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Market report: Wednesday, February 17

Business

The Australian share market has opened slightly lower despite a positive finish on the US market overnight.

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The Dow Jones closed a solid 1.38 per cent higher in the second-straight day of US gains.

At home, a profit slump and reduced dividends reported by energy giant Woodside Petroleum has weighed on the energy and mining sectors, which dragged the ASX/200 down 0.11 per cent.

Macquarie Private Wealth market analyst Lucinda Chan was surprised given the way the US market went.

“I thought at least it would open with a bit of green and then soften afterwards,” she said.

Ms Chan said energy and materials companies would dictate the trade on Wednesday, especially after Woodside Petroleum’s drab profit print.

“Woodside hasn’t really helped the sector. It will lead the other stocks in that sector down,” Ms Chan said.

BHP Billiton was down 48 cents to $16.11, Rio Tinto was down 51 cents to $42.69 and Woodside was down 94 cents to $28.60 at 1015 AEDT on Wednesday.

With ANZ’s trading update showing it has lifted first quarter cash earnings 3.5 per cent to $1.85 billion, Ms Chan said she was also surprised to see the financial stocks “not looking too good”.

ANZ was down 17 cents to $23.10, the Commonwealth Bank was down 11 cents to $72.49 and Westpac and the National Australia Bank were down very slightly by three and four cents respectively.

Ms Chan said companies from other sectors told a different story but they wouldn’t sway the market much.

Beverages giant Coca Cola Amatil has revealed a 45 per cent rise in profits, while Lend Lease has reported a 12 per cent lift in first half profit to $353.8 million.

NEW YORK – Wall Street is higher, as investors go bargain hunting among beaten-down consumer discretionary, industrial and financial stocks.

Even a drop in crude oil prices, which has dictated the stock market’s move recently, failed to derail stocks. The energy sector was the lone laggard among the 10 major S&P sectors, as oil prices fell.

“We are seeing some bargain hunting but it isn’t enough as yet to reverse the negative sentiment,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

Investors are holding the most cash since November 2001, which should be interpreted as an “unambiguous buy” signal, according to Bank of America Merrill Lynch in its February global fund managers survey.

LONDON – Britain’s top share index has risen in choppy trade, with oil shares holding on to gains after news that some oil producing countries were co-operating to tackle a supply glut.

Oil shares, as well as the index as a whole, gave up some gains along with the price of Brent crude after a meeting of oil ministers from Saudi Arabia, Russia, Qatar and Venezuela produced only the promise of a freeze, not a cut, in supply. The deal was also contingent on other producers joining in.

“All they’ve agreed to is not increasing output, and that doesn’t include Iran,” said Alastair McCaig, market analyst at IG.

Azerbaijan has also said it has no plans to freeze production.

“People are hopeful when they hear this talk of output freezes, but it’s already now looking as if that’s not going to happen,” said Augustin Eden, research analyst at Accendo Markets.

HONG KONG – Asian shares extended gain as a combination of stabilising Chinese markets, rebounding oil prices and solid US consumption data prompted investors to look for bargains after last week’s rout.

“Before the start of the Lunar New Year, there were worries about Chinese shares and a possible further fall in the yuan.

“But since the resumption of trading on Monday, Chinese markets have been surprisingly steady,” said Koichi Yoshikawa, executive director of financial markets at Standard Chartered Bank.

Solid US data is also improving investor sentiment given that they are counting on US growth to lead the global economy,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities.

SYDNEY – The Australian market looks set to open flat despite gains on global markets as investors went bargain hunting.

At 0845 AEDT on Wednesday, the share price index was up six points at 4,881.

In local economic news on Wednesday, the Westpac-Melbourne Institute Leading Indexes of Economic Activity is due out.

In equities news, ANZ is expected to release its first quarter trading update, while Insurance Australia Group, Domino’s Pizza, Lend Lease, Primary Healthcare, Sonic Healthcare, Arrium, The Reject Shop, Ardent Leisure, Dexus Property Group, Vicinity Centres (formerly Federation Centres), Flexigroup, A2 Milk and Seven West Media are among the companies slated to post half year results.

