Market report: Monday, January 4
UPDATED: The Australian share market is starting the new year in positive form, with substantial gains in its first session for 2016.
In its final session for 2015 last Thursday, the local market finished lower, but that followed nine straight sessions of gains.
Monday’s rally was led by the long-suffering energy sector, up by more than 3 per cent in intra-day trade.
Oil prices rose in their last session on New Year’s Eve, but they were down by as as much as 35 per cent for 2015.
In noon trade (AEDT), Woodside Petroleum, Origin Energy and Santos, belted by investors over the past 12 months, all pushed higher.
Elsewhere, troubled electronics retailer Dick Smith halted its shares from trade ahead of an expected announcement about its debt financing.
At 10.14am (AEDT) on Monday, the benchmark S&P/ASX200 index was down 19.0 points, or 0.36 per cent, at 5,276.9, while the broader All Ordinaries index was down 18.1 points, or 0.34 per cent, at 5,326.5.
On the ASX 24, the March share price index futures contract was down 17 points at 5,240 with 1,999 contracts traded.The March share price index futures contract was down 33 points at 5,257.
Locally on Monday, the Australian Industry Group performance of manufacturing (PMI) index and the RP Data Core Logic Home Value Index for December will be released.
In Australia, the market on Thursday finished lower as investors use the year’s final session to take profits, follow a nine session winning streak.
The benchmark S&P/ASX200 index was down 24.0 points, or 0.45 per cent, at 5,295.9 points.
The broader All Ordinaries index was down 21.8 points, or 0.41 per cent, at 5,344.6 points.
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NEW YORK – Wall Street has dropped on the last day of trading for 2015, leaving the S&P 500 marginally lower for a year marked by record highs as well as a major sell-off.
In a reversal of one of 2015’s major trends, oil shares moved higher, with the S&P energy sector up 0.34 per cent and alone among gainers.
Much of the blame for this year’s underwhelming stock market performance can be laid at the feet of crude oil prices, which lost a third of their value during an unprecedented global glut. The energy sector fell 24 per cent, its worst annual performance since the global recession.
The S&P 500 hit a record high in May only to slump 11 per cent over eight days in August over fears of a China-led global economic slowdown.
LONDON – European shares ended 2015 mostly higher than where they started, but well below their peaks after weak commodity prices weighed on markets in the final quarter.
Shares have retreated from record highs reached in April, pulled down partly by concerns about a slowdown in China, the world’s second-biggest economy and a major consumer of commodities such as metals and oil.
But economic stimulus measures from the European Central Bank have prevented markets from losing too much ground, with the main German and French markets both up some 10 per cent overall in 2015.However, the FTSE has underperformed its European rivals and is down around five per cent for the year, partly because commodity-related stocks account for a bigger part of the market in Britain than in France and Germany.
Two more investment banks have reported paying zero tax in Britain in 2014, prompting the opposition Labour party to urge the government to reverse a tax change it made for banks last year.
TOKYO – Chinese stocks were down on New Year’s Eve, but the Shanghai market ended 2015 up nearly 10 per cent.
That easily beat Wall Street and most other major markets and shake off a savage summer rout.
The Shanghai market posted an annual gain of 9.4 per cent, capping a year of wild fluctuations that sent shock waves across global markets.
WASHINGTON – More Americans requested unemployment benefits last week, but the level remains near historic lows in a positive sign for the job market.
BEIJING – Activity in China’s services industry rose in December, offsetting weakness in the manufacturing sector, an official survey shows.
STOCKHOLM – Oil company BP says 150 people have been evacuated from offshore platforms in the North Sea because of an unmanned barge drifting in rough seas toward the Valhall oil field.
CHICAGO – As the United States marks more than six years without an increase in the federal minimum wage of $US7.25 ($A9.94) an hour, 14 states and several cities are moving forward with their own increases.
ENERGY
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Oil prices rose on Thursday but fell as much as 35 per cent for the year after a race to pump by Middle East crude producers and US shale oil drillers created an unprecedented global glut that may take through 2016 to clear.
Global oil benchmark Brent and US crude’s West Texas Intermediate (WTI) futures rose between one and two per cent on the day on short-covering and buying support in a thinly traded market ahead of the New Year holiday.
But for 2015 both benchmarks fell by double digits for a second straight year as Saudi Arabia and other members of the Organisation of the Petroleum Exporting Countries (OPEC) again failed to boost oil prices.
The US shale industry, meanwhile, surprised the world again with its ability to survive rock-bottom crude prices, churning out more supply than expected, even as the sell-off in oil slashed by two-thirds the number of drilling rigs in the country from a year ago.
The United States also took a historic move in repealing a 40-year ban on US crude exports to countries outside Canada, acknowledging the industry’s growth.
“You do have to tip your hat to the US shale industry and their ongoing ability to drive down costs and hang in there, albeit by their fingernails,” said John Kilduff, a partner at Again Capital, an energy hedge fund in New York.
PRECIOUS METALS
Gold prices a bit higher on Thursday, ending the year down 10 per cent for its third straight annual decline.
The metal also faces another potentially challenging year in 2016 amid the prospect of higher US interest rates and a robust dollar.
Largely influenced by US monetary policy and dollar flows, the price of gold fell 10 per cent in 2015 as some investors sold the precious metal to buy assets that pay a yield, such as equities.
“The key factor for gold remains the strong US dollar and that ultimately trumps all other issues including the economy and the geopolitics,” said Ross Norman, chief executive of bullion broker Sharps Pixley.
Other precious metals have also been hit by US dollar strength and the gold slump, and were headed for sharp annual declines.
BASE METALS
Copper and zinc lost a quarter of their value in 2015 while nickel fell by more than 40 per cent as slowing growth in top consumer China hammered industrial metals.
Worries about tighter supplies to come capped lead’s losses at 4 per cent. Aluminium fell 19 per cent, and tin ceded 24 per cent on concern about market surpluses.
Investors are hoping the worst is over for base metals. But some fund managers and analysts expect further losses in 2016 before miners make significant output cuts to offset slowing demand growth.
“We’ve come a long way, but 2016 will probably be another lost year for commodities, though we should see a bottom,” said Christoph Eibl, chief executive of Tiberius Asset Management.
ASX stocks to watch on Monday
NEC – NINE ENTERTAINMENT – up one cent, or 0.53 per cent, at $1.905: Regional TV broadcaster WIN Corp has narrowly avoided being cut off the air at midnight after last-ditch talks with Nine Entertainment secured a new six-month licensing deal.
REC – RECALL – down seven cents, or one per cent, at $6.95: US logistics giant Iron Mountain’s $3.4 billion takeover plan for Australian data management firm Recall Holdings has hit a fresh snag, with the UK competition regulator raising concerns about the deal.
YOW – YOWIE – up five cents, or 4.63 per cent, at $1.13. Aussie chocolate treat maker Yowie will speed up its US rollout after signing a long term manufacturing agreement with New York-based Madelaine Chocolate Company.
AAP
