“I think essentially it is a follow-on from events on Friday night (in the US) and the weekend (in China), and in particular the correction in the US markets last night,” CMC Markets chief market analyst Ric Spooner said.
Better-than-expected US jobs figures published in the US on Friday raised expectations of a hike in interest rates there.
A separate report on Sunday showed China recorded its highest trade surplus on record in October, due to an 18.8 per cent fall in imports. Analysts saw it as a further indication that the Chinese economy is weakening.
Spooner said the Australian market may fall less than foreign markets did overnight because local investors had already reacted to the US jobs figures and Chinese trade data on Monday, when the local bourse fell almost two per cent.
In the resources sector at 10.20am (AEDT), BHP Billiton was up 21 cents at $21.63, Rio Tinto added 61 cents to $49.61, and Fortescue Metals cents firmed one cent to $2.21.
Among the major banks, Commonwealth Bank fell 85 cents to $74.73, Westpac gave away 24 cents at $31.05, National Australia Bank surrendered 17 cents at $27.91, and ANZ dipped four cents to $25.32.
Ports and rail operator Asciano was in a trading halt as it received a formal &9.02 billion takeover bid from a consortium led by logistics firm Qube Holdings. Asciano last traded at $8.73.
Construction giant CIMIC and residential developer Devine were both in trading halts as CIMIC said it intends to make a conditional offer to buy the 49.37 per cent of Devine shares it does not already own. CIMIC last traded at $27.27 and Devine at 60.5 cents.
Explosives and fertiliser maker Incitec Pivot fell 3.5 cents to $3.755 after it lifted its full year profit 12 per cent thanks to stronger earnings from its Australian fertiliser business.
On Wall Street on Monday, stocks lost more than one per cent, their biggest decline in six weeks, as investors braced for an interest rate rise and fretted over weak Chinese trade data.The Australian dollar is lower as the US dollar rallies on expectations of a Federal Reserve rate rise in December
At 8.41am AEDT on Tuesday, the currency was trading at 70.48 US cents, down from 70.65 cents on Monday.
The Australian share market looks set to open lower after falls on US and European stocks as investors brace for a US interest-rate rise and fret about weak Chinese trade data.
The December share price index futures contract was down 52 points at 5,065.
Locally, in economic news on Tuesday, the National Australia Bank’s monthly business survey for October is due out, as is the Australian Bureau of Statistics’ housing finance data for September.
The mining safety conference starts in Perth.
In equities news, Incitec Pivot is expected to post results while Asciano has its annual general meeting but an expected vote on Brookfield Infrastructure’s takeover offer has been postponed.
Bendigo and Adelaide Bank, Macquarie Radio Network, SurfStitch, Bradken, Prime Media and Shoply also have their annual general meetings.
NEW YORK – US stock indexes have lost more than one per cent, their biggest decline in six weeks, as investors brace for an interest-rate rise and fret about weak Chinese trade data.
Investors also focused on renewed fears of a slowdown in China, a key market for many companies, ahead of the crucial holiday shopping season.
“There are short-term myopic concerns about a Fed rate hike,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, which has about $50 million in assets under management.
“Bond and stock prices will decline when the Fed makes that first announcement, but ultimately, stocks will thrive because it will prove the US economy is healthy enough to stand on its own,” Dollarhide said.
LONDON – European stock markets have fallen as brokers pondered the impact of higher US rates.
Mounting expectations that the United States will raise interest rates in December for the first time in nine years dominated world financial markets, weighing on stocks but underpinning the US dollar.
Friday’s strong US jobs report “pretty much made it a given that a US rate hike will take place after all in 2015,” said Markus Huber, senior analyst at broker Peregrine & Black.
“The gradual return of US interest rates towards more normal levels is unlikely to be the seismic shock that many have been fearing,” it said in a note.
HONG KONG – More weak trade data out of China has compounded fears about the struggling Asian economic giant but a forecast-busting surge in US jobs has sent the US dollar surging against emerging market currencies.
The chances of the Federal Reserve hiking US interest rates shot up after Friday’s employment report, fuelling worries of a flight of capital from Asia to the United States as well as higher borrowing costs strangling investment.
Investors immediately jumped on the figures to bet on a Fed rate hike next month. Talk of the so-called lift-off by the US central bank had been tempered in recent months following a string of weak data from Washington and in light of China’s ongoing malaise.
