AAP MARKETS WRAP for Thursday, August 23 2001

AAP General News (Australia)
08-23-2001
AAP MARKETS WRAP for Thursday, August 23 2001

MARKETS WRAP: Thursday, August 23 2001




DOW JONES +102.76 10276.90 US2-yr bond dn 6/32 3.73
S&P500 +8.05 1165.31 US10-yr bond dn 10/32 4.90
NASDAQ +28.71 1860.01 US30-yr bond dn 2/32 5.44
NIKKEI +116.05 11396.43 CRUDE Oct/$US -0.35 26.37
HANG SENG -251.78 11188.57 TSEG -44.9 4887.50
FTSE 100 -21.6 5408.70 GOLD US$oz -0.10 277.30
NZSE-40 -15.5 2020.7 COPPER/$US +12.0 1473.50
A/ORDS -8.4 3255.1 TIN/USt +50.0 3875.00
S&P/ASX200 -8.0 3311.0 LEAD/$USt -14.25 464.75
DAX +4.1 5220.21 ZINC/$USt -0.5 822.00
CAC-40 -22.73 4812.14 ALUMINIUM/$US +24.0 1365.00
$US/YEN *120.36 NICKEL/$USt +45.0 5640.00
$EUR/USD *0.9142 SILVER $USoz +0.015 4.208
$NZ/USD *0.4417
$AUD/USD *0.5336





* Still trading

** Preliminary figures



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 23 AAP - In NEW YORK, placing some bets despite their worries about the
economy, bargain-hunting investors sent the stock market higher Wednesday.

Wall Street enjoyed a solid advance by late afternoon after investors spent much of
the day pondering what the Federal Reserve's seventh interest rate cut will mean for the
economy.

Investors had been alternating between worries that the quarter-point cut, which the
Fed made Tuesday, won't be enough to reinvigorate the economy and relief that the central
bank didn't think the economy needed a bigger cut.

The Dow Jones industrial average finished a choppy session up 102.76 at 10,276.90,
according to preliminary calcuations. The Dow recovered most of the 145 points lost Tuesday.

"Contrary sentiment was getting overdone," said Steven Goldman, market strategist for
Weeden & Co.

The broader market also advanced. The Nasdaq composite index rose 28.71 to 1,860.01,
and the Standard & Poor's 500 index gained 8.05 to end at 1,165.31.

However, buyers likely were prompted by cheaper prices from Tuesday's selloff rather
than optimism about an economic turnaround in the near future, analysts said.

The Fed did not predict business would soon improve, prompting investors to sell stocks
across sectors Tuesday. And analysts also don't expect any gains to be long lasting until
companies can say business is improving.



In LONDON, shares closed lower Wednesday on profit-taking after a midday rally inspired
by stronger-than-expected German business sentiment data vanished following a slip into
the red on Wall Street.

The FTSE 100 ended down 21.6 points, or 0.39 per cent, at 5408.7 on a provisional market
volume of 1.6 billion shares.

Leading on the downside, telecommunications firm Energis erased Tuesday's gains and
fell 7.5 pence, or 8.9 per cent, to 76.5 pence, amid continuing gloom over the alternative
carrier sector.



In FRANKFURT, the Xetra DAX gained 4.1 points to 5220.21 on Wednesday.



In PARIS, stocks ended lower in thin trade Wednesday on the US Federal Reserve's gloomy
economic outlook, even though the US rate cut Tuesday gave the market a shortlived shot
in the arm in early trading.

The CAC 40 Index of most heavily traded shares fell 22.73 points, or 0.5 per cent, to
4812.14 points.

Media giant Vivendi Universal, which boasts the second-largest market capitalization
on the Paris bourse, fell EUR1.25, or 2.0 per cent, to EUR60.25 after the company didn't
receive any formal bid for its trade press unit.



In TOKYO, the Nikkei 225 Stock Average Wednesday finished 1.0 per cent higher as players
covered shorts, shrugging off concerns over the US economic outlook.

The Nikkei ended up 116.05 points at 11396.43, after Tuesday's 22.44-point gain.



In HONG KONG, the Hang Seng Index closed at its lowest level in more than 28 months
Wednesday amid concern about the severity of the US economic downturn.

After the US Federal Reserve cut interest rates, the Hong Kong Monetary Authority quickly
followed with its own 25 basis point interest rate cut.

But instead of prompting a much-needed rally in the stock market, investors dumped shares.

Selling of telecom stocks was particularly heavy, tracking weakness in the telecom sector
in Europe.

Dragged down by sharp falls in China Mobile and China Unicom shares, the blue-chip
Hang Seng Index ended down 2.2 per cent, or 251.78 points, at 11188.57, its lowest close
since April 1, 1999.



In WELLINGTON, the sharemarket fell after Wall Street took a nasty tumble as the US
Federal Reserve cut interest rates for the seventh time this year.

The NZSE-40 capital index closed down 15.5 points to 2020.7.



