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Market report: Wednesday, November 25

UPDATED: The Australian share market has opened flat, with the resources sector offsetting losses in the banks.

Nov 25, 2015, updated Nov 25, 2015

News that Turkey downed a Russian fighterjet on Tuesday spooked offshore investors briefly overnight, but hasn’t affected the Australian market too badly, IG market analyst Angus Nicholson told AAP.

“Obviously there was a bit of concern about what might be the repercussions from Turkey downing that Russian jet, whether we were going to see an increased likelihood of potential conflict in the Middle East,” Nicholson said.

“But that does seem unlikely at this point, I think the market has calmed down a bit.”

Oil prices jumped in the wake of the news, which meant Australian energy stocks had a strong start to trade.

At 10.15am (AEDT), Santos was 13 cents higher at $4.16, while Woodside was up 27 cents to $29.98, and Origin gained 12.5 cents to $5.565.

A lift in the gold price helped OceanaGold rise 17 cents, or 7.23 per cent, to $2.52.

The miners also rallied, with BHP Billiton up 22 cents to $19.93 while Rio Tinto rose 39 cents to $47.81.

Banking stocks were mostly lower, with the Commonwealth down 58 cents to $79.06 while ANZ lost 10 cents to $27.67 and National Australia fell 14 cents to $29.68. Westpac bucked the trend to rise five cents to $31.76.

Announcing a first half profit of $50 million, Australian Agricultural Company jumped 5.25 cents to $1.5225.

Gaming company Aristocrat Leisure added 15 cents to $9.69 after recording a full year profit of $186.4 million.

This is amid cautious trading as nervous investors sought low-risk assets after Turkish jets shot down a Russian warplane near the Syrian border.

Locally, in economic news on Wednesday, Reserve Bank of Australia assistant governor for financial markets Guy Debelle is slated to speak in London.

The Australia Bureau of Statistics releases September quarter figures for construction work done.

Meanwhile, the Standard & Poor analyst panel Q&A of local banking sector is on in Sydney.

In equities news, Australian Ag Company is expected to post half year results while Aristocrat Leisure, Goodman Group, Beach Energy and Phylogica have their annual general meetings.

Meanwhile, Asciano chief executive John Mullen is slated to give a speech at an AMCHAM event in Melbourne.

Locally, in economic news on Wednesday, Reserve Bank of Australia assistant governor for financial markets Guy Debelle is slated to speak in London.

The Australia Bureau of Statistics releases September quarter figures for construction work done.

Meanwhile, the Standard & Poor analyst panel Q&A of local banking sector is on in Sydney.

In equities news, Australian Ag Company is expected to post half year results while Aristocrat Leisure, Goodman Group, Beach Energy and Phylogica have their annual general meetings.

Meanwhile, Asciano chief executive John Mullen is slated to give a speech at an AMCHAM event in Melbourne.

In Australia, the market on Tuesday closed nearly 1 per cent lower, dragged down by the major banks and continued weakness in the resources sector due to lower commodity prices.

The benchmark S&P/ASX200 index was down 50 points, or 0.95 per cent, at 5,226.4 points.

The broader All Ordinaries index was down 49.5 points, or 0.93 per cent, at 5,277.0 points

The Dow Jones Industrial Average is UP 32.81 points at 17,825.49 in afternoon trading in New York, while the Standard & Poor’s 500 index is UP 0.55 points at 2,087.14.

The NASDAQ Composite index is DOWN 9.78 points at 5,092.70.

The Australian dollar is trading at 72.45 US cents, UP from 72.02 at Tuesday’s close.

The local currency is worth 88.71 Japanese yen, 68.02 euro cents, 48.03 British pence and 1.1060 New Zealand dollars.

Benchmark crude oil is UP 87 US cents at $US42.62 per barrel.

The Australia market is set to open HIGHER, with the SPI futures index UP 14 points at 5244.

The benchmark S&P/ASX200 index SHED 50 points, or 0.95 per cent, to 5,226.4 points.

The broader All Ordinaries index LOST 49.5 points, or 0.93 per cent, to 5,277.0 points.

The spot price of gold is $US1,075.28, UP from Tuesday’s close of $US1,071.30.

NEW YORK – A jump in petroleum-linked shares has helped lift US stocks after the Turkish downing of a Russian fighter jet on the Syrian border sparked a rally in the oil market.

Government data upgraded US economic growth in the third quarter to 2.1 percent from the prior estimate of 1.5 percent. On the downside, the Conference Board’s read of consumer confidence tumbled to 90.4 in November from October, due mainly to consumers’ less positive view of the jobs market.

Travel stocks retreated after the State Department late Monday issued a global advisory warning US citizens of “increased terrorist threats” in the wake of the Paris attacks.

LONDON – European shares have retreated with the British travel sector down again after signs that armed attacks in France and Mali are dampening customer demand.

