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Market report: Thursday, January 14

UPDATED: The Australian dollar has retained its negative momentum despite local jobs figures beating expectations.

Jan 14, 2016, updated Jan 14, 2016

At 12pm (AEDT) on Thursday, the currency was trading at 69.37 US cents, down from 70.26 cents on Wednesday.

The currency was little changed after data revealed Australia’s unemployment was steady at 5.8 per cent in December, and the total number of people with jobs fell by 1000 in the month.

The big miners Rio Tinto and BHP Billiton, along with the big four banks and retail giants Woolworths and Wesfarmers all suffered heavy falls shortly after trading began at 10am (AEDT).

Among the few stocks to avoid Thursday’s carnage were gold companies.

The All Ordinaries and the benchmark S&P/ASX200 were both down by more than 2.3 per cent at 10.15am (AEDT).

The plunge was sparked by widespread falls on Wall Street, with the S&P500 sinking 2.5 per cent to close below 1,900 points for the first time since September.

US investors were worried about falling energy prices, disappointing corporate earnings and the global economy.

The Dow Jones industrial average also shed more than two per cent while the tech-heavy Nasdaq Composite dropped by over three per cent.

CMC Markets chief strategist Michael McCarthy said the Australia market is likely to hit its lowest level since mid 2013 and unlikely to get support from local jobs data due out at 11.30 (AEDT).

“When sentiment rules, data can only play a secondary role,” he said.

At 8.47am (AEDT) on Thursday, the share price index was down 91 points at 4,846.

In local economic news on Thursday, the Australian Bureau of Statistics releases December’s labour force figures.

In equities news, online marketplace company connecting buyers and sellers, Alphatise, is expected to list on the ASX and Djerriwarrh is slated to post half year results.

Meanwhile, the first Dick Smith creditors meeting is on in Sydney.

The Australian dollar is down as Wall Street suffers following further losses on Chinese stock markets.

The local unit was trading at 69.54 US cents, down from 70.26 cents on Wednesday.

NEW YORK – Wall Street has moved sharply lower as an early rally once again faded, and oil prices have struggled to end a seven-day losing streak.

Stocks rose earlier in the session after positive Chinese trade data allayed concerns about the health of the world’s second-biggest economy, before plunging into the red.

“It’s becoming quite apparent that any strength is being used to trim or exit positions as opposed to taking on new positions in the market, at least in the last couple of days,” said Ryan Larson, head of US equity trading at RBC Global Asset Management in Chicago.

LONDON – British shares have risen after better-than-expected trade data from China improved market sentiment, pushing oil and metals prices higher and lifting investors’ appetite for shares in mining, oil and gas companies.

Energy stocks added nearly nine points to the FTSE 100, while the materials sector, which includes miners, added more than two points.

“We’re being driven higher by those stocks which are used traditionally as a proxy for negativity in China,” Charles Hanover Investments advisory investment manager, Jonathan Roy, said.

Investors were now unwinding short positions in the stocks, he said.

“This is a market well off last year’s peaks and struggling to keep its head above the 6,000 level,” Tony Cross, market analyst at Trustnet Direct, said in a note.

HONG KONG – Asian stocks have risen after Chinese trade data cooled concerns over the world’s second biggest economy, steadying money and currency markets in Shanghai and Hong Kong.

China reported exports dipped just 1.4 per cent in US dollar terms in December, compared with forecasts of an eight-per cent drop, and a four-per cent fall in imports was also much smaller than many had feared, but the reaction was not uniformly positive.

Traders said the mood on many markets was still shaky after an extremely volatile start to 2016, driven by worries over conflict in the Middle East, China’s finances and the fallout from extremely low oil prices.

“I am generally positive on the global outlook but the basis for that is being sorely tested right now,” one London-based investment manager said. “Sentiment is very fragile.”

WASHINGTON – The US economy continued to show mixed signals from late November to early January, with improvements in the labour market and consumer spending offset by the drag of a strong dollar and low energy prices, the Federal Reserve says.

ATHENS – Greece has emerged from 33 months of deflation in December, finally seeing some price rises after a bruising period of economic decline and political upheaval.

LONDON – British takeover target Home Retail says it’s in advanced talks to sell its Homebase home improvement stores to Australia’s Wesfarmers for STG340 million ($A702.99 million), allowing it to focus on its Argos chain.

ENERGY

Oil prices have failed to sustain a rally and are struggling to remain above the crucial $US30 a barrel level.

The deepening slide in oil prices and concerns about China’s economy have rattled equity markets, which have failed to sustain any significant rallies in early 2016.

“There is a fear that the global economy, and the US economy as well, could lapse into a recession given the fall in energy prices and greater economic weakness overseas,” said Tim Ghriskey, chief investment officer of Solaris Asset Management in New York.

PRECIOUS METALS

Gold has turned higher as the US dollar fell, US stocks dropped and a Federal Reserve president raised concerns about inflation expectations.

US stocks sold off sharply and a brief rally in beaten-down oil prices stalled after US data added to concerns about an over supplied energy market.

“The downturn in equities helped push prices up in the latter part of trade,” said James Steel, chief metals analyst for HSBC Securities in New York.

BASE METALS

Copper has rebounded from its six-and-a-half-year low, after upbeat Chinese trade data helped soothe concerns about demand for metals in the world’s second-biggest economy.

China reported exports dipped just 1.4 per cent in US dollar terms in December compared with forecasts of an eight per cent drop. A four per cent fall in imports was also much smaller than many had feared.

The country’s copper trade data was even more positive. Copper imports in December rose 15.2 per cent from the month before as low prices attracted buyers, and were down just 0.3 per cent for the year from record levels in 2014.

“China copper demand is better than the macro numbers have been suggesting but metals are trading on macro cues … concern over Chinese equities, factory and industrial production numbers etc,” said David Wilson, an analyst at Citi.

ASX stocks to watch Thursday, January 14

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTO

The price of iron ore has fallen below the $US40 mark, losing 70 US cents to close at $US39.30.

OSH – OILSEARCH

STO – SANTOS

WPL – WOODSIDE PETROLEUM

Oil prices struggle to stay above the milestone $US30 mark. WTI is virtually unchanged at 7.45am on Thursday (AEDT), down just two US cents at $US30.42, but Brent crude is down 68 US cents, or 2.20 per cent, at $US30.18.

WES – WESFARMERS

LONDON – British takeover target Home Retail says it’s in advanced talks to sell its Homebase home improvement stores to Australia’s Wesfarmers for STG340 million ($A702.99 million), allowing it to focus on its Argos chain.

AAP

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