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Market report: Monday, November 2

Business

UPDATED: The Australian share market has opened relatively flat as investors await the Reserve Bank of Australia’s decision on interest rates, and key economic data from the US.

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“The ASX is still waiting for a lot of key data points this week,” IG market strategist Angus Nicholson said.

“We have the RBA meeting tomorrow, and then there’s a lot of very important US data coming out this week that will give a real direction on what the US Fed will do [on US interest rates].”

The US data includes key jobs figures on Friday.

Among the major banks at 10.19am (AEDT(), Westpac was up one cent at $31.39, after it lifted its full year statutory profit six per cent to $8.01 billion and its cash profit by 3 per cent from a year earlier to $7.82 billion.

Commonwealth Bank had lifted five cents to $76.78, and National Australia Bank was 14 cents richer at $30.29, but ANZ was five cents lower at $27.16.

In the resources sector, global miner BHP Billiton eased five cents to $22.97, Rio Tinto added 17 cents to $50.82, and Fortescue Metals put on 2.5 cents to $2.115.

Among other stocks, online property advertiser REA Group was in a trading halt as it launched a $750 million takeover bid for Southeast Asia-focused rival iProperty. REA last traded at $48.03. iProperty was also in a trading halt, having last traded at $3.51.

Locally, in economic news on Monday, the Reserve Bank of Australia (RBA) releases its index of commodity prices for October while the Australian Bureau of Statistics releases its September building approvals figures.

The Housing Industry Association releases its new home sales data, also for September, the Australian Chamber of Commerce and Industry provides its business expectations survey for the September quarter while the Australian Industry Group issues its performance of manufacturing index (PMI) for October.

RP Data Core Logic’s home value index for October is also due out, as is the TD Securities-Melbourne Institute’s inflation gauge for for the same month.

In equities, Westpac is expected to post full year results.

NEW YORK – Wall Street stocks have finished a banner October on a down note, as shares of Canadian pharmaceutical company Valeant plunged again.

Peter Cardillo, chief market economist at Rockwell Global Capital, said US stocks were “consolidating” after the October equity surge ahead of the monthly jobs report and other key data next week.

Valeant Pharmaceuticals International slumped 15.8 per cent as it announced it was severing ties with mail-order pharmacy Philidor RX, which has been criticised for predatory pricing of drugs.

LONDON – European stock markets fell as many investors cashed in gains after a bumper month for equities and digested uninspiring company results, dealers say.

Markets had charged ahead on expectations that a US interest rate hike would be delayed until the Federal Reserve hinted at an increase in December.

Traders also weighed news that eurozone inflation rose to zero per cent and out of negative territory in October, as the European Central Bank (ECB) mulls adding fresh stimulus.

“Early gains slipped away by the afternoon in Europe as investors booked gains at the end of a strong month for global equities,” said Jasper Lawler at CMC Markets UK.

London-based broker Peregrine & Black’s Markus Huber said: “This is rather normal … that money is being taken off the table,” adding the cash would likely “flow back into stocks within the next few days of the new month.”

HONG KONG – Japan’s central bank slashed its growth forecasts and put back an inflation timetable as the country’s economy stutters but its decision to hold off any fresh stimulus sent Tokyo stocks rallying.

The decision not to further loosen monetary policy came after the European Central Bank indicated it could ramp up its own program in December while China last week slashed interest rates for a sixth time in a year.

Official data showed consumer prices fell in September while household spending also retreated.

“I don’t think this is the end – expectations for easing will be carried over to coming months,” Daiju Aoki, an economist at UBS Securities Japan, told Bloomberg News.

“There were some investors that were hoping for expansion, but I don’t think it’s a negative surprise,” Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank, said.

ENERGY

Oil prices have risen for the third straight session as US data showed a drop in oil output following drilling cutbacks.

Data from the US Department of Energy showed oil production down 45,000 barrels per day in August from the July level at 9.3 million barrels per day.

The Baker Hughes rig count for oil, a closely-watched benchmark of drilling activity, fell by 16 rigs to 578, down 64 per cent from the year-ago level for the week ending October 30.

“The market continues to be hopeful that production is declining in the US,” said Andy Lipow of the Houston consultancy Lipow Oil Associates.

PRECIOUS METALS

Gold fell to a three-week low, extending two days of losses and heading for its biggest weekly drop since August on the chance the US Federal Reserve may still raise interest rates this year.

The Fed indicated after a two-day policy meeting this week that a December rate rise is still on the table, curbing talk that a run of downbeat economic data and worries about the global economy would push a hike back to 2016.

“Our economists are expecting the Fed to raise rates in December,” Macquarie analyst Matthew Turner said.

“To bring about that expectation, we’d have to see some reasonable economic data, sufficient to show we’re not entering a new slowdown, and for some of the other market measures like the Fed Funds futures to be pricing in more of a rate hike expectation. That should see the gold price falling.”

BASE METALS

Copper, zinc and lead dropped to three-week lows as investors zeroed in on a combination of oversupply and weak demand in major metals consumer China.

The market has largely absorbed the latest news from the US and European central banks and the focus is now back on the fundamentals of metals markets, Nicholas Snowdon, metals analyst at Standard Chartered in London, said.

“The concern most investors had was central bank policy action and short-covering moves across the complex,” he said.

“I think we’re through the phase where that risk could materialise, so that means that the underlying supply-demand picture will be back in the driving seat for price dynamics and on the whole that remains a bearish influence.”

BEIJING – Activity in China’s vast manufacturing sector in October shrank for the third month in a row, adding to fears that the world’s second largest economy is slowing faster than policy makers admit.

FRANKFURT – Four major Greek banks must find up to 14.4 billion euros ($A22.35 billion) to survive potential economic shocks, the European Central Bank says.

NEW YORK – US oil giant Chevron says it is going to cut between 6000 and 7000 jobs and continue with asset sales as the company retrenches amid sharply lower oil prices.

Stocks to watch on the Australian Stock Exchange Monday, November 2 

WBC – WESTPAC BANKING CORPORATION

Westpac is expected to post full year results.

Markets Report

Index close move 

Dow Jones 17663.54 -92.26
S&P500 2079.36 -10.05
Nasdaq 5053.75 -20.53
FTSE100 6361.09 -34.71
DAX 10850.14 49.30
Shanghai 3534.08 0.77
Hang Seng 22640.04 -179.90
NIKKEI225 19083.10 147.39

One Australian dollar buys:
0.7121 US DOLLARS
0.6452 EUROS
0.4608 UK POUNDS
4.5140 CHINESE YUAN
1.0537 NEW ZEALAND DOLLARS

METAL MOVE CLOSE
Gold $US/oz -5.90 1141.40
Copper $US/tonne -0.0035 2.3175
Iron ore $UStonne 0.18 49.83

OIL (US$/barrel) MOVE CLOSE
WTI 0.53 46.59
Brent Crude 0.76 49.56

AAP 

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