Foolish Preview: ASX set to start new financial year with a bang

Here's hoping this financial year is better than the last one

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published July 2, 2012 9:54 am AEST

Wall Street had a sensational Friday, with all three indices rising. The Dow Jones Industrial Average jumped 2.2%, the S&P 500 Index was up 2.5% and the Nasdaq Composite Index spiked 3% higher. The main contributor was news from Europe that EU Leaders had agreed on new plans to help resolve the region's economic issues by the creation of new banking regulations.

On a cautious note, its just words so far – let's see if the plans turn into actions.

The Australian dollar was higher against the greenback this morning, extending Friday's gains and is currently trading at around US$1.02.

Commodities markets posted their biggest rise for the year on Friday, with gold up 3.2% to US$1599.66 an ounce and silver up 4.6%. Oil prices rocketed 9%, with Brent crude oil rising US$6.44 to US$97.8 a barrel. Copper closed 4% higher.

A good day ahead?

The ASX SPI futures closed up 38 points this morning, indicating the S&P / ASX 200 (Index: ^AXJO) (ASX: XJO) could show a promising start.

Aristocrat Leisure Limited (ASX: ALL) might see a rise after updating its expected profit for the six months to June 2012. The company expects net profit after tax to come in around $30-$33m, compared to $24.9m in the previous period.

David Jones Limited (ASX: DJS) looks likely to be in the news, with investors expecting more details surrounding Friday's $1.65bn takeover offer from European private equity firm, EB Private Equity (EBPE). Deutsche bank has estimated the bid is worth around $2.87 a share, compared to the last closing price of $2.59.

EBPE however, with just $200m of funds under management, (according to today's Australian Financial Review) is going to need some friends to help it fund the purchase of DJs. The lack of specific detail is likely to weigh on DJs' share price in the near term, especially after Friday's 14% rise.

Resources and energy companies are likely to see early gains, given the strong rise in commodities markets on Friday. Market heavyweights Woodside Petroleum Limited (ASX: WPL), Newcrest Mining Limited (ASX: NCM), Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) may well see their share prices rise today.

Foolish takeaway

If the ASX SPI futures are any guide, our markets should show early gains today, but they could be short lived if Europe fails to deliver on its promises. Remember Fools, while your portfolios might see a nice rise today, focus on the long term, be patient, limit your trading, and ignore daily market fluctuations.

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Motley Fool writer/analyst Mike King owns shares in Woodside and BHP. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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