In SYDNEY today, a bounce overnight in Wall Street should see the Australian market
move higher at the open, although investors will likely remain wary given there is continued
uncertainty about the slower economy in the US and the implications for that globally.

Yesterday, the local market finished modestly weaker with a string of earnings reports
and a weaker night on Wall St on Tuesday sapping investor confidence.

Falls by market leaders Commonwealth Bank and News Corp accounted for most of the market's
decline as investors shrugged off the seventh easing of official interests rates this
year by the US Federal Reserve late Tuesday.

The S&P/ASX200 finished eight points weaker at 3311.0 while the all ordinaries index
dropped 8.4 points to 3255.1 points.

Profit results out here today include those from AMP Ltd, Australian Gas Light Co,
Burswood Ltd full year.

On the Sydney Futures Exchange, the September SPI 200 futures contract was up five
points at 3326.0 on volume of 569 contracts.



COMMODITIES



In LONDON, three-month base metals ended the late kerb mostly higher Wednesday on the
London Metal Exchange from Tuesday's late kerb on strong economic data from Germany and
the stronger euro, dealers said.

German IFO business sentiment index for July released Wednesday came in at 89.8, much
better than the expected 88.9, breaking a five-month decline.

The data helped to dispell the bearishness about demand for base metals and sparked
speculator buying which gathered momentum as the euro rallied against the dollar.

Short covering after sharp falls on Monday and Tuesday also proved supportive, as did
anticipation that consumers will begin returning from the summer vacation period next
week, analyst Martin Squire of JP Morgan said.

However, selling emerged as prices tried to forge higher, stopping copper in its tracks
at $1,505 a metric ton and aluminium at $1,418/ton before falling lower for the close.

Dealers and analysts were reluctant to say that the IFO numbers could lead the way for
other bullish European economic data and a pickup for metal demand. Most erred on the
bearish side and expected to see further lows for prices short term.



In NEW YORK, precious metals were trading mostly higher late Wednesday, with gold futures
surrendering a three-dollar rally amid choppy trading as the euro retreated from its early
highs against the US dollar, participants said.

"Gold is inversely correlated to the dollar. The dollar's weakest point was almost
on the opening and gold's strongest level was on the opening," Jim Steel, an analyst at
Refco Inc, noted. "The dollar has pared its losses, and gold has given up its gains, almost
correspondingly."

Ian MacDonald, manager of precious metals at Commerzbank in New York, cited a marked
slowdown in physical demand since the price has run up.

"I don't see physical buying chasing this market and that's a concern. Most physical
buyers are holding back into the low $270s," he said.

But Mr Steel said physical demand was reported to still be strong in Dubai and the
Middle East, yet relatively poor in East Asia and flat in the Organization of Economic
Cooperation and Development countries.

December gold on the Comex division of the New York Mercantile Exchange finished trading
10 cents lower at $277.30 a troy ounce.

Comex September silver managed to hold its gains against a slide in gold due to strength
in the base metals, such as copper, MKS Finance S.A. noted in its daily report.

Mr Steel saw it languishing amid ample supply and lack of industrial demand. The technically
oriented players wouldn't rest until they had gotten the price down near $4.00 an ounce,
he predicted.

Nymex platinum and palladium had a quiet session, with platinum seen forming a base
in the $430s and $440s.



In NEW YORK, crude oil and refined products futures lost early sharp gains to end mostly
lower at the New York Mercantile Exchange on Wednesday as traders reassessed supplies
in this week's inventory reports.

After a rally at the opening bell on inventory data showing larger-than-expected declines
in crude oil and gasoline supplies, prices fell back into a technical trading mode.

"This was somewhat of a 'Buy the rumour, Sell the news' reaction after (Tuesday's)
rally," said John Kilduff, senior vice president at Fimat USA Inc.

The petroleum complex rallied sharply Tuesday, led by a 4-cent surge in gasoline futures.

The rise was largely fueled by astronomical cash gasoline prices in Chicago, and anticipated
draws in crude and gasoline stocks.

The October crude oil contract respected stiff resistance at $27.30 in the morning,
fell back by midday, and started to inch its way higher in the afternoon session.

However, a bearish AGA report sent natural gas futures plunging in late trade. Then
crude futures sold off, and products began to slide.

September gasoline futures nudged resistance at 80 cents a gallon early on, then fell
back as Nymex traders said futures contracts had nearly caught up to the strong physical
market.

Market players cited longer-term pressures for the decline in prices, such as the belief
that crude inventories will start to rebuild once Iraqi crude exports hit US shores after
their resumption in early July.

Others said high demand levels are unsustainable, especially for gasoline after Labor
Day, given the slowing economy.



INTERNATIONAL NEWS



MUNICH - The German economy showed signs of improving on Wednesday after the widely-followed
Ifo index of western German business confidence rose unexpectedly to 89.8 points in July
from 89.5 points in June. Analysts had been expecting a sharp fall in the index.



PARIS - France's secretary of state for foreign trade hailed on Wednesday a ruling
by the World Trade Organisation that United States tax breaks for exports are incompatible
with global free trade rules.



