At 8.55am (AEDT) on Friday, the March share price index futures contract was down 63 points at 4,895.
Locally on Friday, the Australian Bureau of Statistics will release retail spending figures for November and the Ai Group’s Performance of Construction Index for December is due out.
In Australia, the market on Thursday fell for a fifth straight session after another meltdown on the Chinese market.
The benchmark S&P/ASX200 index was down 112.8 points, or 2.2 per cent, at 5,010.3 points.
The broader All Ordinaries index was down 109.2 points, or 2.11 per cent, at 5,068.8 points.
On Thursday, there was further turmoil on the Chinese share market with trading suspended after only 30 minutes of trade when the Shanghai Composite index opened seven per cent lower.
ANZ economist said that sparked further demand for safe haven assets like bonds and sent equities even lower.
“The tumultuous start to the New Year is keeping us all on our toes,” ANZ said.
“In the space of a week, we have had growing geopolitical tensions in the Middle East and Asia, a rout in the Chinese stock market that reverberated around the world and a sudden devaluation of the yuan.”
At 8.30am (AEDT) on Friday, the March 2016 10-year bond futures contract was trading at 97.310 (implying a yield of 2.690 per cent), up from 97.285 (2.715 per cent) on Thursday.
The March 2016 three-year bond futures contract was at 98.070 (1.930 per cent), up from 98.040 (1.960 per cent).
NEW YORK – US stocks have extended the sharp losses of this week, putting the Dow on track for its worst start to a year in more than a century.
Market volatility in China and a relentless slide in oil prices are rattling investors.
China allowed the biggest fall in the yuan in five months, and trade in Shanghai stocks was halted for the second time this week after a seven per cent selloff.
The Shanghai and Shenzhen stock exchanges, however, said China would suspend using the circuit breaker as of Friday.
With Beijing accelerating the yuan’s depreciation to make its exports more competitive, investors fear the world’s second-largest economy is even weaker than had been imagined.
Adding to the gloom, oil prices fell to near 12-year lows and copper prices touched their lowest since 2009, weighing on energy and material shares. All 10 S&P 500 sectors were lower, though.
LONDON – European shares have fallen sharply after China accelerated the depreciation of the yuan.
The People’s Bank of China surprised markets by setting the official mid-point rate on the yuan at 6.5646 per US dollar, the lowest since March 2011.
Less than half an hour after the opening, Chinese stock markets were suspended for the rest of the day as a new circuit-breaking mechanism was tripped for the second time this week.
Baader Bank head of equity strategy, Gerhard Schwarz, said suspending the circuit-breaker was a smart move because investors were now less nervous about not being able to sell.
“In the short term it will add to the volatility but in the longer term it might actually reduce it because nobody will have to rush for an exit,” he said.
Investors have expressed fears that the yuan’s rapid depreciation could mean China’s economy, the world’s second-largest, is even weaker than had been assumed.
HONG KONG – Asian stocks have slid across the board after China again guided the yuan sharply lower while Shanghai shares tanked more than seven per cent and triggered a stock market circuit breaker for the second time this week.
Share trade was suspended for the rest of the day on Thursday.
The new rules Chinese authorities unveiled this week, which restrict selling by large shareholders, did not go down well with investors, and provided little tonic.
“This is crazy. Chinese regulators set off on this path in July and they cannot get out of it. They have ruined whatever hope investors still had in the market,” said Alberto Forchielli, founder of Mandarin Capital Partners.
With risk sentiment in tatters, spreadbetters forecast a significantly lower open other share markets.
LONDON – Britain’s Treasury chief has warned of a “dangerous cocktail” of new threats to the economy, insisting that the country’s robust growth is not immune to troubles from abroad.
WASHINGTON – Volkswagen chief executive Matthias Mueller will meet with the top US environmental regulator next week, marking the highest-level talks since the German carmaker admitted to using software to evade emissions requirements in 580,000 US vehicles.
