At 11.25am (AEDT), the benchmark S&P/ASX200 index was DOWN 32.4 points at 4,974.2, while the broader All Ordinaries Index was DOWN 29.7 points at 5,027.4.
The Australian dollar was at 69.97 US cents, DOWN from 70.17 US cents at the close on Monday.
Australian markets were closed on Tuesday for the Australia Day public holiday.
It was at 64.41 euro cents, DOWN from 64.86 euro cents at Monday’s close.
The price of spot gold in Sydney is $US1,120.75 per fine ounce, UP from Monday’s local close of $US1,100.71 per ounce.
Phillip Capital senior client adviser Michael Heffernan said the local bourse was having a perplexing start on Wednesday.
“It’s a bit of a confounding start to the day, given the worldwide wave of green that we saw last night in both Europe and the US,” Heffernan said.
“The oil price was going up, so the indications were we should be well oiled for a good start.
“It’s a disappointing start but that might change over the day.”
Heffernan said investors were awaiting local inflation figures to be released later today.
In the resources sector at 1026 AEDT, global miner BHP Billiton was up three cents at $15.31, Rio Tinto dipped 27 cents to $38.89, and Fortescue Metals sagged five cents to $1.47.
In the energy sector, oil and gas producer Woodside Petroleum fell 55 cents to $25.87, and Santos lost nine cents to $2.87.
Oil Search reversed six cents to $6.22 after it reported a 10 per cent decline in quarterly revenue on the back of a sharp fall in oil and gas prices, despite an increase in total production.
Among the major banks, Westpac was down nine cents at $30.82, Commonwealth Bank retreated 48 cents to $78.52, National Australia Bank gave away 41 cents at $27.35, and ANZ Bank surrendered 13 cents to $24.02.
Among other stocks, Australian data management firm Recall Holdings was off nine cents at $6.19 after it bought Swiss document storage and management company Secur Archiv.
Domino’s Pizza weakened 35 cents to $59.54 after it completed its 35 million-euro ($A54.15 million) acquisition of 89 Pizza Sprint stores in France.
On Wall Street on Tuesday, the Dow Jones Industrial Average jumped 282.01 points, or 1.8 per cent, to 16,167.23 points as the price of oil increased almost four per cent after falling sharply the day before.
At 7am (AEDT) on Wednesday, the local unit was trading at 70.16 US cents, virtually unchanged from 70.17 cents on Monday. Australian markets were closed on Tuesday for the Australia Day public holiday.
Commodity currencies gained ground despite Shanghai shares plunging 6.4 per cent on Tuesday, the lowest point since December 2014, Westpac Strategist Imre Speizer said.
Speizer said the Aussie bounced one US cent in the early London session as oil prices staged a recovery in turbulent trade.
Crude prices steadied above $US30 a barrel on Tuesday on hopes that OPEC and non-OPEC producers would come together to tackle a massive supply glut.
Concerns about oversupply have driven prices down 75 per cent since their peak.
And despite keeping the yuan reference rate steady on Tuesday, Chinese authorities are still struggling to stabilise the market as investors continue to liquidate positions, BK Asset Management’s managing director of FX strategy Boris Schlossberg said.
“That implosion of capital wealth is likely to have long-term repercussions on demand in China,” he said.
Speizer tipped the Aussie to push higher towards 70.50 US cents on Wednesday, barring any downside surprises from domestic inflation figures due for release.
He said the median estimate for the headline Consumer Price Index was a rise of 0.3 per cent.
“But given the historical relationship between New Zealand and Australian CPI, and New Zealand’s recent negative surprise, markets will be braced for something lower,” he said.
NEW YORK – Wall Street have rebounded sharply, driven by a surge in crude oil prices and strong results from industry heavyweights such as 3M, Johnson & Johnson and Procter & Gamble.
The Dow was up 1.59 per cent, or 252.41 points, at 16,137.63, while the S&P 500 was up 1.22 per cent, or 22.90 points, at 1,899.98, and the Nasdaq composite index had gained 0.93 per cent, or 42.06 points, to 4,560.55, at 0709 on Wednesday AEDT.
All 10 major S&P sectors were higher, led by the 3.64 per cent rise in the energy sector.
Crude prices soared 6 per cent on hopes that OPEC and non-OPEC producers would tackle an unrelenting supply glut.
Investors are still reeling from a turbulent start to 2016, which saw Wall Street post its worst-ever start to a year, and a two-day recovery late last week was largely wiped out on Monday.
“I think the market is just oversold on a near-term basis,” said Jeffrey Saut, chief investment strategist at Raymond James Financial in Florida.
“We’re getting a rally here and it’s not because of any particular event,” he said, adding that traders were likely taking up positions ahead of Apple’s earnings report.
LONDON – European stocks have gained after early losses, with commodities stocks rebounding after oil rose towards $US31 on hopes of an agreement to deal with supply glut and metals prices gaining ground on speculative buying.
The STOXX Europe 600 Oil and Gas index rose 2.4 per cent after oil prices rose on expectations that OPEC and non-OPEC producers may be edging closer to a deal. The Organization of the Petroleum Exporting Countries is making renewed calls for rival producers to cut supply alongside its members.
