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Market report: Friday, November 13

Business

UPDATED: The Australian dollar has nudged lower as commodities come under pressure and euphoria from a healthy jobs report fades.

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BHP Billiton’s slump to a 10-year low and weak leads elsewhere has pushed the Australian share market into the red.

Still reeling from its Brazillian mine fiasco, shares in the leading market heavyweight dived to a low of $19.81 in morning trade and was down more than two per cent at $20.11 at 12.04pm (AEDT).

The collapse led the march down across the board, with energy and resource stocks hit hardest by lower commodity prices, while retail stocks were also under pressure.

The banks also weighed the bourses down with the worst performer Commonwealth Bank losing more than two per cent.

At noon (AEDT) on Friday, the currency was trading at 71.35 US cents, down from 71.39 cents on Thursday.

Oil prices sank overnight after the US government reported a big jump in US crude-oil inventories, reinforcing worries about the long-running global oversupply.

Broad declines in commodity markets weighed on global risk sentiment, driving the Aussie slightly lower, ANZ economists said.

“Commodity stocks and commodity currencies are bearing the brunt of pressure,” they said

Earlier, Wall Street was down 254.15 points, while the DAX was down -125.24 points.

“We seem to be following on from pretty much in lock step with all that very poor performance,” IG market analyst Angus Nicholson told AAP.

Far worse than expected Chinese credit data released overnight weighed heavily on commodity prices, and has also pushed the bourse down, Nicholson said.

“It’s almost the final note in a series of Chinese data,” he told AAP.

The big losers were the energy and mineral stocks, while the big four banks were all down.

BHP Billiton’s woes continued, slumping to a 10 year low below $20. The global miner’s shares were 69 cents, or 3.3 per cent, lower at $19.91 at 1057 AEDT as it deals with the fallout of the deadly dam collapse in Brazil.

Rival Rio Tinto was down 87 cents to $48.63.

Santos was the biggest loser in the energy stocks, down 38 cents, or 8.84 per cent to $2.92, while Woodside Petroleum was down 82 cents or 2.83 per cent to $28.19.

At 8.43am (AEDT) on Friday, the December share price index futures contract was down 69 points at 5,063.

New York Fed president William Dudley said “it is quite possible that the conditions the Committee has established to begin to normalise monetary policy could soon be satisfied”.

Locally, in economic news on Friday, the Australian Bureau of Statistics releases lending finance figures for September.

In equities news, Lend Lease has its annual general meeting while Qantas welcomes American airlines’ flagship Boeing aircraft to Sydney.

NEW YORK – Wall Street has been hit by a broad sell-off, dragged lower by downbeat views of the world economy and US rate rise concerns.

Oil shares and banks led the way on Thursday, but everything from consumer stocks to industrials registered significant losses, “anything related to global growth,” said Charlie Bilello of Pension Partners.

Bilello tied the slump to a wide fall in commodity prices, such as crude oil and copper, showing the weakness in global manufacturing

“That’s putting pressure on the energy sector, the materials sector, industrials,” he said.

LONDON – A grim profits warning from Rolls-Royce has sent the British engine maker’s shares crashing by a fifth, as a raft of disappointing earnings rocked European equities with Wall Street catching the gloomy mood

“A cavalcade of concerns left the European indices in a uniform shade of red this morning, including a truly nightmarish performance from Rolls-Royce,” said analyst Connor Campbell at traders Spreadex

Investor sentiment was also subdued as traders awaited a speech on Thursday from Federal Reserve chief Janet Yellen hoping for clues about US interest rates

“There’s little doubt that some tough earnings figures are currently weighing on European markets, but there’s also an impression that investors are very much waiting on Janet Yellen’s speech,” added ETX Capital analyst Daniel Sugarman

“All it would take is a couple of sentences to dramatically change the market mood.”

HONG KONG – Hong Kong was the stand-out stock market after five days of losses while Asian traders awaited a speech from Federal Reserve chief Janet Yellen hoping for clues about US interest rates.

