The Australian dollar has been dragged lower by struggling commodity prices ahead of the Reserve Bank’s interest rate decision at its monthly board meeting today.
At 8.03am (AEDT) on Tuesday, the currency was trading at 71.43 US cents, up from 71.40 cents on Monday.
And the Australian share market looks set to open higher following a strong performance on Wall Street on the back of strong earnings reports.
The December share price index futures contract was up 62 points at 5,192.
Meanwhile, the Dun and Bradstreet business expectations survey is released, as is the ANZ-Roy Morgan weekly consumer confidence survey.
No major equities news is expected.
NEW YORK – US stocks have opened higher at the start of a news-jammed week that includes earnings from Disney and the October jobs report.
Five minutes into trade on Monday, the Dow Jones Industrial Average was at 17,709.84, up 46.31 points (0.26 per cent).
The broad-based S&P 500 rose 5.15 (0.25 per cent) to 2,084.51, while the tech-rich Nasdaq Composite Index gained 10.86 (0.21 per cent) at 5,064.61.
Key earnings this week include major media companies led by Disney, which has cut jobs from its ESPN sports broadcasting division and expects a big lift from the upcoming Star Wars movie.
The economic calendar includes the October US employment report on Friday, which could influence whether the Federal Reserve raises benchmark interest rates in December. Fed Chair Janet Yellen is scheduled to testify in Congress on Wednesday.
LONDON – An acceleration in eurozone manufacturing activity has helped push most European stocks higher, but London was held back by mining stocks reacting to downbeat Chinese data.
“Stock markets started November on the front foot after manufacturing data came in above expectations, lessening fears that China’s slowdown is weighing on the global economy,” said CMC Markets UK analyst Jasper Lawler on Monday.
Markit Economics said its Purchasing Managers’ Index (PMI) for the euro area’s manufacturing sector rose to 52.3 last month from 52.0 in September.
“Growth in the eurozone has been quite sluggish for much of this year and the revised PMI data this morning was expected to support this view,” said analyst Craig Erlam at traders Oanda.
“While the numbers were not great, they did provide more cause for optimism than was expected.”
HONG KONG – Asian stocks fell and oil prices dropped as investors weighed fresh data showing China’s slowdown could be deeper than previously thought.
“While you get the ebbs and flows from this monthly data relative to expectations, the overall outlook is one of timid and sluggish activity in the Chinese economy,” said Chris Green, a strategist at First NZ Capital Ltd.
“We’re not expecting a protracted downturn but it will require further policy response from the PBoC (People’s Bank of China) to stabilise the growth profile in China. The bigger thing this week is the US jobs data, which could reinforce the prospects of a December move by the Fed.”
ENERGY
Oil prices have dropped after data showed China’s manufacturing output continued to contract and Russian oil production hit a new record high.
“It’s just an overall oversupplied market with demand that is not really enough to get people excited,” said Kyle Cooper at IAF Advisors.
“The Chinese PMI disappointed only slightly but that’s enough to renew the bearish sentiment around the oil market,” said John Kilduff at Again Capital.
PRECIOUS METALS
Gold has hit a four-week low, extending a sell-off into a fourth straight session as technical signals deteriorate and investors fret that the Federal Reserve will raise US interest rates this year.
“We built up a lot of longs in the market the last five or six weeks, and a good portion of it’s coming out with the interpretation of the Fed statement,” said James Steel, chief metals analyst for HSBC Securities in New York.
“The fact that the Fed is prepared to raise rates even when inflation is quite low is bearish to gold in the short term,” said Macquarie analyst Matthew Turner.
BASE METALS
Copper prices touched a one-month low as weak manufacturing data from China reinforced concerns about demand in the world’s top user, but later recover as the market notes stronger export orders and a lower US dollar.
“The data were encouraging, but the recovery is going to be a slow process. It suggests some of the easing measures are starting to help stabilise the economy, but more is needed,” said Societe Generale analyst Robin Bhar.
“We expect that if and when the Federal Reserve decides to tighten, the pass-through effect on copper from the dollar channel will exist but be limited,” Barclays said in a note.
WASHINGTON – The United States manufacturing sector, under pressure from the strong dollar that makes exports more costly, has continued to grow in October but just barely, a private survey shows.
US construction spending hit a seven-year high in September after a modest rise in the previous month, the Commerce Department has reported.
US environmental regulators say that Volkswagen also included “defeat devices” to skirt emissions rules on certain larger diesel engines, in addition to the smaller 2.0 litre engines reported earlier.
Index close move
Dow Jones* 17793.84 130.45
S&P500* 2099.28 19.92
Nasdaq* 5119.84 66.09
FTSE100 6361.80 0.71
DAX 10950.67 100.53
Shanghai 3475.96 -58.12
Hang Seng 22370.04 -270.00
NIKKEI225 18683.24 -399.86
One Australian dollar buys
0.7143 US DOLLARS
0.6485 EUROS
0.4635 UK POUNDS
4.5269 CHINESE YUAN
1.0602 NEW ZEALAND DOLLARS
Metal move close
Gold $US/oz -5.50 1135.90
Copper $US/tonne 0.0015 2.3190
Iron ore $UStonne -0.33 49.50
OIL (US$/barrel) MOVE CLOSE
WTI -0.45 46.14
Brent Crude -0.77 48.79
Stocks to watch on the Australian Stock Exchange on Tuesday, November 3
BHP – BHP BILLITON
RIO – RIO TINTO
FMG – FORTESCUE METALS GROUP
The mining giants could see their share price hit on Tuesday after the price of iron ore dipped to a four-month low.
AAP
