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Market report: Tuesday, February 16

Business

UPDATED: The Australian share market has opened higher, led by big gains in the energy and resources sectors.

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Origin Energy, Santos, Woodside Petroleum and Orora were among the big gainers in the first few minutes of Tuesday’s trade as energy stocks rose after oil prices held on to recent price increases and even rose modestly.

At 10.20am (AEDT), the benchmark S&P/ASX200 was up 22 points, or 0.45 per cent, at 4,865.5 points, with energy stocks up 1.6 per cent.

BHP Billiton rose 36 cents, or 2.25 per cent, to $16.34, and Rio Tinto lifted $1.01, to 2.39 per cent, to $43.23, while Fortescue Mining Group was up 13.5 cents, or 7.92 per cent, at $1.84.

The upward trajectory of the miners and energy firms helped offset weakness in the financials, with Commonwealth Bank dragging the sector down by trading more than three per cent lower on its ex-dividend date.

“We’re probably in for a pretty good day,” optionsXpress analyst Ben Le Brun said.

“It’s going to be the energy and materials sectors. They were the two best yesterday and it looks like they’re going to be the shining lights again today.”

Origin was up six cents, or 1.62 per cent, at $3.76; Santos lifted five cents, or 1.55 per cent, to $3.27; Woodside rose 39 cents, or 1.4 per cent, tot $28.34; and Orora gained 7.5 cents, or 3.36 per cent, to $2.305.

Among the big four banks, National Australia Bank was up 13 cents, or 0.53 per cent, at $24.88 after reporting an eight per cent increase in first quarter cash earnings to $1.7 billion.

ANZ was also higher, rising 14 cents, or 0.61 per cent, to $22.98, but Westpac was down four cents, or 0.14 per cent, to $28.59. CBA dropped $2.48, or 3.34 per cent, to $71.82.

Vaccine giant CSL was up $2.34, or 2.24 per cent, at $106.77 after lifting its half year net profit 3.8 per cent.

At 10.10am (AEDT) on Tuesday, the benchmark S&P/ASX200 index was up 22.0 points, or 0.45 per cent, at 4,865.5, while the broader All Ordinaries index was up 24.2 points, or 0.49 per cent, at 4,917.6.

On the ASX 24, the share price futures index was up 46 points at 4,831, with 7,340 contracts traded.At 6.45am (AEDT) on Tuesday, the share price index was up 35 points at 4,820

In local economic news on Tuesday, the Reserve Bank of Australia releases its February board meeting minutes, while the Australian Bureau of Statistics is due to release December lending finance figures.

The ANZ-Roy Morgan weekly consumer confidence survey is also due out.

In equities news, National Australia Bank is expected to release its first quarter trading update, while CSL, Pacific Brands, The Star Entertainment Group, Greencross, Bradken, Monadelphous and GWA Group are among the companies slated to post half year results.

InvoCare is due to release full year results.

In Australia, the market on Monday closed more than 1.5 per cent higher with investors flocking to BHP Billiton, Rio Tinto and banking stocks.

The benchmark S&P/ASX200 index was was up 78.2 points, or 1.64 per cent, at 4,843.5 points.

The broader All Ordinaries index was up 76.8 points, or 1.59 per cent, at 4,893.4 points.

NEW YORK – Wall Street was closed on Monday for the President’s Day public holiday.

LONDON – Britain’s top equity index has risen, extending its recovery from the three-year lows it hit earlier in February, helped by a surge in Reckitt Benckiser.

The FTSE 100 index on Monday closed up 116.68 points, or 2 per cent, at 5,825.17 points.

Consumer goods group Reckitt rose 6.8 per cent, posting its biggest one-day rise since February 2009.

Reckitt posted stronger-than-expected full-year sales, helped by its focus on faster-growing consumer health products.

“These were a phenomenal set of results,” said Bernstein analyst Andrew Wood. “RB blew away consensus on every major metric.”

HSBC also advanced 1.4 per cent. HSBC, Prudential Plc and Standard Chartered benefited from a rise in shares in Hong Kong, where they have major operations.

HSBC also said it would keep its business headquarters in Britain .

China’s January trade performance came in worse than expected as tepid demand persisted.

But, some traders took reassurance from comments by China’s central bank governor that there was no basis for a continued depreciation in the yuan.

“The trade numbers are particularly disappointing, as we had started to see some recovery and we expected it to continue on the basis of the CNY’s depreciation,” said Guy Foster, head of research at Brewin Dolphin.

“Nevertheless, markets are in good spirit, partly because of reassuring comments from the PBoC that the depreciation may have largely run its course.”

