, stocks continued their bear-run Thursday, sending the Nikkei 225 Stock Average
to a new near 17-year closing low for the third time in a week.

Speculative players sold the Nikkei 225 index futures contract actively on the Singapore
Exchange despite an absence of major incentives, apparently taking advantage of sentiment
as players despaired of achieving quick trading gains, traders said.

The Nikkei 225 index fell 269.51 points, or 2.4 per cent, Thursday to 11126.92, its
lowest close since October, 1984 and after a 116.05-point rise Wednesday.



In HONG KONG, the Hang Seng Index got some respite from a relentless decline as telecommunications
stocks, HSBC Holdings and some of the property counters put on a show of strength.

Market watchers were wary of calling the move a recovery. Rather, they said telecom
stocks, in particular China Mobile, had been oversold, and investors were mildly encouraged
by a rise in the Nasdaq in US trading Wednesday.

The blue-chip Hang Seng Index ended up 1.4 per cent, or 156.81 points, at 11345.38.



In WELLINGTON, sharemarket turned in a solid performance yesterday, lifting nearly
one per cent in line with good gains on overseas markets.

The NZSE-40 capital index closed up 17.48 at 2038.16.



In SYDNEY today, the local market will likely be tentative given some weakness on Wall
Street overnight with continued uncertainty about the slower US economy and awaiting further
major corporate results in Australia next week.

Yesterday, the Australian sharemarket struggled into the black, a bundle of recent
profit reports the principal driver for investor sentiment.

Profits aside, the resources sector - fuelled by stronger overnight metal prices -
also gave the market a leg up.

The benchmark S&P/ASX 200 closed up 9.7 points to 3320.7 while the all ordinaries index
added 9.1 points to 3264.2.

On the Sydney Futures Exchange, the September SPI 200 futures contract was down three
points at 3320.0 on volume of 495 contracts.



COMMODITIES



In LONDON, on the London Metal Exchange three-month base metals ended the late kerb
mostly higher Thursday on short covering and follow through buying.

There are hopes emerging that the recent spell of following demand may be at an end,
dealers said.

"There are distinct signs of bottoming out in the global economies," said Kevin Norrish,
analyst with Barclays Capital, adding that this could help lift consumer demand and allow
metal prices to form a base at current levels.

Wednesday's better-than-expected German IFO index was the catalyst for the rally, prompting
funds to cover short positions and local dealers to enter longs.

This continued Thursday morning after a strong bout of Chinese buying in early trade,
helping take the market to the day's highs.

However, building expectation among a number of market participants that the upmove
is the start of a steady, long-term rally may be premature.

"I don't think you can necessarily rule out another pullback to the lows," said Norrish.

The two bellwether metals, copper and aluminum, led the rest of the complex higher
in pre-market trade but neither this, nor a later rally, could overcome resistance at
$1,520-$1,525/ton and $1,430/ton respectively.

On a technical basis, both metals will need to breach resistance if further gains are to be seen.

Nickel again ran into a strong area of selling toward $5,800/ton while zinc was unable
to break $860/ton resistance convincingly.

The stronger euro against the dollar has also played a large part in the recent base
metal rally but unlike most participants, Barclays view the currency as overvalued and
expect losses medium term, Norrish said.



In NEW YORK, precious metals were trading mostly higher late Thursday, with the only
real sign of life seen in platinum futures, as other metals decided to take the day off.

Buoyed by Japanese short covering overnight and higher fixings of the spot price in
London Thursday, October platinum on the New York Mercantile Exchange attracted enough
trade buying to push through a key resistance level at $451 a troy ounce, a floor trader
said.

Platinum's technical strength points toward regaining $490 an ounce, but the Tokyo
market appears to be the dominant influence, with volume very light in New York and little
improvement in physical demand, the trader noted.

The gains in platinum didn't spill over into palladium, which ended another $6.50 lower
at $443.50 an ounce.

Minimal movement in the euro translated into a narrow trading range in gold, which
has been tracking the single currency recently in the absence of any other influences.

December gold on the Comex division of the New York Mercantile Exchange finished trading
40 cents higher at $277.70 a troy ounce.

Technical support levels - include the 200-day moving average at $274.10 and the 100-day
moving average at $272.20.

Resistance for December is at recent highs of $280.80 and $283.80 an ounce.

It was strength in the base metals as well as steadiness in gold that probably helped
Comex September silver inch a bit higher, ending 1.2 cents up at $4.22 an ounce.



In NEW YORK, crude oil futures finished moderately higher Thursday at the New York
Mercantile Exchange, boosted in part by a rally in petroleum products futures.

Nearby October crude futures, which lost 35 cents Wednesday, advanced 28 cents to $26.65
a barrel.

September gasoline futures rose 80 points to end at 79.20 cents a gallon, while September
heating rose jumped 78 points to close at 73.80 cents a gallon.

Final settlement prices weren't in yet.

Prices spent most of the session in and out of positive territory after Wednesday's
sell-off but gained momentum amid talk of refinery outages in the Midwest and Gulf Coast.

Citgo Petroleum Corp. said it will take it 20 weeks to 24 weeks to restart its recently
shuttered 160,000-barrel-a-day refinery in Lemont, Illinois.

Midwest traders attributed a 9-cent rise in midwest gasoline prices Thursday partly
to news of a glitch at Conoco's Ponca City, Oklahoma, refinery.

Conoco confirmed the 190,000 barrel-a-day refinery's 54,500-barrel-a-day fluid catalytic
cracking unit "experienced an upset" on Tuesday but a spokesman wouldn't comment on the
status of the unit.