“Divergence in monetary policy is creating an even choppier investment environment,” Michael McCarthy, chief market strategist in Sydney at CMC Markets, said.

“The futures market is indicating that it’s more likely than not that we’ll see the Fed raise rates in December. Expectations of further easing in China are high because there’s been a demonstrated responsiveness among policy makers to the weakening economy.”

ENERGY

Oil prices have sunk after the US government reported a big jump in US crude-oil inventories, reinforcing worries about the long-running global oversupply.

The US Department of Energy reported that commercial crude inventories last week grew by 4.2 million barrels, far higher than analyst expectations of an increase of 1.3 million barrels.
“Production remains at pretty good level here in the US and across the world,” said Andy Lipow of Lipow Oil Associates.

“The market remains under pressure as it sees crude inventories rising for another week.”

PRECIOUS METALS

Gold has fallen to its lowest level since early 2010, under pressure from expectations the US Federal Reserve is on track to raise interest rates in December for the first time in nearly a decade.

“We expect prices to fall a little bit further because of the anticipated rate hike by the Fed in December,” Capital Economics analyst Simona Gambarini said.

“There has been so much concentration on when the first hike is coming, we don’t think the debate has moved on to when the second and third hikes will come,” Standard Chartered analyst Paul Horsnall said.

“We don’t think there will be a third hike, and we think, in fact, the Fed will be in cutting mode by the end of next year. That’s very positive for gold.”

BASE METALS

Copper prices have tumbled to their weakest in more than six years, weighed down by a strong US dollar, weak Chinese credit data and concern about oversupply after inventories rose.

As copper fell for a fifth session in six, other metals on the London Metal Exchange also declined after heavy selling from Chinese funds and analysts said more losses are on the cards.

Metals were hurt by a rise in the US dollar index after the head of the European Central Bank underscored the bank’s readiness to extend money printing.

“Macro sentiment is the main overlay at the moment … that dollar strength and weaker Chinese data is hitting the market,” London-based Citi analyst David Wilson said.

GENEVA – A massive trade pact between 12 Pacific rim countries could limit the availability of affordable medicines, the head of the World Health Organisation says, joining a heated debate on the impact of the deal.

WASHINGTON – New claims for US unemployment insurance benefits held steady last week, close to a four-decade low as the jobs market firms, the Labor Department reports.

MOSCOW – Russia’s economy shrank 4.1 per cent in the third quarter this year, official statistics show, as a recession caused by low oil prices and Western sanctions over Ukraine continued to take its toll.

Stocks to watch

BHP – BHP BILLITON: Mining giants BHP Billiton and Vale will be held responsible for a deadly dam rupture at an iron ore mine and already face preliminary sanctions, Brazilian President Dilma Rousseff says.

LLC – LEND LEASE: Lend Lease has its annual general meeting in Sydney.

QAN – QANTAS: Qantas welcomes American airlines’ flagship Boeing aircraft to Sydney.

Australian indices and key stocks at the open

INDEX LAST MOVE
ASX200 5037.4 -88.292
All ords 5098.5 -83.654
ASX200SPI 5035 -97
Gold US$/o 1084.86 0.21
AUD/USD 0.7122 -0.0003
Dow Jones 17448.07 -254.15
S&P500 2045.97 -29.03
Nasdaq 5005.08 -61.94
NIKKEI225 19697.77 6.38
NZSE 50 6001.2 -22.76

Key stocks – last percentage change

AMP 5.62 -0.1 -1.75
ANZ Bank 25.95 -0.69 -2.59
BHP Billiton 19.86 -0.75 -3.64
C’wealth Bank 75.64 -1.76 -2.27
News Ltd 19.97 -0.61 -2.96
NAB 28 -0.56 -1.96
Rio Tinto 48.38 -1.12 -2.26
Telstra 5.18 -0.07 -1.33
Westpac Bank 30.02 -0.59 -1.93
Woodside Petr 28.16 -0.85 -2.93
Woolworths 23.35 -0.57 -2.38

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