HONG KONG – Asian stocks mainly rose as China’s central bank fixed the yuan at a much stronger rate and oil prices held on to recent gains, easing fears of global deflation.

The rally belied a string of poor economic data from Beijing to Tokyo as demand for safe-haven assets waned.

“We had a very strong statement from the Chinese authorities signalling they are committed to a stable currency and that’s helped sentiment … safe-haven flows have unwound somewhat,” said RIA Capital Markets strategist Nick Stamenkovic.

China’s spot yuan jumped more than one per cent to 6.4934 per US dollar – its firmest this year – after the People’s Bank of China set its daily midpoint 0.3 per cent stronger and the head of the bank was quoted as saying speculators should not be allowed to dominate market sentiment.

China’s weak exports and imports in January, down 11.2 per cent and 18.8 per cent year-on-year, respectively, seemed not to disturb markets. The resulting jump in the country’s trade surplus to $US63 billion ($A88.53 billion) for the month might have helped, as that may offer support to the yuan.

The disconnect between markets and economics was perhaps starkest in Japan, where the Nikkei jumped more than seven per cent, despite data showing the economy contracted by an annualised 1.4 per cent in the last three months of 2015, more than expected.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.3 per cent.

Hong Kong stocks posted their best performance in five months. The benchmark Hang Seng index jumped 3.3 per cent, to 18,918.14 points.

Having declined nearly 3 per cent in early trade, both the CSI300 index and the Shanghai Composite Index closed the session down only 0.6 per cent, at 2,946.71 points and 2,746.20 points, respectively.

WELLINGTON – The S&P/NZX 50 Index advanced 100.3 points, or 1.7 per cent, to 6034.29.

ENERGY

Oil has held on to the solid gains made at the end of last week, with both Brent and WTI crude edging up further.

Brent and US crude futures edged up on Monday adding to Friday’s 10 per cent surge on speculation that the Organization of the Petroleum Exporting Countries (OPEC) might finally agree to cut output to reduce a world glut.

Brent was up 59 US cents at $US33.95 a barrel at 0744 AEDT on Tuesday, while WTI was up 32 US cents at $29.76.

PRECIOUS METALS

US markets were closed on Monday for the Presidents Day public holiday.

BASE METALS

Copper and nickel have risen as hopes for more stimulus measures resurface after Chinese traders, returning from a week-long holiday, digested worse-than-expected trade data.

Also helping the metals, oil held on to recent gains, while China’s central bank fixed the yuan at a much stronger rate. A stronger yuan reduces the risk that China will export deflation to the world.

“There’s a sense of calm. The (China) trade stats … may be … fuelling hopes for more stimulus that will bolster demand,” said Societe Generale analyst Robin Bhar.

“There’s more scope for risk fears to come back … and metals are still well supplied … but we’re building a floor, the bad news is in the price.”

London Metal Exchange three-month copper rose 1.4 per cent to $US4,562 a tonne, after ending last week down more than two per cent.

China’s January exports fell for a seventh straight month while imports tumbled for a 15th straight month.

Exports declined even though China allowed the yuan to weaken sharply, underlining the weakness in global growth.

Nickel rose strongly, up 5.6 per cent to $US8,260, while aluminium lifted 0.7 per cent to $US1,511.

But lead fell 1.00 per cent to $US1,831, having earlier hit its highest since July at $US1,865.

Zinc lost 1.2 per cent to $US1,685 and tin fell 0.6 per cent to $US15,305.

ASX stocks to watch Tuesday, February 16

BKN – BRADKEN: Bradken is slated to post half year results on Tuesday.

CSL – CSL: CSL is slated to post half year results on Tuesday.

GWA – GWA GROUP: GWA Group is slated to post half year results on Tuesday.

GXL – GREENCROSS: Greencross is slated to post half year results on Tuesday.

IVC – INVOCARE: InvoCare is expected to release full year results.

MND – MONADELPHOUS: Monadelphous is slated to post half year results on Tuesday.

NAB – NATIONAL AUSTRALIA BANK: National Australia Bank is slated to release its first quarter trading update.

PBG – PACIFIC BRANDS: Pacific Brands is slated to post half year results on Tuesday.

SGR – THE STAR ENTERTAINMENT GROUP: The Star Entertainment Group is slated to post half year results on Tuesday.

WBC – WESPAC BANKING CORPORATION: Westpac New Zealand will refund $NZ4 million ($A3.73 million) to more than 100,000 customers who were overcharged when getting cash out of Australian ATMs.

AAP

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