“Markets have recovered with a rise in oil prices and that indicates that the two are still strongly correlated. Today’s reversal could be the first step towards a short-term improvement in equity prices,” said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
The European basic resources index rose 4.4 per cent after copper and zinc prices hit multi-week peaks as speculators bought back short positions ahead of a holiday break in top metals consumer China.
Shares in Anglo American rose 11.8 per cent, in line with a rally in the market and also after it reported that rough diamond sales had improved significantly.
Rio Tinto, Glencore and Fresnillo jumped 4.9-7.7 per cent, helping the pan-European FTSEurofirst 300 to close 0.9 per cent higher at 1,335.90 points after falling to a low of 1,296.66 earlier in the day. The index is down about 9 per cent since the start of the year.
London’s FTSE 100 closed 34.46 points, or 0.59 per cent, higher at 5,911.46.
HONG KONG – The plunge in China has capped a miserable day for Asia.
Investors retreated to traditional safe-haven plays, sending the Japanese yen back up against the US dollar, gold higher and yields on two-year German government debt to record lows deep in negative territory.
Derek Halpenny, European Head of Global Markets Research at Bank of Tokyo-Mitsubishi, said the drop in Chinese markets was another blow to sentiment but it was the fresh oil slump that was probably the bigger concern.
“There was a natural question after the rebound last week whether we were seeing a turning point,” he said.
“But this reversal again is prompting investors to think there is more to come of what we have had in the first three weeks of the year.”
The Nikkei fell 2.35 per cent, or 404.01 points, to 16,708.90 and the Hang Seng lost 2.48 per cent, or 479.34 points, to 18,860.80.
But Shanghai suffered the worst, falling 6.02 per cent, or 188.38 points to 2,940.51.
WELLINGTON – The S&P/NZX 50 Index fell 33.09 points, or 0.54 per cent, to 6,142.15.
ENERGY
Oil prices have rebounded on hopes oil producers would cut output to address the supply glut that has punished equity markets and pushed crude values to 12-year lows.
Top OPEC and Russian oil industry officials stepped up vague talk on Monday of possible joint action to remedy one of the worst supply gluts in decades. Others, including Kuwait, said they doubt it will happen as long as others are increasing their output.
Brent crude futures were up $US1.12, or 3.67 per cent, at $US36.62 a barrel and WTI crude was up 90 US cents, or 2.97 per cent, at $US31.24 per barrel, at 0807 Wednesday AEDT.
PRECIOUS METALS
Gold has risen to a 12-week high, shrugging off strong stocks with nervous investors moving into safe-havens as the US Federal Reserve began a two-day meeting expected to give clues about the timing of the next interest rate increase.
Spot gold was up 1.3 per cent at $US1,121.80 an ounce at 2.16 pm EST (0616 Wednesday AEDT), the highest since November 4.
US gold futures for February delivery settled up 1.3 per cent at $US1,120.20 an ounce, the highest since early November.
“I think what the market’s hoping for is a dovish Fed,” said Rob Haworth, senior investment strategist for US Bank Wealth management in Seattle.
“You’re getting a bit of a short-covering rally, some safe-haven flows.”
Platinum was up 1.9 per cent at $US874.51 an ounce, well off last week’s seven-year trough of $US806.31. Palladium was up 0.5 per cent at $US491.90, while silver was up 2.0 per cent at $US14.52.
BASE METALS
Copper and zinc have both gained as speculators scrambled to buy back short positions ahead of a holiday break in top metals consumer China and as oil prices bounced back.
The lack of clarity ahead of the Chinese new year and a US central bank meeting led investors to cancel some of their heavy bets on lower prices, said Robin Bhar, head of metals research at Societe Generale in London.
“The uncertain environment, with a lot of turmoil across all asset classes, is making participants keep their cards close to their chest, not putting on risk needlessly,” Bhar said.
“Illiquidity ahead of the Chinese new year is playing an increasing part, so you’re probably getting some squaring up heading towards that period.”
London Metal Exchange three-month zinc was the biggest gainer, jumping 4.9 per cent to close at $US1,589 a tonne, the highest in three weeks and the biggest one-day gain in more than three months.
Copper finished 2.7 per cent stronger at $US4,535 a tonne, the highest in more than two weeks.
Aluminium lagged the rest of the metals, ending 1.3 per cent firmer at $US1,495 a tonne.
Lead closed 1.8 per cent higher at $US1,651, nickel ended 1.4 per cent stronger at $US8,670 and tin surged 3.7 per cent to a three-week high of $US14,150.
ASX stocks to watch Wednesday, January 27
BHP – BHP BILLITON
FMG – FORTESCUE METALS GROUP
RIO – RIO TINTO
Miners could see a lift in their share price on Wednesday with iron ore prices remaining back above the $US40 mark.
DLS – DRILL SEARCH
BPT – BEACH ENERGY
Drillsearch has a scheme meeting scheduled in Sydney for its proposed merger with Beach Energy.
NAB – NATIONAL AUSTRALIA BANK
National Australia Bank hs a scheme meeting on demerger of its Clydesdale Bank.
ORG – ORIGIN
OSH – OILSEARCH
STO – SANTOS
WPL – WOODSIDE PETROLEUM
Energy stocks could be in for another hit with oil prices still not showing a turnaround, instead diverging with Brent crude higher but WTI falling.
AAP
