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Market report: Monday, November 16

Business

UPDATED: The Australian share market is lower at noon as the Paris terror attacks create uncertainty and trepidation among investors.

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Only the gold stocks were performing strongly, with Newcrest Mining up 5 per cent, Evolution Mining up four per cent and Regis Resources up 3.75 per cent.

Gold is considered a strong defensive stock, providing stability and returns amid uncertainty.

Elsewhere among commodities, results were mixed, with BHP Billiton up one per cent while Rio Tinto was down about two per cent.

The big banks were all lower.

And Telstra was moderately, or 0.4 per cent, higher.

Volumes and values of trade were lower than average.

AT 11am (AEST) the benchmark S&P/ASX200 index dropped below the key 5,000 point-level in the early minutes of trade on Monday as investors worried about more global turmoil.

There were heavy falls across the board, with heavyweight banking and resources stocks all lower.

Australian Stock Report’s head of research Chris Conway said the local share market was already set for a weak open following steep losses on Wall Street on Friday and further slumps in the oil price.

But he said the weekend Paris terrorists attacks, where 132 people are reported dead and 53 injured, added further pressure on the market.

“The attacks in Paris have added further negative energy to what was already shaping up to be a bearish day,” he said.

“International events of this nature have an impact on market sentiment.”

Diversified miner BHP Billiton had fallen four cents, or 0.20 per cent, to $20.19 at 1050 AEDT.

Fellow miner Rio Tinto was down 96 cents, or 1.92 per cent, to $47.69, while Fortescue Metals had dropped half a cent to $2.275.

As for the banks, the Commonwealth Bank was down 69 cents, or 0.91 per cent, to $75.07, ANZ had declined 41 cents, or 1.56 per cent, to $25.90, Westpac was down 35 cents, or 1.15 per cent, to $30.17 and NAB had shed 34 cents, or 1.2 per cent to $27.91.

Energy stocks were performing better-than-expected despite further slumps in the oil price.

Santos was up four cents to $4.01, Woodside Petroleum had gained 18 cents to $28.63 and Oil Search had added six cents to $7.79.

Earlier this morning, the Australian bond market is firmer as markets play it safe following some weak US retail spending data and increased expectations of a US interest rate rise in December.

US retail spending grew just 1.7 per cent in the year to October, reflecting America’s modest economic growth.

St George senior economist Jo Horton said Australian bond futures prices moved in line with US Treasuries at the end of last week.

“US government bond yields fell (prices rose) after US retail sales and producer prices data disappointed,” she said.

“Cleveland Federal Reserve Bank president and hawk Loretta Mester said she thought the economy could handle a rate hike and it was time to start normalising.”

At 8.30 (AEDT) on Monday, the December 2015 10-year bond futures contract was trading at 97.105 (implying a yield of 2.895 per cent), up from 97.010 (2.990 per cent) on Friday.

The December 2015 three-year bond futures contract was at 97.930 (2.070 per cent), up from 97.850 (2.150 per cent).

At 7am (AEDT) on Monday, the local unit was trading at 71.11 US cents, down from 71.33 cents on Friday.

US retail spending grew just 1.7 per cent in the year to October, reflecting both the modest pace of growth in the world’s largest economy but also falling prices for many things, including fuel and clothing.

In Paris, there are at least 129 people dead from a series of shootings and bombings on Friday night.

Westpac Strategist Imre Speizer said markets moved into safe-haven assets over the weekend.

“Risk aversion took hold in equity and commodity markets,” he said.

“That, plus some disappointing US data, caused US interest rates to fall, although the US dollar was resilient.”

AMP Capital chief economist Shane Oliver said the Paris attacks would be an additional negative for markets on Monday.

“We were going to be down anyway in response to the weakness on Wall Street and further falls in commodity prices,” he said.

“But we will get an extra push along with nervousness associated with the terrorist attacks.”

NEW YORK – Wall Street has fallen sharply, capping off its worst week since the dark days of August, hurt by a sell-off in technology companies, while department stores dropped on concerns about the upcoming holiday shopping season.

Dow component Cisco, which dropped 5.8 per cent after it gave a flimsy forecast, citing a slowdown in orders and weak spending outside the US, was the second-biggest drag on the S&P and the Nasdaq and pulled down shares of tech heavyweights including Apple and Facebook.

Disappointing reports from department store chains hit retailers. And, data showed US retail sales rose less than expected in October, suggesting a slowdown in consumer spending.

“The market got to up within about a per cent of its previous record high. It got overbought, but we really didn’t get the follow-through we wanted from the small caps,” Alan Gayle, senior investment strategist at RidgeWorth Investments in Atlanta said.

The Dow Jones industrial average fell 1.16 per cent to finish at 17,245.24 points and the S&P 500 lost 1.12 per cent to 2,023.04. The Nasdaq Composite dropped 1.54 per cent to 4,927.88.

LONDON – European stock markets closed down as traders reacted to weak eurozone data and lingering concerns over China.

Equities were weighed down by a slump in commodity prices caused largely by weaker Chinese demand and additional downward pressure came from increased expectations of a long-awaited US rate hike in December.

With oil diving to a two-month low and commodity markets continuing to be buffeted, Craig Erlam, senior market analyst at Oanda trading group, on Friday said: “It’s worth noting that the market was primed for some form of correction following a good five weeks for investors.”

At the close, London’s benchmark FTSE 100 index had lost 60.40 points, or 0.98 per cent, to 6,118.28.

In the eurozone, Frankfurt’s DAX 30 index ended off 74.23 points, or 0.69 per cent, at 10,708.30.

“Slower eurozone GDP growth … will intensify already strong belief that the ECB will deliver more stimulus at its December policy meeting,” said Howard Archer, chief European economist at research group IHS Global Insight.

HONG KONG – Energy companies from Australia to China have tumbled as falling commodities prices stoked fears over the global outlook, with Asian stock markets tracking hefty losses in Europe and New York.

Prices have halved since peaking above $US100 in June last year, hit by tepid demand in a weak global economy, and a supply glut in the face of near-record output levels.

Adding to the pain is a growth slowdown in China, the world’s biggest energy user, which has also affected other commodities such as copper and iron ore.

Among Asian energy firms, Sydney-listed miner BHP Billiton and Rio Tinto gave up almost two per cent while Origin was seven per cent lower.

The Nikkei lost 100.86 points, or 0.51 per cent at 19,596.91; the Hang Seng shed 492.78 points, or 2.15 per cent, to 22,396.14; and the Shanghai Composite fell 49.08 points, or 1.29 per cent, to 3,746.24.

WELLINGTON – The S&P/NZX50 dropped 34.93 points, or 0.6 per cent, to 5989.03.

STOCKS TO WATCH

BHP – BHP BILLITON: The giant iron ore miner continues to feel the impact of the dam burst at its co-owned Brazil mine where nine people have been confirmed dead, 19 are still listed as missing and 500 people have displaced from their homes.

ELD – ELDERS: Elders is slated to post full year results on Monday.

QAN – QANTAS AIRWAYS: Qantas celebrates its 95th birthday on Monday.

AAP 

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