NCM in focus with gold above $1300

Five markets in focus today; Rio Tinto, Newcrest Mining, Sims Metal, Spot gold and China A50 cash.

Rio Tinto (RIO)

RIO fell modestly in London trade despite producing a strong result. Perhaps the fact that they guided the market to 2014 iron ore production of 295Mt seems disappointing given consensus was for 305Mt. Considering iron ore is expected to contribute 94% of full-year earnings you can see how a guidance like this affects sentiment. Otherwise the earnings were strong and the narrative from Steve Walsh was upbeat and shows the company is seeing strong demand in China. Price action today will be very interesting.

Newcrest Mining (NCM)

Newcrest Mining produce first-half earnings today and while the market has heard a fair bit of information after its January update, there is naturally much traders will be looking out for. Gold has broken the $1300 level and is testing the 200-day moving average at $1304; however in AUD terms the price is just shy of the levels that NCM stipulated that would mean they would be cash neutral (A1450). NCM is up 60% since the December low and is the best performing stock in the ASX 200 this year.

Sims Metal (SGM)

Sims has not performed too well this year, falling 8% for the year. There is no consensus forecast as such, so the market will find it hard to fully evaluate today’s earnings report, however it is worth highlighting that SGM has one of the highest levels of short interest of any stock in the ASX 200. As a percentage of shares outstanding the level of short interest is above 20%, so good numbers today and the stock could have a strong day of trade.

Spot gold

There is clear momentum behind the upside move in gold at present and traders are looking for a break of the 200-day moving average at $1304. A break here and the bottom of the week ichimoku cloud could come into play at $1347.

China A50 cash

All eyes fall on the raft of China data today, with CPI and PPI due for release at 12:30 AEDT. It will also be interesting to look at their credit metric such as new yuan loans, M2 money supply and aggregate finance; although no set time has been given.

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