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Market report: Friday, February 19

Business

UPDATED: The Australian dollar has lost some steam as volatile oil prices ease off their highs.

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At noon (AEDT) on Friday, the currency was trading at 71.30 US cents, down from 71.60 cents on Thursday.

Crude oil prices pulled back overnight after rallying almost 23 per cent in the five trading sessions to Thursday.

Bell Direct analyst Julia Lee said the slide in early trade was expected and was small in comparison to the gains made earlier in the week.

“We’re not going to see big losses on the market today,” Lee said.

Investors in US stocks paused overnight with the Dow Jones industrial average down 0.25 per cent and the S&P500 sliding 0.47 per cent.

On the ASX, the banks, big miners and energy stocks were all lower at 10.20am (AEDT) on Friday, with the benchmark 200 companies down 0.28 per cent.

“Although we’ll likely see the energy sector in the red today, it’s been a key driver of the market in the past week,” Ms Lee said.

“The first six weeks of the year have been just horrible.”

Origin Energy slid more than two per cent, or 10 cents, to $4.13 and Woodside Petroleum fell 33 cents to $28.42.

BHP Billiton fell by three cents to $16.92 while Rio Tinto was down five cents at $43.35.

Lee said US banks were under pressure overnight, and that had filtered through to banks at home, creating a “major drag” on the market.

The big four dropped between 0.3 and 0.85 per cent, with the ANZ the most affected, down 20 cents to $23.55.

Lee said company earnings reports that would impact the market on Friday include building products supplier James Hardie, which has reported a 76 per cent decline in December quarter profit to $35.51 million.

However, investors appeared unperturbed, with the company’s shares soaring 86 cents, or 5.1 per cent, to $17.52 at 1040 AEDT.

By contrast, organic baby food maker Bellamy reported a quadrupling of half year profit to $13.7 million. But its shares had plunged 12 per cent, or $1.70 to $12.20.

Earlier at 8.45am (AEDT) on Friday, the share price futures index was down 24 points at 4,932.

No major economic news is expected on Friday.

In equities news, Medibank Private, Fairfax Media, Automotive Holdings, Sims Metal Management and Beacon Lighting are among the companies slated to post half year results.

Santos and Duet Group are due to release full year results while James Hardie is expected to release third quarter results.

The local unit was trading at 71.57 US cents, down from 71.60 cents on Thursday.

NEW YORK – Wall Street is lower, snapping a three-day rally, after a slump in Wal-Mart weighed on retail stocks and oil prices retreated.

The three-day rally, led by beaten-down sectors such as financials, materials and energy, boosted the benchmark S&P 500 5.3 per cent. But such has been the rout since the start of 2016 that the index is still down nearly 6.0 per cent this year.

“I think today, at least up until this point, is somewhat of a day of pause after a quite strong three-day rally due to mostly short covering,” said Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.

Economic data provided some relief. A report showed US jobless claims unexpectedly fell to 262,000 last week, pointing to labor market strength that could keep a Federal Reserve rate hikes on the table this year.
The Australian dollar has fallen as oil prices ease.

LONDON – Britain’s top share index has ended a four-day winning streak, led lower by major mining stocks and hit by growing concern over the potential impact of Britain’s exit from the European Union.

In a note sent to media on Thursday, major bond investor PIMCO, whose flagship fund alone manages $US90 billion ($A125.55 billion) in assets, said it saw a 40 per cent chance of “Brexit” at a referendum potentially later this year.

Many investors remain concerned about the impact on mining and energy shares of a slowdown in China, a leading consumer of commodities.

“Investors must remember that oil prices are still painfully low, while concerns over the global economy remain elevated, which should weigh heavily on sentiment,” said FXTM research analyst Lukman Otunuga.

HONG KONG – Asian stocks rose across the board as crude oil extended gains on hopes that big producers will cap output, improving investor sentiment for riskier assets.

Crude oil remained the main market driver. US crude was up 2.1 per cent at $US31.34 a barrel following a 7.0 per cent jump on Wednesday after Iran voiced support for a Russia-Saudi-led move to freeze production to deal with the market glut that had pushed prices to 12-year lows.

“While there has been some confusion as to whether ‘support’ equals action, oil traders are simply relieved that the world’s fourth-largest holder of oil reserves is willing to cooperate,” wrote Kathy Lien, managing director of FX strategy at BK Asset Management.

RIYADH – Saudi Arabia is “not prepared” to cut oil production, Agence France-Presse has reported, quoting the Saudi foreign minister Adel al-Jubeir.

DUBAI – The United Arab Emirates has thrown its support behind a plan involving oil powerhouses Russia and Saudi Arabia to freeze oil production levels in an attempt to halt the slide in crude prices.

WASHINGTON – The World Bank says it is making $US150 million ($A209.25 million) in financing immediately available to help combat the Zika virus outbreak in affected Latin American and Caribbean countries.

ENERGY

Brent crude is down nearly twoper cent while US, or WTI crude is heading to a one per cent fall as the commodity pares earlier gains after data showed a build in US crude oil inventories.

Oil also felt the impact of Saudi Arabia’s decision not to cut output.

Brent had earlier climbed above $US35 a barrel and has gained more than three per cent so far this week after Iran welcomed plans by Russia and Saudi Arabia to freeze output. US oil has gained 4.5 per cent so far this week.

PRECIOUS METALS

Gold prices have risen just over two per cent, reversing earlier losses and lifting silver, as US equities resumed their downward spiral, renewing bullion’s safe-haven appeal that has spurred the market’s biggest rally in years.

“The equities pulled back. Gold popped,” said Bob Haberkorn, senior market strategist at RJO Futures in Chicago.

“While equities are starting to come back and oil’s shown a little bit of life, gold is strengthening as the day goes on. The sentiment in gold right now is overwhelmingly bullish.”

BASE METALS

Copper prices have fallen as markets fret over demand in China, though expectations of further monetary stimulus in the country and firmer oil and equities have helped to limit losses.

Oil was trading around $US35 a barrel after Iran welcomed plans by Russia and Saudi Arabia to freeze output and an industry report showed a surprise drop in US inventories.

Demand from top consumer China has slowed alongside economic growth. Import data has shown some improvement, but confidence in future demand remains low.

“I expect to see higher prices. Risk appetite is coming back, as witnessed by higher equities, and we are likely to see more monetary stimulus coming from China,” said Commerzbank analyst Eugen Weinberg.

ASX stocks to watch Friday, February 19

3PL – 3P LEARING: 3P Learning is due to release half year results.

AHG – AUTOMOTIVE HOLDINGS: Automotive Holdings is expected to release half year results on Friday.

AYS – AMAYSIM AUSTRALIA: Amaysim Australia is listed as posting half year results.

BLX – BEACON LIGHTING: Beacon Lighting is slated to post half year results on Friday.

DUE – DUET GROUP: Duet Group is expectedt to release full year results.

FXJ – FAIRFAX MEDIA: Fairfax Media is slated to post first half results.

ILU – ILUKA RESOURCES: Iluka Resources is slated to post full year results.

JHX – JAMES HARDIE: Building products maker James Hardie is expected to release its third quarter results on Friday.

MPL – MEDIBANK PRIVATE: Medibank Private is due to release its half year results.

SGM – SIMS METAL MANAGEMENT: Sims Metal Management is slated to post half year results.

STO – SANTOS: Santos on Friday is expected to release its full year results.

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