Market report: Tuesday, December 15
UPDATED: The Australian share market has closed lower, starting with a splutter before fading into the red by the session’s close.
At the close on Tuesday, the benchmark S&P/ASX200 index was 19 points, or 0.39 per cent, lower at 4,909.6, while the broader All Ordinaries index was down 18 points, or 0.36 per cent, at 4,963.9.
On the ASX 24, the December share price index futures contract was 19 points lower at 4,902, with 141,808 contracts traded.
At 9.05am (AEDT) on Tuesday, the currency was trading at 72.44 US cents, up from 72 cents on Monday.
And the Australian share market looks set to open lower after a volatile session on international markets ahead of an expected US interest rate rise, as oil prices bounced from multi-year lows while weakness in credit markets weighed on sentiment.
The share price index was down on point at 4,920.
In local economic news on Tuesday, federal treasurer Scott Morrison is expected to release the mid-year budget update, and the Reserve Bank of Australia releases the minutes of its December board meeting.
The Australian Bureau of Statistics is due to release September quarter residential property prices and new motor vehicles sales figures for November.
Plus, the ANZ-Roy Morgan weekly consumer confidence survey is due out.
No major equities news is expected.
NEW YORK – US stocks have closed higher, two days ahead of an expected interest rate rise, as oil prices steady after falling to within touching distance of 11-year lows.
The S&P materials sector was the worst performer of the day, hurt by Dow Chemical and DuPont, which agreed on Friday to merge.
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Investors were worried about everything from high yield bonds to oil price volatility to slowing economic growth in China, according to Stephen Guilfoyle, managing director, floor operations, Deep Value Execution Services.
“I think we’ve got a lot of fear in the market,” said Guilfoyle.
LONDON – Britain’s top stock index has touched 10-week lows, pulled down by a drop in oil and mining shares as commodity prices continued to fall.
The prices of key metals, including copper and gold, fell as the US dollar rose. The price of crude neared levels not seen since 2008 on growing expectations the global oil glut would worsen in the months to come.
“The oil price taking another leg down isn’t helping, it’s bringing down some of the heavyweights … and then continuing to weigh on the commodities sector,” Accendo Markets head of research Mike van Dulken said.
HONG KONG – Asian stocks traded mostly in the red with China’s yuan hitting a fresh multi-year year low and oil’s continued travails adding to nervousness before an expected rise in US interest rates later this week.
The People’s Bank of China on Monday continued guiding its currency lower, setting the yuan/US dollar official midpoint at its weakest since July 2011.
Beijing’s introduction of a yuan rate index against a basket of peers, seen as a move traders said would depeg the renminbi from the greenback over time, further weighed on the yuan.
“Nerves are fraying ahead of the Fed’s expected decision to lift US rates on Wednesday. And this might just be a foretaste of what’s to come if the market does not like what the Fed has to say on Wednesday,” said Steve Barrow, head of G10 strategy at Standard Bank in London.
PARIS – A landmark deal to curb global warming has dented shares of fossil fuel companies and lifted renewable energy stocks, although some price swings were muted by the non-binding nature of the pact.
LONDON – European Union countries’ reluctance to integrate in the face of an influx of refugees and with the possible departure of Britain from the bloc could ultimately hurt creditworthiness, Standard & Poor’s says.
Royal Dutch Shell says it plans to cut 2,800 jobs following its mega takeover of smaller rival BG Group.
ENERGY
Volatile oil prices have rebounded from multi-year lows.
The early declines in energy weighed on commodity stocks in Europe, which turned negative after a positive start.
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PRECIOUS METALS
Gold has fallen one per cent ahead of a Federal Reserve policy meeting this week, which is expected to announce the first interest rate rise in nearly a decade.
Investors have been cutting gold positions in anticipation of a rate rise and the metal has fallen about 10 per cent so far in 2015. Higher rates could dent demand for the non-interest paying asset, while also boosting the US dollar.
“Gold’s downtrend persists, with initial support around $US1,062-$US1,063, a break of which could see prices back to their December lows (at $US1,045),” ActivTrades chief analyst Carlo Alberto de Casa said.
Bullion prices held technical support just above $US1,060, a short-term Fibonacci retracement level from the December 4 high to the December 3 low.
“It’s coming into critical support. If it holds right here, we can go higher,” said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago.
BASE METALS
Copper has slipped as oil tumbled towards 11-year lows and risk appetite was subdued ahead of an expected US rate rise, although better-than-expected Chinese economic data put a firm floor under prices.
Oil moved to within a hair of 11-year lows at one point on fears over a worsening supply glut, deterring investors from buying into commodity basket funds.
The slide in oil coupled with weakness in credit markets, seen as the most vulnerable to higher US interest rates, hit global equities.
A London-based broker said investors were waiting on the sidelines ahead of the US Federal Reserve’s rate decision on Wednesday (US time), with no strong buy or sell signals present.
“Given the weakness in oil and US equities, the odds of base metals pushing substantially higher look somewhat limited,” said Ed Meir at INTL FCStone in a note
ASX stocks to watch
BHP – BHP BILLITON
STO – SANTOS: Energy sector stocks may find some relief with WTI oil prices rising nearly 2 per cent.
QAN – QANTAS AIRWAYS: Qantas expects to post underlying profit before tax of between $875 million and $925 million in the first six months of the current financial year.
WOW – WOOLWORTHS
QAN – QANTAS AIRWAYS: Woolworths has renewed its reward scheme partnership with Qantas less than two months after trumpeting a revamp of its loyalty program that excluded frequent flyer points.
AAP
