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Market report: Friday, October 30

Business

The Australian dollar has sagged overnight and the ASX has opened sharply lower.

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The Australian share market has opened sharply lower after European stocks fell and Wall Street traded flat as investors digested the Federal Reserve’s post-rate decision statement..

At 1011 AEDT on Friday, the benchmark S&P/ASX200 index was down 53.5 points, or 1.02 per cent, at 5,213.4, while the broader All Ordinaries index was down 48.4 points, or 0.91 per cent, at 5,261.8.

On the ASX 24, the December share price index futures contract was down 50 points at 5,190, with 11,580 contracts traded.after European stocks fell and Wall Street traded flat as investors digested the Federal Reserve’s post-rate decision statement.

At 0802 AEDT on Friday, the share price index futures contract was down 14 points at 5,226.

Locally, in economic news on Friday, the Reserve Bank of Australia is due to release financial aggregates for September and the HIA releases its Affordability Report for the September quarter.

In equities news, Macquarie Group posts half year results while Origin Energy, OceanaGold and Paladin Energy give quarterly production reports.

Whitehaven Coal, Tatts, Transpacific Industries, GWA Group and Buderim Ginger have their annual general meetings

Meanwhile, Uber general manager Simon Rossi is expected to speak at a Financial Services Council Deloitte Leadership Series lunch in Sydney while Transfield Services chairman Diane Smith-Gander is slated to speak at Governance Institute function in Sydney.

The Australian dollar has sagged after the US Federal Reserve hinted at a possible December interest rate rise, sparking fresh investor uncertainty.

At 0802 AEDT on Friday, the currency was trading at 70.76 US cents, down from 71.03 cents on Thursday.

WASHINGTON – The US economy grew at a slower pace in the third quarter as exports and private inventory investment fell, the Commerce Department says.

NEW YORK – Botox-maker Allergan says it has been approached by US pharmaceuticals giant Pfizer about a friendly merger deal that could easily top $US100 billion ($A140.9 billion) in value.

PARIS – A recovery in European markets has helped French carmaker Renault beat analyst expectations with a 9.4 per cent increase in third quarter sales to 9.3 billion euros ($A14.3 billion).

NEW YORK – Talks between Pfizer and Allergan have raised the prospect of a mega-merger in the pharmaceutical industry as the broader US stock market finished slightly lower.

Allergan jumped 6.1 per cent and Pfizer shed 2.2 per cent after the companies disclosed that they are holding “friendly” discussions on a possible combination.

A deal would run north of $US100 billion ($A141.3 billion) in value and be the biggest of the year.

Analysts said investors continue to weigh on Wednesday’s Federal Reserve policy statement, which opened the door to a possible interest rate hike in December.

LONDON – European equities dipped after the US Federal Reserve hinted at a potential December interest rate rise, sparking fresh investor uncertainty.

News of a possible US hike before year-end took the wind out of an advance across global markets in October supported by expectations that an increase would be delayed.

“The Fed has just created more uncertainty in the markets,” said analyst Craig Erlam at trading firm Oanda on Thursday.

“The statement was undoubtedly more hawkish than before and put December well and truly back on the table and investors did not really know how to take this.”

HONG KONG – Equities were broadly lower after the US Federal Reserve hinted at a possible December interest rate hike.

Investors are also keeping tabs on Beijing, where they hope the ruling Communist Party will unveil fresh measures to support the stuttering Chinese economy after a four-day meeting draws to a close.

The Fed’s statement explicitly pointed to the possibility of a rate hike in its next meeting in December, dampening market predictions it could be held off until March.

“This is exactly what the market wanted,” Scott Wren, a senior global equity strategist in St Louis at Wells Fargo Investment Institute, told Bloomberg TV.

“The market wants clarity and this is providing clarity. I feel pretty good that we’re going to have a rate increase in December.”

ENERGY

Oil prices are little changed as traders’ worries about abundant global supplies returns to the fore a day after a rally fuelled by bargain hunting from prior slumps.

Carl Larry of Frost & Sullivan, said there was a trend toward oil investment, with “hedge funds playing the oil rather than playing currencies. I think that’s where the interest is coming”.

“We see ongoing physical oversupply as the key fundamental issue, with the high level of Russian output reported today as one piece of the total,” said Tim Evans of Citi Futures.

“OPEC production is the other major issue in our view, and it looks like Iraqi production continues above 4.0 million barrels per day, as part of that total,” Evans said.

PRECIOUS METALS

Gold has fallen for a second day, reaching its lowest level in three weeks, after the Federal Reserve hinted at a possible US interest rate rise in December.

The surprisingly hawkish tone of Fed chair Janet Yellen sent the US dollar soaring to a two-month high. Though it turned down around 0.5 per cent Thursday, gold prices continued to fall.

“The statement was leaning a bit to the hawkish side but I don’t think it was that hawkish to justify this size of decline,” said Bill O’Neill, co-founders of commodities investment firm Logic Advisors in New Jersey.

“There’s a liquidation without any new buyers. Nobody wants to step in here.”

BASE METALS

Copper hit a three-week low, hit by concern about global demand after data showed weaker US economic growth and as investors weighed the prospect of higher US interest rates.

Data showed that US economic growth slowed sharply in the third quarter as businesses cut back on restocking while contracts to buy previously owned US homes fell unexpectedly in September.

“Yesterday’s Fed meeting outcome was bearish for metals. The market is positioning for a new leg lower in metals,” said Gianclaudio Torlizzi, managing director at consultancy T-Commodity in Milan.

“So, the scenario might be that of a stronger dollar with a cooling economy, not the best scenario for risk assets.”

Stocks to watch on the Australian Stock Exchange on Friday, October 30 

BUG – BUDERIM GINGER

Buderim Ginger have its annual general meeting.

GWA – GWA GROUP

GWA Group holds its annual general meeting on Friday.

MQG – MACQUARIE GROUP

Macquarie Group is expected to post half year results.

OGC – OCEANAGOLD

OceanaGold is expected to release its quarterly production report.

ORG – ORIGIN ENERGY

Origin Energy is slated to post its quarterly production report.

PDN – PALADIN ENERGY

Paladin Energy is due to give a quarterly production report.

TPI – TRANSPACIFIC INDUSTRIES

Transpacific Industries holds annual general meeting on Friday.

TTS – TATTS

Tatts holds its annual general meeting on Friday.

WHC – WHITEHAVEN COAL

Whitehaven Coal has its annual general meeting.

INDEX CLOSE MOVE

Dow Jones 17755.80 -23.72

S&P500 2089.41 -6.94

Nasdaq 5074.27 -21.42

FTSE100 6395.80 -42.00

DAX 10800.84 -31.12

Shanghai 3533.31 8.39

Hang Seng 22819.94 -136.63

NIKKEI225 18935.71 32.69

One Australian dollar buys: 

0.7074 US DOLLARS

0.6444 EUROS

0.4621 UK POUNDS

4.4958 CHINESE YUAN

1.0572 NEW ZEALAND DOLLARS

Metal move close 

Gold $US/oz 28.80 1147.30

Copper $US/tonne -0.0415 2.3210

Iron ore $UStonne -0.30 49.65

Oil (US$/barrel) move close

WTI 2.12 46.06

Brent Crude -0.25 48.80

– AAP

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