But Shane Oliver, Sydney-based strategist at AMP Capital Investor, said the latest report “supports the case for a December Fed rate hike”.
ENERGY
Oil prices have fallen for the fourth straight session as traders weighed lowered OECD global growth forecasts and weak Chinese crude imports against abundant supplies.
The Organisation for Economic Development and Cooperation trimmed its forecast for global growth this year slightly, to 2.9 per cent, but slashed the 2016 estimate 0.3 percentage point to 3.3 per cent, citing stagnating trade largely because of a slowdown in China.
China’s crude imports fell to about 6.23 million barrels a day in October, the lowest level in five months, Bloomberg News reported.
Tim Evans, an energy futures analyst at Citi Futures, said the OECD report was “at the very least … a limiting factor on how much petroleum demand growth we can expect, in the monthly reports from the DOE, OPEC, and International Energy Agency due out this week”.
PRECIOUS METALS
Gold prices have edged modestly higher, snapping an eight-day losing streak as the US dollar retreated, but still hovered near its lowest in three months after robust US jobs data boosted expectations of a US rate hike in December.
“Until the Fed rate hike, there is going to be continued concern about where is the floor for gold, whether at current levels or significantly lower,” ING Bank senior strategist Hamza Khan said.
“This back-and-forth on expectation of what the Fed will do is going to keep the market busy in the short term at least,” Julius Baer analyst Carsten Menke said.
“We really have to concentrate on whether growth is sound in the US (but) we are not going to have an inflation problem, so from that perspective, there is no investment case to be done for gold.”
BASE METALS
Copper hit a six-week low and was headed towards its weakest in six years as the US dollar remained firm and trade data from top consumer China reinforced the view that economic growth is slowing.
“The dollar is providing downside pressure and … (there are) concerns over a global growth slowdown,” said William Adams, head of research at Fastmarkets.
He said, however: “There is support below the $US5,000 area, we’ve had supply cuts and the market is probably well balanced. All it would take is a slight glimmer of light on the China outlook and that would turn copper around quite quickly.”
MARIANA – Brazilian authorities have halted all operations at an iron ore mine where the collapse of a waste reservoir triggered a mudslide that killed at least four people, the state government says.
PARIS – Global trade flows have fallen dangerously close to levels usually associated with a global recession, although actions taken by China and others should ensure a pick-up in 2016, the OECD says in a report.
BERLIN – Germany’s exports and imports have both rebounded in September after falls a month earlier, as the trade surplus shrank slightly to 19.4 billion euros ($A29.68 billion), official data shows.
Stocks to watch on the Australian Stock Exchange today.
AIO – ASCIANO: Asciano has its annual general meeting but a shareholder vote on Brookfield Infrastructure’s takeover offer has been postponed.
BEN – BENDIGO AND ADELAIDE BANk: Bendigo and Adelaide Bank has its annual general meeting on Tuesday.
BKN – BRADKEN: Bradken has its AGM.
IPL – INCITEC PIVOT: Incitec Pivot is expected to post full year results.
MRN – MACQUARIE RADIO NETWORK: Macquarie Radio Network has its annual general meeting on Tuesday.
PRT – PRIME MEDIA: Prime Media has its AGM
SHP – SHOPLY: Shoply has its annual general meeting on Tuesday.
SRF – SURFSTITCH: SurfStitch has its annual general meeting.
INDEX CLOSE MOVE
Dow Jones 17730.48 -179.85
S&P500 2078.58 -20.62
Nasdaq 5095.30 -51.82
FTSE100 6295.16 -58.67
DAX 10815.45 -172.58
Shanghai 3840.36 46.98
Hang Seng 22726.77 -140.56
NIKKEI225 19642.74 377.14
ONE AUSTRALIAN DOLLAR BUYS:
0.7051 US DOLLARS
0.6560 EUROS
0.4665 UK POUNDS
4.4862 CHINESE YUAN
1.0779 NEW ZEALAND DOLLARS
METAL MOVE CLOSE
Gold $US/oz 00.40 1088.10
Copper $US/tonne -0.0120 2.2300
Iron ore $UStonne 0.03 48.24
OIL (US$/barrel) MOVE CLOSE
WTI -0.42 43.87
Brent Crude -0.23 47.19
* Still trading
AAP