SAN FRANCISCO – The alliance between carmakers Renault and Nissan will launch more than 10 cars with self-driving technology over the next four years in the United States, Europe, China and Japan, the partnership’s leader says.
ENERGY
Global crude oil prices have fallen futher this week on concerns about an oversupply of the commodity and falling demand from US and China.
For the past 18 months, oversupply has been the main factor responsible for dragging down prices by two-thirds, after Saudi Arabia pushed OPEC to ramp up exports to fight for market share with higher-cost producers such as US shale firms.
Low prices spurred global demand to multi-year highs, saving oil from a further collapse and encouraging producers to hope that the market might recover later in 2016.
But just as Saudi Arabia was about to start celebrating its first tactical victories, with US output declining under pressure from low prices, signs are emerging that demand in the United States, China and Europe is much weaker than anticipated.
PRECIOUS METALS
Gold prices have climbed above $US1,100 an ounce for the first time in nine weeks as investors moved into safe assets for a fourth straight day after worries about the Chinese economy hit global stocks.
Shares on major exchanges fell for a sixth consecutive day as volatile markets digested another move lower in the yuan and China’s efforts to stabilise its sinking stock market.
“Gold’s strength is probably going to be relatively short term, but there is an upside risk to gold, if the view that China is going to pull the whole world into recession becomes stronger,” Citigroup metals strategist David Wilson said.
“But if the US and Europe continue to grow, gold will go weaker … Chinese stock markets had got massively over inflated because a lot of money piled into it and now people have come back to reality.”
Gold, often seen as an alternative investment during times of geopolitical and financial uncertainty, benefited from the risk-averse sentiment this week after tensions escalated in the Korean peninsula and flared in the Middle East.
BASE METALS
Copper prices have tumbled, hitting their lowest in nearly seven years, as plunging equities in China highlighted the country’s economic problems.
China’s stock markets were suspended for the day less than half an hour after opening as a new circuit-breaking mechanism was tripped for a second time this week. Shanghai stocks slid 7.3 per cent to trigger the halt, a repeat of Monday’s losses.
“Chinese equities, some of the economic data this week have spooked the market. China is the dominant consumer of pretty much every commodity,” said Investec analyst Marc Elliot.
Data published this week showed China’s manufacturing sector shrank for the 10th month running in December, while activity in services fell to a 17-month low.
China’s central bank allowed the yuan to fall to its lowest level against the dollar since March 2011, a move analysts said was an acknowledgement of weak growth.
“The Chinese stock market still has much more room to fall considering that for all the weakness we saw in the Chinese economy last year, the general Shanghai stock market was still up nine per cent last year,” INTL FCStone’s Edward Meir said in a note.
“Another relatively safe bet is further yuan depreciation.”
ASX stocks to watch Friday, January 8
BBG – BILLABONG – down eight cents, or 3.62 per cent, at $2.13: The head of surfwear retailer Billabong’s US business Ed Leasure is stepping down from his post so he can head to the beach a bit more often.
BHP – BHP BILLITON – down 82 cents, or 4.78 per cent, at $16.33
FMG – FORTESCUE METALS GROUP – down 10 cents, or 5.62 per cent, at $1.68
RIO – RIO TINTO – down $2.05, or 4.8 per cent, at $40.70
A bad day for mining and energy stocks on the Australian share market worsened in afternoon trading on Thursday after the Chinese share market was suspended for the second time this week.
PRG – PROGRAMMED – down five cents, or 2.2 per cent, at $2.23: Labour hire and maintenance group Programmed has agreed to sell a fleet of marine vessels acquired through its merger with Skilled for $25 million, with the proceeds to be used to repay debt.
SPO – SPOTLESS – Up three cents, or 3.03 per cent, at $1.02 : Shares in cleaning company Spotless jumped about two per cent following reports it might field a takeover bid from a foreign company.
AAP
