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Market report: Friday, November 6

Business

UPDATE: The Australian share market is flat in early trade as the banks offset losses in the minerals sector.

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Despite ANZ entering ex-dividend territory, its three fellow big banks were up.

“We did see quite a heavy selloff there in the banks (yesterday) so if investors are keen to come back in and start picking up some of the stocks again that could be seen as a positive and that could really help move the index,” IG Markets analyst Angus Nicholson said.

Commonwealth Bank led the group, up 41 cents at $76.26, while Westpac was 34 cents higher at $31.45 and National Australia Bank had risen 19 cents to $28.75 at 10.26am (AEDT).

ANZ fell 91 cents to $25.75 on ex-dividend.

On the back of losses in overseas markets overnight, particularly in commodities, Australian mineral stocks were feeling the pain.

BHP Billiton was down 80 cents to $22.48, on the back of falls in the Iron Ore price and the news a mudslide at their Brazilian dam had engulfed several houses and possibly injured people.

Rio Tinto was also down, 80 cents worse off at 49.35, while Newcrest lost 12 cents to $11.77.

With oil lower as traders fear oversupply, Woodside Petroleum was down 82 cents at $29.81.

Also feeling the pain, Santos fell 15 cents to $5.86, and Origin shed 8 cents to $5.37.

Announcing a 15 per cent slide in first quarter earnings, News Corp fell 9 cents to $21.62.

NEW YORK – US stocks drifted lower on the eve of the highly anticipated jobs report, seen as a litmus test for a Federal Reserve increase in interest rates.

Stocks “lack conviction” ahead of Friday’s October jobs report, said Charles Schwab analysts in a market note.

LONDON – The Bank of England has trimmed its growth outlook due to slowing emerging markets, leaving London stocks in the red while eurozone stocks gained ground.

While the BoE sees the British economy slowing to 2.5 per cent growth in 2016, from 2.7 per cent this year, and a bout of negative inflation, it gave no indication about increasing monetary stimulus and left its key interest rate at a record-low 0.50 per cent.

“When looking at UK economic data alongside US economic data there does appear to be a much more compelling case for raising rates in the UK than there does in the US, yet all the talk is about the prospect of a US rate rise next month,” said Michael Hewson, chief market analyst at CMC Markets UK.

“Following yesterday’s upside moves in global equity indices, the FTSE is underperforming its European peers,” noted Brenda Kelly, head analyst at London Capital Group.

HONG KONG – Major Asian markets mostly shrugged off Wall Street’s negative lead, with Shanghai performing especially strongly and Japan Post shares soaring again in Tokyo.

China’s ruling Communist Party issued guidelines for its 2016-2020 development plan on Tuesday, including calling for liberalisation in its capital markets and foreign exchange regime, following a high-level meeting last week.

“The government has successfully clamped down on short selling,” said Francis Cheung, a senior strategist at brokerage CLSA in Hong Kong, told Bloomberg News.

“So it is easier for (the) market to go up, especially with anticipation that China will cut rates and do more stimulus.”

WASHINGTON – US unions, lawmakers and interest groups have questioned the long-awaited text of a landmark US-backed Pacific trade deal, setting up a potentially long and difficult path to ratification by the United States, the biggest of the 12 partners. The 12 countries of the ambitious Trans-Pacific Partnership free-trade deal have announced a parallel agreement to avoid currency manipulation, a particular worry of the United States.

ENERGY

Oil prices have slipped for a second straight day as traders worry about abundant supplies and a dollar made stronger by Federal Reserve hints of a hike in interest rates.

“The big elephant in the room was Yellen with a December rate hike back on the table,” said Phil Flynn, energy analyst at Price Futures Group.

“I don’t think the market believed it until Yellen said it.”

“We have seen few signs recently indicating a change of tack in the oil markets,” said Natixis analyst Abhishek Deshpande, in reference to recent sharp losses.

“Global production continues to remain in excess of demand and OPEC have been continuing with their policy of maintaining output levels to protect market share.”

PRECIOUS METALS

Gold has fallen to a seven-week low as the US dollar hit a three-month high, and looks vulnerable to further losses after Federal Reserve officials left the door open to a US interest rate rise in December.

Fed Chair Janet Yellen on Wednesday said a rise in rates in December was a “live possibility” if justified by upcoming economic data. William Dudley, president of the New York Fed, later agreed with her comments. And, on Thursday, Atlanta Fed President Dennis Lockhart said the US central bank’s last policy statement was deliberately trying to convince investors of a possible December rise and was successful in doing so.

“All of this pressure has been due to the increasing expectations for the Fed to move in December,” said David Meger, director of metals trading for Vision Financial Markets in Chicago.

“That has strengthened the dollar against a basket of currencies and pressured the precious metals complex across the board.”

BASE METALS

Copper has fallen to its lowest in a month and other base metals also slipped on the prospects of a December US interest rate rise, which has boosted the US dollar.

Zinc and lead touched their weakest levels in nearly a month while nickel hit a six-week low as metals also felt the impact of worries about global economic growth and soggy metals demand.

“The main driver behind the drop in prices must be the speeches of the Fed officials, driving the dollar higher and weighing on the wider commodity space,” said analyst Daniel Briesemann at Commerzbank in Frankfurt.

“The market is just concentrating on the negative, ignoring any positive factors. The mood is very, very negative and as long as this does not change, then we should probably be prepared for even lower prices,” he said

Stocks to watch on the Australian Stock Exchange 

NWS – NEWS CORP: News Corp is expected to post first quarter results on Friday.

INDEX CLOSE MOVE  

Dow Jones 17864.43 -4.15

S&P500 2099.93 -2.38
Nasdaq 5127.77 -14.74
FTSE100 6364.90 -47.98
DAX 10887.74 42.50
Shanghai 3705.97 77.43
Hang Seng 23051.04 -2.53
NIKKEI225 19116.41 189.50

ONE AUSTRALIAN DOLLAR BUYS:
0.7145 US DOLLARS
0.6568 EUROS
0.4698 UK POUNDS
4.5327 CHINESE YUAN
1.0812 NEW ZEALAND DOLLARS

METAL MOVE CLOSE
Gold $US/oz -2.00 1104.20
Copper $US/tonne -0.0675 2.2550
Iron ore $UStonne -0.47 48.71

OIL (US$/barrel) MOVE CLOSE
WTI -1.12 45.20
Brent Crude -0.60 47.98

* Still trading

AAP

 

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