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Market report: Monday, November 9


UPDATE: The Australian dollar is managing to stay above 70 US cents, despite suffering a steep fall on the back of strong US jobs figures.

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At midday (AEDT) on Monday, the local unit was trading at 70.34 US cents, down from 71.45 cents on Friday.

Early on Monday morning, it fell as low as 70.17 US cents, its weakest level since October 2.

The US dollar rallied and commodity prices fell following the data as traders saw the jobs figures as a green light for the US Federal Reserve to raise its interest rate for the first time in nine years.

Adding to the local currency’s woes was the Chinese China trade surplus rising to its highest on record, due to an 18.8 per cent fall in imports.

However, OANDA Australia and Asia Pacific senior trader Stephen Innes said there is a reluctance to drive the Australian dollar below 70 US cents at this time.

“The one reprieve over the short term is the China data beckons a call for the Peoples Bank of China (PBoC) easing which will continue to support the broader risk on sentiment we’ve seen regionally over the past month,” he said.

Economic data out at the end of last week showed that the US unemployment fell to five per cent in October, the lowest rate since early 2008, with 271,000 new jobs added to the economy.

But that was followed, on Sunday, by a report showing that in October China recorded its highest trade surplus on record, due to an 18.8 per cent fall in imports. Analysts saw it as a further sign that the Chinese economy is weakening.

OptionsXpress analyst Ben Le Brun said the Chinese trade data was the overriding factor driving the Australian market on Monday morning.

“The China trade data is, obviously, something that hits a little bit closer to home,” he said.

“Unfortunately, the good work from the US non-farm payrolls has undone by the renewed concern emanating out of China.”

Le Brun said the market also was weighed down by a 3.6 per cent fall in BHP Billiton shares, after the mining giant said it is reviewing its iron ore production guidance for the 2016 financial year.

An avalanche of mud at its mine in southeastern Brazil killed at least one of its employees, with another dozen or more missing.

BHP shares at 10.32am (AEDT) were down 82 cents at $21.88.

Also, in the resources sector, Rio Tinto had lost 91 cents to $49.89, and Fortescue Metals had fallen five cents to $2.18.

Among the major banks, Commonwealth Bank was 18 cents lower at $76.42, Westpac lost 23 cents at $31.42, National Australia Bank was down 12 cents at $28.53, and ANZ had retreated 26 cents to $25.71.

However, Recall Holdings’ shares were up five cents to $7.46, after the data management firm said it is on track to deliver earnings and revenue growth as it tries to wrap up a takeover offer from US logistics giant Iron Mountain.

Nine Network owner, Nine Entertainment, has appointed TV veteran Hugh Marks as its new chief executive, replacing David Gyngell.

In early trade, its share were steady at $1.58.

Stocks of interest on the Australian Securities Exchange on Monday

BHP – BHP BILLITON – down 83.00 cents, or 3.66 per cent, at $21.87

Global miner BHP Billiton does not yet know what caused a tailings dam to burst at an iron ore mine in Brazil, killing at least one person and leaving 28 missing.

MAH – MACMAHON HOLDINGS – down 0.05 cents, or 0.53 per cent, at 9.35 cents

Shareholders in Macmahon Holdings want to sue the mining services company over its alleged delay in revealing information about problems with a major infrastructure project in 2012.

NEC – NINE ENTERTAINMENT – down 2.5 cents, or 1.58 per cent, at $1.555

TV guru Hugh Marks is taking over from David Gyngell at the helm of Nine Entertainment.

QAN – QANTAS AIRWAYS – up 5.00 cents, or 1.35 per cent, at $3.76

VAH – VIRGIN AUSTRALIA – down 0.75 cents, or 1.58 per cent, at 46.75 cents

Credit card surcharges of up to 23 times the average fee undermine consumer confidence and hurt business, a Senate inquiry has been told.

REC – RECALL HOLDINGS – up 1.00 cent, or 0.13 per cent, at $7.42

Data management firm Recall Holdings is on track to deliver earnings and revenue growth as it tries to wrap up a takeover offer from US logistics giant Iron Mountain.

STO – SANTOS – in a trading halt, last traded at $5.91

Oil and gas producer Santos plans to cut its debt by $3.5 billion through a rights entitlement offer and an assets sale, in an effort to ride out weak oil prices, and has appointed a new chief executive.


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