WASHINGTON - The White House today slashed its budget surplus forecast for the current
fiscal year to $US158 billion ($A296.77 billion), and brushed aside criticism the Bush
administration had squandered budget cushioning on tax cuts.



DUSSELDORF - Vodafone chief executive Chris Gent said on Wednesday the British operator
had acted legally when it made large pay-offs to senior Mannesmann executives when the
two companies were in merger talks. Prosecutors are investigating Gent for alleged corruption
and former Mannesmann boss Klaus Esser for alleged breach of trust.



WASHINGTON - After lengthy negotiations, the International Monetary Fund agreed to
offer Argentina an additional $US8 billion ($A15 billion) in loans, which will bring to
$US22 billion ($A41.32 billion) the amount of IMF help available to help the country weather
a severe economic crisis.



NATIONAL NEWS



CANBERRA - Health Minister Michael Wooldridge today denied shortchanging public hospitals
by $200 million in federal funds and continued to accuse Opposition Leader Kim Beazley
of using his family to play politics.



SYDNEY - The Commonwealth Bank has cut 600 extra staff and 40 more branches than it
said it would as a result of the Colonial Group takeover, The Daily Telegraph reports.



CANBERRA - The Labor Party has backed a decision by Treasurer Peter Costello to allow
the takeover of Australia's second biggest phone company by a Singaporean telco.



CANBERRA - The Institute of Chartered Accountants in Australia has called for the government
to take a breather from any further tax changes. The ICAA said its members were still
struggling under he mountain of paperwork caused by the introduction of the new tax system.



SYDNEY - Talks between rail maintenance workers and their employer to break a seven-week
strike will continue in Sydney today under the guidance of former prime minister Bob Hawke.



STOCKWATCH for Thursday, August 23





PBL - PUBLISHING & BROADCASTING LTD - UP 12 CENTS AT $9.85

Kerry Packer's Publishing & Broadcasting reported a net loss for 2000/01 after taking
a hit to earnings on its investment in One.Tel.





CBA - COMMONWEALTH BANK OF AUSTRALIA LTD - DOWN 80 CENTS AT $30.80

Commonwealth Bank posted an 11 per cent fall in full year net profit of $2.398 billion
and warned credit quality in the business sector was expected to weaken further.





SSX - SMORGON STEEL GROUP LTD - DOWN TWO CENTS AT 91 CENTS

Smorgon Steel was confident of a better year ahead after posting a $246.6 million net
loss in its "toughest year on record".

"It has been a tough year since the introduction of the GST and post Olympics, there
were no major projects, the construction industry really took a dive," managing director
Ray Horsburgh said.

Yet the weak domestic economy was not the primary reason behind the slump in 2000/01
earnings, down from a $72.11 million profit a year ago.





STO - SANTOS LTD - UP TWO CENTS AT $6.33

Oil producer Santos expects production in 2001 to be close to last year's record level
of 56 million of barrels of oil equivalent





BLD - BORAL LTD - UP 14 CENTS AT $3.40

Boral anticipates an improved net profit this financial year after savage Australian
trade conditions carved nine per cent from its earnings in 2000/01.

Boral reported a lower net profit of $153.4 million for the year ending June 30, 2001,
but was confident the Australian building cycle had bottomed.

Shares in Boral added more than four per cent Wednesday on news of the result, with
analysts noting the profit was ahead of expectations.





AWB - AWB LTD - CLOSED AT $3.46

AWB's stunning $100 million listing on the Australian Stock Exchange marked the final
step in the transition of 62-year-old former government-owned wheat exporter into a commercially
focussed rural services group.

With demand high for the limited supply of publicly available B-class shares, AWB debuted
at $3.42, an 8.57 per cent premium to the $3.15 issue price.





ERG - ERG LTD - DOWN 20 CENTS AT 66 CENTS

Shares in ERG crashed more than 16 per cent after its annual net profit was dragged
lower by a change in the accounting treatment of licence fees.





JJS - JUST JEANS GROUP LTD - UP FIVE CENTS AT $1.40

Just Jeans will undertake an off-market share buy-back as it makes the transition from
a public to a private company.

Just Jeans, which Wednesday received a final proposal from takeover group Catalyst
Investments Managers Pty Ltd, will buy up to 16.7 million shares or nearly 21 per cent
of the shares on issue.





MGW - BRIAN MCGUIGAN WINES LTD - UP 29 CENTS AT $3.85

Wine group Brian McGuigan Wines will look to export markets and continued distribution
gains in Australia to keep to the double digit growth seen in previous years.





BIR - BURSWOOD LTD - UP TWO CENTS AT 73 CENTS

Burswood and Six Continents Hotels and Resorts (Australia) Pty Ltd have earmarked the
development of a $50 million hotel at Burswood's resort casino complex in Perth.





ECP - ECORP LTD - DOWN TWO CENTS AT 40 CENTS

Online group ecorp has trumped expectations for full year earnings but warned its Charles
Schwab stockbroking venture continued to fall short of targets.





AAP

KEYWORD: MARKETS WRAP

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