The Dow closed down 27 points as the market fails to break through the 13 000 resistance level, on the back of worse than expected US home sales data.  Sales of homes that were previously owned increased to 4.57 million per annum which failed to meet analysts’ estimates.  Adding to the selling pressure was monthly data from China showing that manufacturing fell again which is the fourth time in a row.  Manufacturing in Europe also fell which was not expected.  The underlying fear remains that Greece will default later this year as Fitch has reduced the country’s credit rating from CCC to C which is one grade before formal default.  Stocks hit the hardest were Dell, down over 5% and KB Home falling more than 4%.  Bank stocks also fell strongly as there is not much confidence that Greece’s bailout package will be suffice. 

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The Dow Jones Industrial Average pierced the 13000 level for the first time in almost four years, but traded largely below the mark in a choppy session in which stocks turned negative at times. The Dow broke through 13000 before noon on Tuesday and a handful of other times throughout the day, but ended the session at 12965.69, up 15.82 points, or 0.12%. The Dow last traded at the 13000 level on an intra-day basis on May 20, 2008.

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With the US market closed for Presidents day, overnight leads stemmed from Europe; in the UK the LSE managed a 0.7% gain, the French CAC was up 1%, and Germany’s DAX lead from the front up 1.5% for the session. The key driver for the move was to make up some ground post Bejing’s move to cut its bank reserve requirement ratio by 50 basis points, an announcement that assisted the XJO to close on its highs for yesterday’s session up 60 points as fears of a spike in inflation subsided.
Adding further strength to markets is the firming up of the Greek situation, as eurozone finance ministers are currently in meetings in Brussels. The focus of the current meeting is an assessment of the proposed austerity package that will seal the continued flow of bailout funds in the sum of E130bn across a number of gradual tranches.  Concerns have been raised with a new Greek government to be formed in April of this year.
Also in view are the developments with Iran, as yesterday Tehran announced it was halting oil exports to Britain and France in retaliation for sanctions placed on Iran due to its nuclear program.  This continued escalation in the geopolitical tension in the region has continued to push Crude prices higher over the last month, with WTI putting on 1.63% to close the session at US$104.92 a barrel.
We have a number of companies reporting today, notably Oil Search (OSH), One Steel (OST) and Flight Centre (FLT, additionally on a data front we have the release of the minutes of the last RBA meeting.
The SPI is pointing to a flat open with eyes fixed towards news out of Brussels.

US markets closed modestly higher Friday night on continued positive economic data and as European leaders signalled progress towards a Greek debt deal.  The Dow Jones Industrial Average managed a 45.7 point gain to close at 12949, making fresh 3 year highs and just 50 points from the psychologically important 13000 level where it rejected and sold off heavily in May 2011. The S&P500 finished 3.19 points higher at 1361.23 whilst the Tech oriented NASDAQ lost ground, closing down 8 points at 2951. The Volatility Index fell over 5% to close at 17.8.

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Overnight the Dow Industrials rebounded off the lows to close at its highest level in almost four years after positive reports from the labour and housing markets and some progress in Europe pointing to a second bailout for Greece. The Dow Jones Industrial average ended the session higher by 123 to 12,904 points, the NASDAQ composite continued its recent rally closing up 44 points or 1.51% while the S&P 500 gained 14.8 points to 1,358. Leading the market were technology and material stocks, among the gainers, Microsoft rose 4.7% and Bank of America added 3.4%.

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US stocks fell by 97 points on the back of news that euro zone officials may consider delaying the passage of the second round of the Greek bailout until April when Greece holds its elections.  Adding to the sell off was Federal reserve reports showing that industrial production was unchanged last month when analysts had expected a rise of 0.7%.  The biggest decliners were Caterpillar, General Electric and United Technologies all shedding over 1%.  Selling pressure was dampened by some positive news out from China where its central bank will increase its stake in European assets. In other positive news, minutes from the US Federal reserve meeting revealed the central bank’s commitment to implement further easing measures should the economy struggle to grow.   Gold edged higher finishing up $10.4 an ounce at $1728.1.  Oil continued its climb as it made a four week high still holding above the $100.00 a barrel mark. 
 
This morning before the open, a slew of companies have reported their earnings.  AMP reported a 11% fall in full year net profit down to $688 million as the result factors in contributions from the AXA business AMP bought last year.  AMP has confirmed its dividend of 14 cents per share. ASX also reported stronger profits, up 2.1% to $175.6 million as it confirms its dividend of 92.8 cents per share. Brambles (BXB) reported strong profits of up 9% of US$239.5 million and confirms its interim dividend of 13 cents per share. Westpac also reported profit of $1.5 billion as higher funding costs has attributed to a lower net interest margin.  AWC also reported better than expected profits of $126.6 million and declares a final dividend of 3 cents per share as demand in China is seen to continue over the next few years.
 
SPI futures finished down around 36 points as traders will watch out for data to be released today; Australian unemployment rate and consumer inflation expectation.  Tonight in the US we will be watiching initial jobless claims and housing starts. Today being index expiry, we are likely to see a choppy opening.

U.S. stocks ended the session slightly up Tuesday, after a volatile session in which the market flirted with its worst point decline of the year, only to recover in the last half hour of trading.

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The Dow finished up 72 points overnight as it priced in yesterday’s approval of the Greek austerity plans by parliament.  The market seems to have priced most of the news in as the outcome was somewhat expected.  Some skepticism remains though as whilst it is a step in the right direction, it does not resolve the entire debt problem as the country could run into difficulty making the debt payments in future. The euro rallied on the back of this news.  The Italian bond auction was well received as it met its quota whilst unrest continued in Athens as protesters set fire to buildings in Athens.   Gold closed up $1.60 an ounce at $1724.25 as the safe haven commodity still has strong demand amidst the ongoing uncertainty.  Crude oil futures had a strong session as the March contract closed above the $100.00 level at $100.71, up over 2% on the session.

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Friday night leads were largely negative on the back of unsubstantiated news that the EU had rejected the draft bill, resulting in risk-off trading across both equities and commodities. The Dow closed down 89 points or 0.7% and the S&P much the same, also down 0.7% to 1342. After being down 150 points earlier in the session the Dow managed to work off the lows to recapture 57 points.

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Overnight markets drifted with the US indexes still keeping multi-year highs after jobless claims dipped and Greece seems to have reached an austerity deal which should lead to a second round of financial aid. The Dow Industrials closed 6.5 points higher to 12,890, its highest close since May 2008, the S&P 500 up 2 points to 1351.95 while the tech orientated NASDAQ closed 11.4 points higher to 2927.23, its highest since December 2000.

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