Coca-Cola Amatil and Woodside Petroleum are due to release full year results.

ENERGY

Top oil exporters Russia and Saudi Arabia have agreed to freeze output levels but say the deal is contingent on other producers joining in, a major sticking point with Iran absent from the talks and determined to raise production.

The uncertainty around the negotiations dented expectations for a supply cut and sent oil tumbling off its highs.

PRECIOUS METALS

Gold has fallen for the third straight session, as global equity markets and the US dollar rose, depressing interest in gold as a safe-haven asset and taking it further below last week’s one-year high.

“Equity markets are continuing to run and that obviously has taken a bit of the safe-haven demand component behind metals,” said David Meger, director of metals trading for High Ridge Futures in Chicago.

“On top of that, renewed dollar strength has continued to pressure the metals complex overall.”

BASE METALS

Copper prices have steadied, supported by some positive data from China, but doubts over demand in the top consumer and a stronger US dollar gave the bears a slight edge.

News that Chinese banks armed with fresh lending quotas extended a record 2.51 trillion yuan of new loans in January suggests that Beijing is keeping monetary policy loose to counter a protracted economic slowdown, boosting sentiment for metals.

“The data is distorted because of (China’s) New Year holiday, but it is still quite encouraging. The loans data is positive for demand and though copper imports were softer, they are still high,” Capital Economics’ Caroline Bain said.

However, many expect China’s copper imports to slide over the coming months because much of the buying in December and January was restocking, analysts said.

NEWS

Optimism in the US dollar, equity markets and oil prices has pushed the Australian dollar lower.

At 0845 AEDT on Wednesday, the local unit was trading at 71.09 US cents, down from 71.48 cents on Tuesday.

And the Australian share market looks set to open flat despite gains on global markets as investors went bargain hunting.

At 0845 AEDT on Wednesday, the share price index was up six points at 4,881.

ELSEWHERE:

BANGKOK – Australian health and fitness operator Jetts is focusing on the Thai urban middle class by opening its first commercial gym in Thailand.

HAVANA – American and Cuban officials have signed an arrangement to restore scheduled air service between the two countries after half a century, setting off competition among US airlines for the best routes to the Caribbean island.

TRENTON, New Jersey – Drugmaker Pfizer Inc has swung to a fourth-quarter financial loss, instead of a modest profit, as a result of a just-announced charge to settle a long-running federal case over reimbursements for its former blockbuster heartburn pill.

STOCKS TO WATCH ON THE AUSTRALIAN STOCK EXCHANGE ON WEDNESDAY, FEB 17:

AAD – ARDENT LEISURE

Ardent Leisure is slated to release its half year results on Wednesday.

ANZ – ANZ BANKING GROUP

ANZ on Wednesday is expected to release its first quarter trading update.

ARI – ARRIUM

Arrium is listed to post half year results on Wednesday.

CCL – COCA-COLA AMATIL

Coca-Cola Amatil is slated to post full year results.

DMP – DOMINO’S PIAAZ

Domino’s Pizza is expected to post half year results on Wednesday.

DXS – DEXUS PROPERTY GROUP

Dexus Property Group is slated to release half year results.

FXL – FLEXIGROUP

Flexigroup is expected to release half year results.

IAG – INSURANCE AUSTRALIA GROUP

Insurance Australia Group is slated to post half year results on Wednesday.

LLC – LEND LEASE

Lend Lease on Wednesday is slated to post half year results.

PRY – PRIMARY HEALTHCARE

Primary Healthcare on Wednesday is slated to post half year results.

RIC – RIDLEY CORPORATION

Ridley Corporation is expected to release its first half results on Wednesday

SHL – SONIC HEALTHCARE

Sonic Healthcare is listed to release half year results.

TRS – THE REJECT SHOP

The Reject Shop on Wednesday is slated to post half year results.

VCX – VICINITY CENTRES

Vicinity Centres (formerly Federation Centres) is due to release half year results on Wednesday.

WPL – WOODSIDE PETROLEUM

Woodside is scheduled to release its full year results.

AAP

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