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Market report: Thursday, December 24

UPDATED: The Australian share market has jumped more than 1 per cent in early trade on Christmas eve, helped by a rally on Wall Street and a rebound in oil prices.

Dec 24, 2015, updated Dec 24, 2015

European and US stocks rose sharply overnight, lifted by gains in energy and mining stocks. The Dow Jones industrial average ended more than one per cent higher as crude prices ticked up after US inventories fell.

“Commodity prices are stable and the gains in oil prices should help energy stocks today,” CommSec market analyst Steven Daghlian said.

“If we manage to hold on to these gains, it could tip the Aussie market into positive territory for December,” he added.

The benchmark ASX 200 index crashed nearly seven per cent during the month on the back of a slump in global crude oil and metal prices, battering stocks in the two sectors.

Energy and mining stocks led the gains in Thursday’s session, although volumes remained light.

Big miners BHP Billiton and Rio Tinto, beaten down over the past month, jumped nearly four per cent each, while Fortescue added six cents to $1.85.

Woodside Petroleum rose 65 cents to $28.25, Origin Energy was up 26 cents to $4.77, while Oil Search added 25 cents at $6.63.

Major utility AGL, which announced a long term gas supply deal with the Gladstone LNG project in Queensland, added 18 cents at $17.54.

Major banks were among the gainers, with all the big four banks up nearly one per cent each.At 8.13am (AEDT) on Thursday, the March share price index futures contract was up 72 points at 5,170.

In Australia, the market on Wednesday, closed higher for the sixth straight session, following a stabilisation in commodity prices.

The benchmark S&P/ASX200 index was up 25.1 points, or 0.49 per cent, at 5,141.8 points.

The broader All Ordinaries index was up 25.8 points, or 0.5 per cent, at 5,193.5 points.

NEW YORK – Wall Street rallied for the third straight session, led by sharp gains in energy stocks as a rebound in oil prices boosted sentiment heading into the Christmas holiday.

Crude prices climbed after US inventories fell but still hovered near multi-year lows as oversupply concerns continued to weigh.

The S&P energy sector surged 3.44 per cent and led the 10 major sectors on the index by a solid margin.

After a soft start to December, the S&P 500 has gained 2.66 per cent this week, leaving the index essentially unchanged in 2015.

“There is a bit of a Santa Claus rally here. People want to feel good, they want to dress up their portfolios and look fully invested going into yearend,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

US stock markets will have a shortened session on Thursday and stay closed on Friday for Christmas. Trading volumes are expected to remain thin through the holiday period.

LONDON – European shares have risen, lifted by gains in the hard-hit mining sector which rallied on the back of stronger copper prices.

Mining stocks benefited as London copper prices rose, with investors looking for more signs that Chinese stimulus measures are having a positive impact in the world’s top metals user, with some encouraging early signs of an improvement in grid spending and housing.

London-listed mining stocks dominated the list of Europe’s top performing shares on stronger London copper prices, with Glencore and Anglo American rising 8.4 per cent and 9.1 per cent respectively.

HONG KONG – Hong Kong stocks had their best day in two weeks, aided by strength on Wall Street, and a sharp rebound in energy shares after oil prices bounced off 11-year lows.

Investors are looking for more signs that Chinese stimulus measures are supporting the world’s top metals user, with some early signs of more spending on the state power grid and on housing.

Traders also cited a report from state news agency Xinhua that China would prioritise cutting excess steel capacity. In reaction, shares in steel producer ArcelorMittal surged 11 per cent.

WASHINGTON – A gauge of US business investment plans fell in November and the prior month’s increase was revised sharply lower as the drag on manufacturing from a strong dollar and spending cuts in the energy sector showed little sign of abating.

US transportation officials say they have confirmed an eighth US death due to an explosive air bag made by Japanese car parts maker Takata.

LONDON – Britain’s economy grew less strongly than previously thought in much of 2015, according to official data that is likely to surprise the Bank of England as it ponders when to raise interest rates.

ENERGY

Global crude oil prices are beginning to stage a recovery after suffering a series of falls that sent them below $US40 a barrel.

New York’s main contract, West Texas Intermediate for delivery in February, was up $US1.36 at $US37.50 per barrel.

US crude inventories fell 5.88 million barrels to 484.78 million barrels last week, the Energy Information Administration said, compared with a forecast rise of 1.4 million barrels.

“As (oil) has weakened and stayed weak, it has become less about oil and more about an indication of generalised global weakness or not,” said Jim Paulsen, chief investment strategist at Wells Capital Management in Minneapolis.

PRECIOUS METALS

Gold prices inched down for the second straight session, hemmed into a narrow range in thin pre-holiday trade as major stock markets posted strong gains and the US dollar climbed.

The metal has struggled to maintain the past week’s gains in thin trade despite a recovery in oil prices, as global stocks extended a rally into a third day and the dollar rose 0.3 per cent against a basket of major currencies.

Investors are reluctant to take positions into year-end, dealers said.

“Gold has been stuck in a range for such a long time that no one wants to do anything with it. At the end of the year, most books are going to be closed,” said Afshin Nabavi, head of trading at MKS.

BASE METALS

Aluminium touched its highest in two months and other industrial metals such as zinc also gained on greater optimism about demand from China.

Sources at three large Chinese commodity funds said they have positioned themselves for a short-term uptick in metals prices despite a poor longer-term outlook.

Copper, aluminium, nickel and zinc producers in China have announced planned output cuts.

Aluminium, which has shed about 18 per cent this year, slipped 0.4 per cent in the previous session.

ASX stocks to watch on Thursday

AZJ – AURIZON – down 58.0 cents, or 11.74 per cent, $4.36: Aurizon shares are under pressure after the company lowered its half year earnings guidance and outlined an up to $240 million writedown.

LLC – LEND LEASE – up 25.0 cents, or 1.83 per cent, at $13.90: Property developer Lendlease has a new international co-investor in Tower One at the Barangaroo South precinct in Sydney.

PVA – pSIVIDA – up 87.0 cents, or 16.32 per cent, at $6.20: Shares in pSivida have climbed around 17 per cent after the US-based biotech reported positive results from an advanced clinical trial of a treatment for chronic uveitis affecting the eye.

SGH – SLATER AND GORDON – down 6.5 cents, or 6.63 per cent, at 91.5 cents: Law firm Maurice Blackburn is opening registrations to pursue a class action against rival Slater and Gordon.

AAP

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