British travel and leisure stocks were hit on Tuesday after data from ForwardKeys showed new flight bookings to Paris, one of the world’s most visited cities, have fallen by over a quarter in the week after the November 13 attacks that killed 130 people.

With an eye to the attacks, the US State Department issued a global travel alert for Americans planning to go abroad, while the downing of a Russian jet near the Syrian border by Turkish fighter jets added to global tensions.

“There’s a bit of geopolitical concern out there at the moment – we’ve had a couple of incidents last week, and now today our screens are filled with pictures of this Russian jet being shot down over Syria by Turkey,” Jasper Lawler, market analyst at CMC Markets, said, adding this was dragging on travel-sensitive areas of the stock market in particular.

HONG KONG – Australian miners led losses in Asian commodity firms, with giant BHP Billiton sitting at a 10-year low, as metals prices slip further on slack demand and a strong US dollar.

Producers took a hit on Tuesday as the price of copper sank to a six-year low below $US4,500 a tonne on Monday, nickel was at its lowest for more than a decade, and zinc and silver declined.

Oil prices moved higher after Saudi Arabia said it was prepared to work with other producers to stabilise prices, although dealers remain subdued owing to a long-running supply glut, continued overproduction and anaemic demand.

“Wild gyrations in oil and another copper tumble could see further pressure on resource stocks,” Michael McCarthy, chief markets strategist in Sydney at CMC Markets, told Bloomberg News.

ENERGY

Global oil prices have surged higher after Turkey shot down a Russian warplane on the Syrian border, sparking concerns about rising tensions in the oil-rich Middle East.

The Turkish army says the plane was shot down by two Turkish F-16s after it had violated Turkish airspace 10 times within a five-minute period. Russia insisted the plane was inside Syrian airspace, raising the possibility of a major spike in tensions over Syria.

“We’re really getting a boost here from geopolitical tensions, as concerns have been stoked by news a Russian plane has been shot down, and fears that an escalation could cause some kind of contagion in the Middle East and ultimately affect oil supplies,” Matt Smith, an oil analyst at ClipperData, said.

PRECIOUS METALS

Gold has risen 1 per cent, recovering from near six-year lows as news that Turkish fighter jets had shot down a Russian warplane near the Syrian border sparked a rush to safety among investors, weighing on the US dollar.

The metal remained under pressure, however, from expectations the US Federal Reserve will press ahead with its first interest rate rise in nearly a decade next month.

“This is a clear escalation of the crisis, which should lift gold,” Commerzbank analyst Carsten Fritsch said.

“If the dollar continues to strengthen, gold will soften. It won’t necessarily be a smooth trajectory, but I don’t see any reason why it should pick up,” Citi analyst David Wilson said.

“Markets are still targeting that December rate hike.”

BASE METALS

Zinc, copper and nickel has rebounded as bearish investors buy back positions to lock in profits while a weaker US dollar and firmer oil also support the hard-hit market.

Investors, many from China, which have unleashed waves of selling in recent weeks, took a breather and bought back some of their short positions, analyst David Wilson at Citibank said.

“The Chinese selling has been absolutely massive over the last few weeks, so I guess we’re getting some short-covering,” he said.

“You’ve had a decent pullback in open interest.”

NEWS

The Australian dollar has climbed higher following some soft US data that has weighed on the greenback.

At 8.35am (AEDT) on Wednesday, the local unit was trading at 72.49 US cents, up from 72.02 cents on Tuesday.

And the Australian share market looks set to open higher after a mixed performance on Wall Street amid cautious trading as nervous investors sought low-risk assets after Turkish jets shot down a Russian warplane near the Syrian border.

At 8.35am (AEDT) on Wednesday, the December share price index futures contract was up 23 points at 5,253.

WASHINGTON – The US economy expanded more than expected in the third quarter but growth remained well below the pace of the second quarter, according to Commerce Department data.

BERLIN – German business confidence bounced back in November from the decline Europe’s top economy had the previous month over the Volkswagen scandal, a leading economic think tank says.

TOKYO – Japanese Prime Minister Shinzo Abe says the government needs to raise the minimum wage by an annualised 3 per cent to bolster consumer spending.

ASX STOCKS TO WATCH

ACC – AUSTRALIAN AGRICULTURAL COMPANY: The Australian Agricultural company is expected to post half year results on Wednesday.

AIO – ASCIANO: Asciano chief executive John Mullen is slated to give a speech at an AMCHAM event in Melbourne.

ALL – ARRISTOCRAT LEISURE: Aristocrat Leisure has its annual general meeting on Wednesday.

BPT – BEACH ENERGY: Beach Energy has its annual general meeting on Wednesday.

GMG – GOODMAN GROUP: Goodman Group has its annual general meeting on Wednesday.

PYC – PHYLOGICA: Phylogica has its annual general meeting on Wednesday.

AAP

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