need2know: Positive overseas lead

We’re sorry, this feature is currently unavailable. We’re working to restore it. Please try again later.

Advertisement

This was published 8 years ago

need2know: Positive overseas lead

Updated

Local shares are poised to open higher, buoyed by Wall Street.

What you need2know

Apple's shares were up 2.6 per cent at $US116.65 after Goldman Sachs added the iPhone maker to its "conviction buy" list.

Apple's shares were up 2.6 per cent at $US116.65 after Goldman Sachs added the iPhone maker to its "conviction buy" list.Credit: AP

SPI futures up 49pts to 5180

AUD at 70.93 US cents, 87.51 Japanese yen, 66.60 British pence and 46.54 British pence

On Wall St, late, S&P 500 +1.3%, Dow +1.2%, Nasdaq +1.5pc

In Europe, Stoxx 50 -0.6%, FTSE +0.2%, CAC -0.6%, DAX flat

In London, Rio +2.1%, BHP +0.4%

Spot gold dips 29 US cents to $US1070.01/oz

Brent crude up 64 US cents or 1.5% to $US44.21/bbl

Advertisement

Iron ore +1.7% to US$46.35 dry metric tonne

What's on today

Australia jobs data; Bank of Japan monetary policy decision, Japan trade date (Oct); ECB publishes Oct meeting notes, UK retail sales (Oct); US Intel hosts investors meeting, US Philly Fed report (Nov), US weekly jobless claims, US leading indicators (Oct)

BHP Billiton annual general meeting

Earnings: Best Buy, Intuit, Gap, ThyssenKrupp

Stocks in focus

The world's biggest explosives maker, Orica, is expecting its earnings to lift slightly in 2016 with further improvement the following year after it dived into the red in 2015 following a $1.69 billion write down.

BHP Billiton, which had stubbornly closed above $20 in recent sessions ended Wednesday below that point for the first time since 2008, slumping 2.8 per cent to $19.81 and capping off a miserable fortnight ahead of Thursday's annual general meeting.

Online foreign exchange company OzForex Group has had a preliminary takeover approach, as revealed by Street Talk Online on Wednesday.

Suncorp Group is a "buy" at Bell Potter, which sees "exceptional value" and has an unchanged $15.25 12-month price target on the stock.

Currencies

Russia's rouble strengthened for a third day, rising 0.3 per cent, and the dollar-denominated RTS Index of stocks rose 2.1 per cent, bringing its advance this week to 8.1 per cent, amid signs of a rapprochement with the West.

Sweden's krona climbed against all but two of its major peers as Riksbank deputy governor Martin Floden said action to weaken the currency "feels rather remote" and that it "ought to take quite a lot" for bank to contemplate such a step. Norway's krone and South Africa's rand also rallied.

The forces driving the EUR/USD lower are fundamentally significant and unless these drivers change, the path of least resistance for the pair will be lower, Kathy Lien, managing director of FX strategy for BK Asset Management, says. "This requires the ECB to move forward with easing monetary policy next month and the Fed to raise interest rates. At this stage, ECB easing is almost certain but we still do not know if the Fed will proceed with a rate hike. France is the second largest economy in the eurozone and the attacks will have a significant impact on economic confidence, trade and tourism activity. In recent months, France's economy returned to growth as Germany was slowing but now with the two regional powerhouses both experiencing troubles, the ECB will have no choice but to act."

Commodities

Zinc slid to the lowest price since 2009 as Chinese President Xi Jinping acknowledged downside risks to growth and property data underscored the slowdown. Zinc lost as much as 2.3 per cent to $US1512 a metric ton on the London Metal Exchange and copper slumped as much as 1.9 per cent.

The LME index of six industrial metals has tumbled 25 per cent in 2015 and is heading for its worst year since the global financial crisis as China, the biggest user, faces the weakest growth in a quarter of a century.

Iron ore will extend declines into 2016 as weakening steel output hurts demand while the world's biggest suppliers raise production further, according to a former chief economist at Rio Tinto Group, who said China would do well to demolish unneeded mills. "There's about 300 million tons of surplus capacity in China that needs to be not just shut down, it needs to be eradicated, it needs to be bulldozed," David Humphreys, who held the title at Rio for eight years to 2004, said in a phone interview. Steel "production needs to fall," said Humphreys, 63, who is now an independent consultant.

United States

A solid core of Federal Reserve officials rallied behind a possible December rate hike at the central bank's last policy meeting, but central bankers also debated evidence the US economy's long-term potential may have permanently shifted lower.

The S&P 500 hit a session high on Wednesday after the minutes were released. "I think the market is ready and comfortable for an increasing Fed funds rate," said Alan Rechtschaffen, portfolio manager at UBS Wealth Management Americas in New York. "We just have to turn this aircraft carrier around, get out of this zombie-like economy which is being fed on an elixir of low interest rates and get to a process of normalisation."

Apple's shares were up 2.6 per cent at $US116.65 after Goldman Sachs added the iPhone maker to its "conviction buy" list, saying it sees potential for the stock gaining as much as 43 percent from current levels. The stock provided the biggest boost to the three major indexes.

Europe

European stocks were little changed as investors assessed value after the strongest rally in six weeks, while France's CAC 40 Index retreated after a police gun battle with suspects linked to the Paris terror attack. Air Liquide SA slid the most on the French equity gauge, falling 7.4 per cent after agreeing to purchase US rival Airgas Inc. The CAC 40, which jumped the most in six weeks yesterday, retreated 0.6 per cent at the close of trading in Paris after the shootout left at least two people dead. L'Oreal SA slid 1.7 per cent and LVMH lost 1.1 per cent in France. The Stoxx Europe 600 Index fell 0.1 per cent to 379.33, paring earlier losses of as much as 0.8 per cent.

The Stoxx 600 stalled after a rally in energy producers helped push it higher in the two trading days following the attacks in Paris. The gauge closed yesterday 12 per cent higher than its September low, boosted by optimism that the European Central Bank will add to stimulus measures. "You've had a good run in the market so there's a short- term profit taking after a really strong day," said Patrick Spencer, equities vice chairman at Robert W. Baird & Co in London. "On top of that, the strong US inflation numbers put further evidence that there's going to be a rate hike and that's a concern of European equities as it makes borrowing more expensive for companies."

European stocks will be under pressure in the near term because it's unlikely that riskier assets such as equities will do well if the Fed raises rates and financial conditions tighten, Deutsche Bank's Sebastian Raedler wrote in a note published November 17.

What happened yesterday

The sharemarket staged a spectacular turnaround on Wednesday, defying a savage commodity rout as investors snapped up relatively cheap bank stocks. At the close the ASX 200 and All Ordinaries indices each posted 0.3 per cent or 15 points gains to 5133.1 and 5189.1 respectively.

Commonwealth Bank of Australia climbed 1 per cent to $77.84, Westpac Banking Group rose 0.6 per cent to $30.77, ANZ Banking Group added 1 per cent to $26.75 as did National Australia Bank, up 1 per cent to $28.79. The reason for the bank support was that they were beginning to look irresistible, Watermark Funds Management analyst Omkar Joshi said. "The banks are starting to look pretty good from a valuation perspective in terms of both PEs [price-earnings ratios] and dividend yields now," he said. "They have fallen quite significantly but [at] around 10 to 11-times earnings they are pricing in most of the negatives now."

Most Viewed in Business

Loading