The latest spate of refinery glitches come amid declining gasoline inventories and
strong demand. The American Petroleum Institute reported Tuesday that US gasoline stocks
fell by 3.071 million barrels to 203.075 million barrels last week as demand surged to
an all-time high of 9.692 million barrels a day.



INTERNATIONAL NEWS



WASHINGTON - The number of people stuck on the US jobless rolls grew to a nine-year
high of 3.18 million this month, official figures showed Thursday, but an expert said
the total remained low.



TROY, Michigan - US discount retail giant Kmart's shares tumbled 7.19 per cent Thursday
after it took a 95-million-dollar loss in the second quarter. The losses were largely
due to the restructuring and the cost of taking full ownership of its internet commerce
site, it said.



FRANKFURT - The euro zone posted a current account deficit of EUR800 million in June,
down from EUR1.3 billion 12 months earlier, the European Central Bank said on Thursday.

The figure was unchanged from the figure for May.



GENEVA - The World Trade Organization agreed Thursday to investigate complaints by
a large group of countries, including Australia, against a U.S. law that passes on to
American companies fines levied on foreign firms.



WIESBADEN, Germany, - The German economy stagnated in the second quarter of 2001 as
the global downturn weighed on Europe's biggest economy, but analysts said they saw light
at the end of the tunnel. German gross domestic product remained unchanged in April-June
compared to the first quarter, official statistics released on Thursday showed. GDP had
risen 0.4 percent in January-March compared to the previous three months.





NATIONAL NEWS



CANBERRA - Small Business Minister Ian Macfarlane remains under pressure today over
his knowledge of a possible breach of GST laws by his own electorate council.



SYDNEY - The NSW Coalition has edged ahead of the Labor Party in the primary vote for
the first time in three years, according to the latest Newspoll survey. The poll reports
the Coalition capturing 41 per cent of the primary vote compared with the government's
39 per cent for July/August.



PORT MORESBY - The laying of the $A6 billion plus PNG-to-Queensland gas pipeline edged
closer to reality today when the PNG government accepted Japan's Itochu Corporation as
a potential investor. Itochu, one of the world's biggest trading companies, is already
buying tuna, copra and timber from PNG.



CANBERRA - Strict regulation of the prices airports charge airlines should be replaced
by a trial period of monitoring, the Productivity Commission said in a draft report released
today.



CANBERRA - Claims by Treasurer Peter Costello that Australia would lead the developed
world in economic growth next year are at odds with the survey he drew from. The latest
report by UK-based Consensus Economics had a consensus forecast for Australia to grow
by 4.0 per cent next year, ahead of some, but behind forecasts for Ireland and South Korea.



STOCKWATCH for Friday, August 24





AMP - AMP LTD - UP 80 CENTS AT $19.60

Volatile investment markets have swiped 23 per cent off AMP's first half profit, but
the financial services giant remains convinced it can bounce back to growth.

AMP's net profit plunged to $403 million in the six months to June 30 from $525 million
in the same period last year as income from its investments dived because of the slump
on global stock markets.

The result was in line with the $390 million-$410 million AMP forecast last week amid
controversy over selective briefings it gave analysts in July which led to many downgrading
their earnings expectations.





CWO - CABLE & WIRELESS OPTUS LTD - UP 10 CENTS AT $3.72

Shares in Cable & Wireless Optus climbed nearly three per cent Thursday as Singapore
Telecommunications Ltd passed a further hurdle in its bid take over the telco.

Singapore Telecommunications is now expected to soon receive final approvals for the
takeover, and should secure 100 per cent ownership.

Treasurer Peter Costello has said "yes" to the company's takeover of C&W Optus - but
said the deal remains subject to some conditions including the approvals from the US State
Department.

Analysts and industry sources said SingTel already is likely to have the required US
approval, with interested parties waiting to get hard copies of the documents.





CBA - COMMONWEALTH BANK OF AUSTRALIA LTD - DOWN 75 CENTS AT $30.05

Shares in Commonwealth Bank tumbled more than two per cent Thursday as investors slammed
the banking giant for delivering a disappointing full year profit result.

Analysts described the bank's result as "weak", with many downgrading profit forecasts
for CBA's current fiscal year by four-to-five per cent and cutting their recommendations
on the stock.

CBA shares closed 2.44 per cent lower as investors dumped bank in favour of its rivals
- National Australia Bank Ltd, ANZ Banking Group Ltd and Westpac Banking Corp Ltd.

The plunge in CBA's shares, which had hit a peak of $34.15 in June, came after the
bank reported on Wednesday its underlying profit had dived 11 per cent slide to $2.398
billion.





PML - PACMIN MINING CORP LTD - UP 30 CENTS AT $1.23

SGW - SONS OF GWALIA LTD - UP 26 CENTS AT $7.00

Gold and tantalum miner Sons of Gwalia has launched a $159 million takeover offer for
Pacmin Mining Corp in a bid to create a 700,000 ounce a year gold producer.

Analysts welcomed the move, which if successful, will lead to further rationalisation
of Western Australia's Goldfields region.

It comes just weeks after Delta Gold Ltd and Goldfields Ltd, both with a significant
WA presence, revealed they were in merger talks.





PMM - PORTMAN LTD - UP NINE CENTS AT $1.35

Iron ore miner Portman forecast a steady improvement in profitability in the years
ahead after posting a record first half result.





BGN - BRESAGEN LTD - UP 3.5 CENTS AT $1.035

Bresagen plans to further boost its investment in embryonic stem cell research despite
the Adelaide-based biotech's annual loss blowing out to almost double last year's loss.





COH - COCHLEAR LTD - UP $1.10 AT $45.70

Shares in Australian bionic ear maker Cochlear hit another record Thursday, adding
to a 12 per cent surge since a strong profit report earlier this week.





AAP

KEYWORD: MARKETS WRAP

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