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Market report: Wednesday, February 10

Business

 UPDATED: The Australian dollar is up slightly, but set to fall in afternoon trade on the back of a rising Japanese yen.

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At noon (AEDT) on Wednesday, the currency was trading at 70.55 US cents, up from 70.37 cents on Tuesday.

CMC Markets chief market analyst Ric Spooner says the yen, which has been rising against the greenback this week, had led to the shares of exporters being scorched on the Japanese share market.

He says the Australian dollar is set to track Japanese shares on Wednesday afternoon.

“There’s a bit of downward momentum on the Aussie dollar and I suspect that will become more pronounced,” Spooner told AAP.

He also forecast markets to quieten ahead of US Federal Reserve chairwoman Janet Yellen’s Congressional testimony on Wednesday (US time).

“That testimony has the capacity to move markets in either direction and people might wait to see what happens there,” Spooner added.

At 8.32am (AEDT) on Wednesday, the share price futures index was up three points at 4,778.

In local economic news on Wednesday, the Westpac/Melbourne Institute Survey of Consumer Sentiment is due out.

In equities news, CIMIC is slated to post full year results while Commonwealth Bank of Australia, AGL Energy, Boral, Stockland, OZ Minerals, Caresales and Computershare are all expected to release half year results.

Australian dollar is higher as more investors bet on the US Federal Reserve tightening monetary policy amid global volatility.

The local unit was trading at 70.69 US cents, up from 70.37 cents on Tuesday.

And the Australian share market looks set to open higher despite international markets putting on weak performances amid concern over world economic growth, ahead of Federal Reserve chair Janet Yellen’s Congressional testimony.

NEW YORK – Wall Street has closed essentially flat, after bouncing between gains and losses in a choppy session, as the beaten-down energy and financials stocks fall further and a rebound in technology fades.

“We’re starting to feel some of the knock-on effects from energy and distress in those markets,” said Steven Baffico, chief executive officer at Four Wood Capital Partners in New York.

“Over the last couple of days, that’s spread into the financial system. It’s difficult to find a lot of momentum to the upside for any sustained period of time,” he said.

LONDON – Weaker mining and banking stocks have kept Britain’s top share index mired near three-year lows as concern lingers over the global economy and the health of the financial sector.

Signs of a global economic slowdown have hit world stock markets since the start of 2016, and raised concerns about the stability of the European banking system.

“There are worries about global growth, and fears of a recession are starting to emerge. The banks are getting hit hard,” Berkeley Futures associate director, Richard Griffiths, said.

Goldman Sachs analysts wrote that while there were no signs of any strain in terms of euro or US dollar funding in money markets, market liquidity had nevertheless reduced.

HONG KONG – Asian shares were scorched as stability concerns put a torch to European bank stocks and sent investors stampeding to only the safest of safe-haven assets.

As fear overwhelmed greed, yields on longer-term Japanese bonds fell below zero for the first time, the yen surged to a 15-month peak and gold reached its most precious since June.

Japanese Finance Minister Taro Aso felt moved enough to warn that the yen’s rise was “rough”, something of an understatement as the Nikkei nosedived 5.4 per cent on Tuesday.

“Sentiment towards risk assets remained extremely bearish and price action reflected a market that may be capitulating,” said Jo Masters, a senior economist at ANZ.

WASHINGTON – US President Barack Obama has proposed a $US4.1 trillion spending plan for 2017 in a final White House budget that lays out his priorities for fighting Islamic State, raising taxes on wealthy Americans and helping the poor.

US companies advertised more available jobs in December and there were more resignations in a trend that could lift wages in the coming months.

ATLANTA, Georgia – Coca-Cola has reported fourth-quarter net income of $US1.24 billion ($A1.75 billion).

ENERGY

Oil prices have sunk, with benchmark Brent crude prices falling to their lowest in two weeks and US crude prices falling below $US28 a barrel to their lowest in just under three weeks.

Forecasts for more growth in US crude stockpiles and weak demand forecasts contributed to the plunge.

PRECIOUS METALS

Gold has turned higher but hovers beneath the previous session’s seven-and-a-half-month high of $US1,200 an ounce, buoyed by risk aversion as equities remain volatile and the dollar extends losses.

Analysts said the metal looked overbought and fell short of testing key psychological resistance at $US1,200 an ounce, attracting profit-taking earlier in the session.

“We need a stabilisation in stock markets and as long as that does not happen, risk aversion will remain elevated and very supportive (for gold),” said Commerzbank analyst Carsten Fritsch.

“(Gold) absorbed a decent amount of profit taking and liquidation, and it stood up well absorbing it,” said James Steel, chief metals analyst for HSBC Securities in New York, about earlier market weakness.

BASE METALS

Copper prices have tumbled to two-week lows as the rout in equities undermines growth sentiment, though volumes are subdued by a holiday in China and a market waiting for clues on demand prospects in the country.

Traders said falling equity prices were being viewed as a sign of problems for the global economy.

China, which accounts for nearly half of global copper consumption estimated at 22 million tonnes in 2016, started its week-long Lunar New Year holiday on Monday.

“We’ll have to wait and see what happens when it comes back (after the holiday),” said Macquarie analyst Vivienne Lloyd.

“We’re waiting for production reports from the miners, which should be interesting.”

ASX stocks to watch Wednesday, February 10

AGL – AGL ENERGY: AGL Energy is expected to release half-year results.

BLD – BORAL: Boral is expected to report a rise in first-half net profit, bolstered by strong demand for its building products and cost cutting.

CAR – CARSALES.COM: Caresales is expected to release half year results.

CBA – COMMONWEALTH BANK OF AUSTRALIA: Commonwealth Bank has lifted first half cash profit four per cent to a record $4.804 billion.

CIM – CIMIC: CIMIC is slated to post full year results on Wednesday

CPU – COMPUTERSHARE: Computershare is expected to post its half-year results on Wednesday.

OZL – OZ MINERALS: OZ Minerals is expected to post its half-year results on Wednesday.

SGP – STOCKLAND: Stockland is expected to post its half-year results on Wednesday.

AAP

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