Beruflich Dokumente
Kultur Dokumente
This material has been produced by RBS sales and trading staff and should not be considered independent.
The Round Up
9 August 2010
Issue No. 383
Equities
Move Last % Move Range Volume
ASX 200 -0.4 4566.1 -0.0% -21 to -0.u.c $4.0 bn(L)
SPI - yesterday -8.0 4529.0 -0.2% -23 to +2 15,730(L)
Dow Jones -21.4 10653.6 -0.2% -160 to -6 Low
S&P 500 -4.2 1121.6 -0.4% -19 to -3 Low
Nasdaq -4.6 2288.5 -0.2% -39 to -2 Low
FTSE -33.4 5332.4 -0.6% -58 to +42 Avg
Commodities
Move Last % Today % Past Month
Oil-WTI spot -1.31 80.70 -1.6% +12.1%
Gold Spot +10.45 1205.40 +0.9% +1.1%
Nickel (LME) +10.25 999.50 +1.0% +17.0%
Aluminium (LME) -0.43 98.96 -0.4% +10.8%
Copper (LME) -1.19 333.16 -0.4% +11.7%
Zinc (LME) +1.42 95.27 +1.5% +15.5%
Silver +0.14 18.47 +0.8% +3.6%
Sugar -0.05 18.24 -0.3% +9.3%
Equity Structured Products and Warrants
Overnight Commentary
US markets finished the week with a 21pt loss thanks to weak Non Farm Payroll numbers. Markets dropped 160pts early
after the jobs data showed -131k vs -65k expected but up from a revised -221k the month prior. The Unemployment Rate
was 9.5% vs 9.6% expected. It was another low volume day.
Why the recovery intra day recovery?? See note below… whisper of further QE.
Retailers were weak on the jobs data but the reporting season has been a good one which has encouraged investors.
European markets were tracking along sideways until the US jobs data dragged them lower. Banks led the selloff after
the US jobs data on profit taking. In eco news German IP was weaker than expected; UK IP was also weaker whilst UK
Manufacturing Production was broadly in line.
This could be announced as soon as this week's FOMC. The more aggressive, but near term less likely, option is further expansion of
the balance sheet. This would be meaningful for markets. It could also further weaken the US$ but is not the current base case.
Equity Structured Products and Warrants
Commodities Commentary
Oil -1.6%, Gold +0.9%, Nickel +1%, Aluminium -0.4%, Copper -0.4%, Zinc +1.5%, Silver +0.8%GOLD
GOLD
Gold extended its gains to settle higher for a eight straight day in light of weaker equity markets and rumours of further QE.
OIL
Oil declined Thursday, tracking a slump in equities driven by the poor jobs number
Currencies Commentary
DXY Index down another 50bps and extends its longest losing streak in 5 years and makes 9 straight weeks of falls. Is
this why metals are trading better than they feel at the moment? Interesting to see that "growth" cross like EUR/USD and
AUD/USD rallied on the employment data not because the world is a better place but because the market is an
aggressive seller of USD. More quant easing chatter for this Tuesday will only extenuate this.
SPI Commentary
The SPI traded down 10 pts to 4529. Open at 4539 with a high of 4558 and a low of 4514. Volume 18,041. Overnight the SPI traded
down 4pts to 4525.
*SPI report taken from the 9:50am open to the 4:30pm close on the previous trading day. Charts taken from IRESS
Equity Structured Products and Warrants
Summary
RIO reported underlying earnings of US$5.8bn, ahead of consensus at US$5.5bn and well above our forecast US$5.2bn.
The difference related to iron ore where RIO achieved better prices than we had expected (we took a conservative view
on price realisations in light of the move from benchmark to quarterly contracts). A dividend of US$0.45ps was declared,
inline with our forecast. Net debt at the end of the period stands at US$12bn (US$19bn YE2010), with gearing at 19%.
Overall a strong result in our view.
Divisional NPAT (US$m) 1H10E Consensus Actual Diff vs RBS Diff vs RBS
Iron Ore 3,420 3676 4108 688 20%
Aluminium 387 348 358 -29 -7%
Copper 1,185 1153 1062 -123 -10%
Energy 620 793 642 22 4%
Diamond and Minerals 83 81 121 38 45%
Other Operations 4 -61 -2 -6 -148%
Underlying NPAT (US$m) 5,188 5,515 5,767 579 11%
Iron ore remains the key swing factor for RIO, with 2/3rds of earnings coming from the division. 3Q10 iron ore prices will
be the average of the March to May spot price, implying US$147/t FOB (above the spot price of US$134/t). This
represents another gain qoq, which will see positive earnings momentum continue.
Corporate items
RIO is about to enter a growth phase which is positive for production growth, however a significant amount of capex
needs to be spent.
Buy Long MINI MQGKZD for short/medium term trade to $45 or hold for the long term.
Source: IRESS
Source: IRESS
Our view is that there will be no default in Europe but that resolution of the crisis may still be some time off. We show
below that while debt markets have deteriorated this is certainly no GFC event. With the Australian market trading on a
12.2x forward market PE, some good buying opportunities are emerging on any sort of medium-term view.
Equity Structured Products and Warrants
For further information please do not hesitate to contact us on the details below
Disclaimer
The information contained in this report has been prepared by RBS Equities (Australia) Limited (“RBS Equities”) (ABN 84 002 768 701) (AFS Licence No 240530) and has
been taken from sources believed to be reliable. RBS Equities does not make representations that the information is accurate or complete and it should not be relied on as
such. Any opinions, forecasts and estimates contained in this report are the views of RBS Equities at the date of issue and are subject to change without notice. RBS
Equities and its affiliated companies may make markets in the securities discussed. RBS Equities, its affiliated companies and their employees from time to time may hold
shares, options, rights and warrants on any issue contained in this report and may, as principal or agent, sell such securities. RBS Equities may have acted as manager or
co-manager of a public offering of any such securities in the past three years. RBS Equities’ affiliates may provide, or have provided banking services or corporate finance to
the companies referred to in this report. The knowledge of affiliates concerning such services may not be reflected in this report. This report does not constitute an offer or
invitation to purchase any securities and should not be relied upon in connection with any contract or commitment. RBS Equities, in preparing this report, has not taken into
account an individual client’s investment objectives, financial situation or particular needs. Before a client makes an investment decision, a client should consider whether any
advice contained in this report is appropriate in light of their particular investment needs, objectives and financial circumstances. It is unreasonable to rely on any
recommendation without first having consulted with your advisor for a personal securities recommendation. The information contained in this report is general advice only.
RBS Equities, its officers, directors, employees and agents accept no liability for any loss or damage arising out of the use of all or any part of the information contained in this
report. This Information is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local
law or regulation. If you are located outside Australia and use this Information, you are responsible for compliance with applicable local laws and regulation. This report may
not be taken or distributed, directly or indirectly into the United States, or to any U.S. person (as defined in Regulation S under the U.S. Securities Act of 1993, as amended).
The warrants contained in this report are issued by RBS Group (Australia) Pty Limited (“RBS”) (ABN 78 000 862 797, AFS Licence No. 247013). The Product Disclosure
Statements relating to these warrants are available upon request from RBS Equities or on our website www.rbs.com.au/warrants
RBS Group (Australia) Pty Limited is not an Authorised Deposit-Taking Institution and these products do not form deposits or other liabilities of The Royal Bank of Scotland
N.V. or The Royal Bank of Scotland plc. The Royal Bank of Scotland plc does not guarantee the obligations of RBS Group (Australia) Pty Limited.
© Copyright 2009. RBS Equities. A Participant of the ASX Group.