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Market report: Friday, January 15

Business

UPDATED: The local share market has pared back much of the strong gains made in morning trade but remains in positive territory at noon (AEDT).

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After surging above the 5,000 mark, the indices have dropped back into the 4,900s but still remain almost half a per cent higher.

Energy and mining stocks are continuing to do well after bounces in commodity prices.

Rio Tinto is up 2.5 per cent, while BHP Billiton has climbed more than three per cent despite revealing a $10 billion write-down on its US oil assets.

The broader market was less buoyant, with Telstra, Woolworths and Wesfarmers only slightly higher.

The banks have also retreated but remain in the black with best performer NAB up 0.59 per cent.

Earlier, leading the gains were BHP Billiton, Rio Tinto, Woodside Petroleum and Origin Energy.

The positive news out of the US was well overdue, Bell Direct equities analyst Julia Lee said.

“The markets have been extremely oversold. Today is only the second positive session in 2016,” she added.

The US market finished strongly, driven by the energy sector following a spike in oil prices, and financial companies.

Banking giant JPMorgan Chase delivered strong earnings numbers amid a flurry of earnings results.

The S&P 500 closed 1.7 per cent at 1,921.84 points.

On the Australian bourse, BHP Billiton, was up 82 cents, or 5.5 per cent, at $15.69 at 10.30am (AEDT) after finishing 6 per cent higher in London overnight.

The stock is getting a boost from Wall Street, with the company’s decision to write down its US onshore oil and gas assets by $US7.2 billion ($A10.31 billion) already factored in by the market given the fall in oil and commodity prices, according to Ms Lee.

There’s also “a view that BHP has been oversold for a while”, she added, noting the strong performance in London.

Rio Tinto gained $1.73 to $40.59, with Woodside Petroleum up 94 cents at $27.81.

The big four banks are also up.

National Australia Bank rose 54 cents to $27.65, the Commonwealth Bank of Australia gained $1.38 to $80.80, ANZ Bank rose 48 cents to $25.53 and Westpac Bank up 36 cents to $31.52At 10.10am (AEDT) on Friday, the benchmark S&P/ASX200 index was UP 78.4 points, or 1.60 per cent, at 4,987.8, while the broader All Ordinaries index was UP 75.7 points, or 1.52 per cent, at 5,039.8.

On the ASX 24, the share price index was 60 points at 4,938, with 11,167 contracts traded.At 8.39am (AEDT) on Friday, the share price index was up 43 points at 4,921.

In local economic news on Friday, the Australian Bureau of Statistics releases housing finance data.

No major equities news is expected.

NEW YORK – US stocks have rallied, with the S&P 500 crossing a key technical level, as a rebound in oil prices boosted energy companies.

“We’ve been looking for some sort of bounce for a while now,” said Scott Brown, chief economist at Raymond James in St Petersburg, Florida.

“Normally, when you have increased volatility, you get some upside as well.”

The Australian dollar is higher amid a turnaround in global market sentiment following gains in Chinese stocks and most commodities.

The local unit was trading at 69.82 US cents, up from 69.42 cents on Thursday.

LONDON – Britain’s top share index fell to its lowest level in almost five months, hit by falls in downgraded travel and leisure stocks, though an oil price recovery and strength on Wall Street helped it end off its lows.

“This market is in contraction and I expect this contraction to continue for the next six months,” Beaufort Securities’ sales trader Basil Petrides said.

InterTrader’s chief strategist Steve Ruffley was also cautious, saying the FTSE could fall to 5,500 points this quarter.

HONG KONG – Hong Kong’s benchmark index bounced off fresh lows hit after a Wall Street slide on Thursday, paring losses after a sharp rebound in mainland stocks eased the gloom stemming from a tumble in global stocks.

Sentiment improved after China’s main indexes rebounded roughly two per cent as some investors bet that the lows hit during last summer’s rout would not be so easily breached.

Most sectors were down on Thursday. Energy and utility shares shares ended in positive territory.

WASHINGTON – The number of Americans filing for unemployment benefits has unexpectedly risen but remains at levels associated with a healthy labour market.

LONDON – The Bank of England has kept interest rates at record lows once more amid mounting gloom on the global economy and slowing UK growth.

BRUSSELS – The European Investment Bank (EIB) has stopped making loans to Volkswagen pending an investigation into whether some of its previous funding could have been used by the German carmaker to cheat diesel emissions tests.

ENERGY

Oil prices have rebounded from 12-year lows.

Benchmark Brent oil snapped an eight-day rout as some players covered short positions after crude prices plumbed new lows on worries that Iran may add its barrels to a glutted global market sooner than expected.

Traders said options expiry for the front-month contract in US crude, scheduled at Thursday’s settlement, was also pushing players to cover positions.

“Natural covering interest is buoying the market as many had $US30 as an objective,” said Pete Donovan, broker at Liquidity Energy in New York.

PRECIOUS METALS

Gold fell sharply to a one-and-a-half-week low, pressured by a US Federal Reserve president’s comments about potentially rethinking further rate hikes, triggering technical sell signals while shrugging off a rise in oil prices.

St Louis Federal Reserve president James Bullard said a continued decline in inflation expectations may change his outlook for further Fed rate rises, though so far he feels the United States continues on a healthy track.

“I think those comments initiated a technical breach,” said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago, adding that technical selling came in at the prior session’s opening level as well as its low.

BASE METALS

Copper bounced from its fresh six-and-a-half-year lows after a rebound in the oil price gave pause to investors’ worries about the state of the global economy.

“Global economic growth appears to be weakening. The slump in the oil price is in effect telling us that global growth is extremely weak while trade activity on a global basis we know is struggling,” said Robin Bhar, head of metals research at Societe Generale in London.

“I struggle to see any bullish catalysts in the near term … but there’s slightly calmer sentiment now only because the Chinese currency isn’t falling as sharply and the (Chinese) stock market, although volatile, has calmed down as well.”

ASX stocks to watch Friday, January 15

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTOP

The pressure on mining stocks could ease on Friday, with the iron ore price for once lifting slightly overnight.

OSH – OILSEARCH

STO – SANTOS

WPL – WOODSIDE PETROLEUM

Oil prices have risen slightly but Australian-listed energy stocks could still be at risk as crude prices hover a little above the crucial $US30-mark.

AAP

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