Market report: Wednesday, November 4
UPDATED: The Australian dollar has recovered from its overnight weakness at the hands of a US dollar boosted by speculation about a Federal Reserve interest rate rise.
At 12pm (AEDT) on Wednesday, the currency was trading at 71.88 US cents, down from 71.95 cents on Tuesday.
Jo Horton, St George Bank senior economic said the Australian dollar had gained ground on Tuesday after the Reserve Bank of Australia’s upbeat assessment of the economy on Tuesday.
After slipping to 71.52 US cents overnight, due to greenback strength, the Australian dollar regained its RBA-induced momentum early Wednesday morning.
Westpac currency strategist Sean Collar said the RBA’s cautious stance on interest rates had strengthened the Australian dollar against other major currencies.
“(The) AUD was the strongest G10 currency over the day, thanks to the RBA’s decision to hold rates steady and to include a rather qualified easing bias,” he said in a report on Wednesday.
In economic news, the Australian Bureau of Statistics today released September retail trade figures, along with international trade in goods and services data for the same month.
The Australian Industry Group’s Australian Performance of Services Index (PSI) for October is due out.
Reserve Bank of Australia governor Glenn Stevens is at the Lowy Institute to launch The G20 and the Future of International Economic Governance, a new book from the Lowy Institute for International Policy and NewSouth Publishing.
In equities news, CSR is slated to post half year results, while Downer EDI, Echo Entertainment, Domino’s Pizz, Macmahon Holdings and nib have their annual general meetings.
LONDON – Britain and Kazakhstan have signed trade deals worth STG3 billion ($A6.48 billion) as London rolled out the red carpet for the country’s autocratic President Nursultan Nazarbayev.
Disappointing results from Britain’s emerging markets bank Standard Chartered and the mushrooming scandal at Germany’s troubled carmaker Volkswagen have dominated trading in Europe.
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StanChart on Tuesday said it sank into the red in the third quarter with an unexpected pre-tax third-quarter loss of $US139 million ($A194.83 million), and outlined surprise plans to raise $US5.1 billion in fresh capital to bolster its finances.
“Sentiment (was) dominated by the return of the Volkswagen story and the surprise bringing forward of a rights issue by Standard Chartered Bank after the bank slumped to a surprise Q3 loss,” said analyst Michael Hewson at traders CMC Markets.
“With Standard Chartered announcing a monster rights issue and slashing jobs, investors are heading for the exits in droves,” said Mike McCudden, head of derivatives at stockbroker Interactive Investor.
WASHINGTON – New orders for US manufactured goods fell for a second consecutive month in September, dragged down largely by a drop in commercial plane orders. Shoppers flocked to US car dealerships in October with most automakers reporting strong sales gains from a year ago.
NEW YORK – Wall Street stocks have risen for the second straight session, led by the energy and retail sectors.
Dow members ExxonMobil rose 1.8 per cent and Chevron 3.4 per cent, extending Monday’s gains.
A note from Evercore said large oil companies could benefit if oil prices recover and industry consolidation accelerates.
Retail stocks jumped after Victoria’s Secret parent company L Brands and teen retailer American Eagle Outfitters lifted their earnings forecasts, with the latter saying it was able to charge full prices and resort less frequently to promotions.
HONG KONG – Asian stocks mostly rose after the US and some European markets advanced overnight, though the hangover from China’s slowing growth still lingered.
“Investors have realised the world isn’t about to end,” said Shane Oliver, a Sydney-based global strategist at AMP Capital Investors.
“The rally has been partly contingent on support from central banks, with the easing in China and talk of easing in Europe.”
ENERGY
World oil prices have closed higher.
US benchmark West Texas Intermediate for December is up $US1.66 at $US47.80.
Brent North Sea crude for delivery in December, the global oil benchmark, is up $US1.63 at $US50.42.
PRECIOUS METALS
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Gold has fallen nearly 2 per cent to a four-week low, sliding for a fifth straight session as prices come under pressure from a rising US dollar and speculation that the Federal Reserve may lift interest rates this year.
Traders will be eyeing this week’s US economic data closely, particularly the bellwether non-farm payrolls report on Friday, for clues on whether or not the Fed will move before the end of the year.
“We are back to watching US data as the next six weeks’ output most likely will determine the output of the December FOMC (Federal Open Market Committee) meeting,” Saxo Bank head of commodities research Ole Hansen said.
“A stronger-than-expected [payrolls] number will put the cat among the pigeons, considering it would be the first above-expectation number since May.”
BASE METALS
Copper prices have steadied as expectations of tighter supplies support prices and the market looks for further clues to determining the strength of demand in top consumer China.
One reason behind that optimism has been output cuts, analysts say. Those and disruptions caused by severe weather conditions are starting to add up and could tighten supplies over the coming months.
“The market is tightening, but we now need to know what’s going to happen with demand, which has been subdued,” Capital Economics commodities economist Caroline Bain said.
Stocks to watch on the ASX
CSR – CSR: CSR is slated to post half year results
DOW – DOWNER EDI: Downer EDI holds its annual general meeting on Wednesday in Sydney.
EGP – ECHO ENTERTAINMENT: Echo Entertainment has its annual general meeting in Sydney.
DMP – DOMINO’S PIZZA: Domino’s Pizza holds its annual general meeting in Brisbane.
MAH – MACMAHONS HOLDINGS: Macmahon Holdings has its annual general meeting in Perth.
NHF – NIB HOLDINGS: Healthcare insure nib holds its annual general meeting in Newcastle on Wednesday.
INDEX CLOSE MOVE
Dow Jones 17918.15 89.39
S&P500 2109.79 5.74
Nasdaq 5145.13 17.98
FTSE100 6383.61 21.81
DAX 10951.15 0.48
Shanghai 3465.49 -10.47
Hang Seng 22568.43 198.39
NIKKEI225 18683.24 closed
ONE AUSTRALIAN DOLLAR BUYS:
0.7186 US DOLLARS
0.6559 EUROS
0.4659 UK POUNDS
4.5584 CHINESE YUAN
1.0795 NEW ZEALAND DOLLARS
METAL MOVE CLOSE
Gold $US/oz -21.80 1114.10
Copper $US/tonne 0.0115 2.3305
Iron ore $UStonne -0.39 49.11
OIL (US$/barrel) MOVE CLOSE
WTI 1.66 47.80
Brent Crude 1.63 50.42
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