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Market report: Monday, February 22

Business

UPDATED: The Australian stock market has opened marginally higher following a flat performance on Wall Street.

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US equities ended Friday little changed after a drop in resource stocks due to further falls in crude oil prices neutralised a rally in the technology and retail sectors.

And, with little global and domestic economic news directing investors, it is no surprise the local share market has had a fairly flat open, CMC Markets chief market analyst Ric Spooner says.

“The US market was flat on Friday and there hasn’t been a lot of change in terms of macro news to influence investors since then and this is reflected in our relatively flat open,” he said.

“One exception is the energy sector which is weaker this morning due to the softer oil price.”

At 10.15am (AEDT), among the energy players, Woodside Petroleum was down 70 cents, or 2.49 per cent, at $27.40, while Santos had lost eights cents, or 2.36 per cent, to $3.31 and Oil Search had dropped 10 cents, or 1.4 per cent, to $7.03.

The big four banks were mixed with ANZ down 11 cents at $23.29, and Westpac losing 9.5 cents to $29.685, but Commonwealth Bank was up 24 cents at $73.67 and National Australia Bank had lifted six cents to $25.68.

Among the companies to report on Monday was Southern Cross Austereo which has lifted first half profit 25.1 per cent. Its shares were up one cent at $1.095.

Shares in Brambles climbed 77 cents to $11.82 after it raised its full year guidance, and Bluescope Steel lifted 15 cents to $5.63 after it reported a half year net profit of $200.1 million, more than double last year’s.

Shares in private health insurer nib, which has reported a five per cent rise in first half profit, were up 22 cents at $3.50.

At 7.56am (AEDT) on Monday, the share price futures index was down one point at 4,919.

Locally, in economic news on Monday, Reserve Bank of Australia assistant governor for financial markets Guy Debelle is scheduled to deliver a speech at the KangaNews DCM Summit in Sydney.

MasterCard’s Australian SpendingPulse report, providing a macro-economic analysis of retail performance and spending in Australia is slated for launch, while the Commonwealth Bank business sales indicator for January is due out.

In equities news, BlueScope Steel, MacMahon Holdings, Southern Cross Media, PMP, Brambles, MyState and NIB are among the companies expected to post half year results, while Vodafone Hutchison and oOh! Media are slated to release full year results.

NEW YORK – Wall Street has ended little changed as Applied Materials helped lift the tech sector and offset a renewed drop in oil prices, with major indexes capping their best week of 2016.

The performance of equities has been tightly linked with that of oil. The commodity’s price fell four per cent on Friday as record high US crude stockpiles heightened supply concerns, and the S&P energy sector ended down 0.4 per cent.

“We have seen oil come back off and that has put some pressure on the market,” said Walter Todd, chief investment officer at Greenwood Capital Associates in Greenwood, South Carolina.

“Some of these earnings that we have gotten out of the past couple of days from retailers have not exactly been confidence inspiring.”

LONDON – Britain’s top share index fell as energy stocks came under pressure again from dropping oil prices, although the index recorded its best weekly performance since October following strong gains in the previous sessions.

Investors traded cautiously ahead of the outcome of a EU summit to negotiate new membership terms for Britain.

The meeting was forced into extra time on Friday as Prime Minister David Cameron struggled for a deal he could sell to sceptical British voters in a referendum.

“The political risks are hard to price in at the moment … There is clearly little appetite in building fresh long and/or short positions before more clarity on the issue,” Ipek Ozkardeskaya, analyst at London Capital Group, said.

SHANGHAI – China has removed the head of its securities regulator following a turbulent period in the country’s stock markets, appointing a top state banking executive as his replacement, as leaders move to restore confidence in the economy.

SAO PAULO – The Brazilian government has announced more than $A8 billion in spending cuts in its 2016 budget amid the country’s worst recession in decades.

LA PAZ – Repsol SA has discovered four trillion cubic feet of possible natural gas reserves in Bolivia that it will start tapping in 2019, the government and company say – a finding that could boost the Andean country’s reserves by 40 per cent.

BOGOTA – Citibank plans to sell the consumer banking operations it has run for a century in Argentina, Brazil and Colombia as South America’s three biggest economies suffer a major downturn.

HONG KONG – Asian shares slipped from near three-week highs as a rally in oil prices reversed and investors remained cautious about the outlook for the global economy.

“This week is the first sign of change I have seen in 2016,” Evan Lucas, market strategist at trading services provider IG, wrote in a note, referring to some the upswing in equities.”

But “most fund managers are nearing their maximum levels of cash under their respective mandates. This capital needs to be deployed to confirm the change is on”.

SAN FRANCISCO – Yahoo’s board has hired three investment banking firms to evaluate potential bids for its internet operations in the clearest sign yet that CEO Marissa Mayer may not have much more time to turn around the struggling company.

ENERGY

Oil prices have fallen with WTI crude falling back below the $US30 mark.

Brent futures slumped 3.7 per cent to $US33.01 a barrel while US, or WTI, crude fell 3.4 per cent to $US29.64.

Advances earlier in the week were sparked by moves by oil producers, including Saudi Arabia and Russia, to cap output were erased after a record buildup in US crude stockpiles kindled worries over persisting global oversupply.

Brent is now down 1.1 per cent for the week, while WTI crude is up 0.9 per cent.

PRECIOUS METALS

Gold has eased as investors cashed in some of the previous day’s two per cent gains, though expectations that rock-bottom interest rates would persist served to keep prices above $US1,225 an ounce.

Turmoil in the wider financial markets has been fuelling interest in the metal as a store of value while reducing the likelihood of further interest rate rises by the US Federal Reserve. That’s continuing to underpin gold.

“Momentum is strong. Yesterday, gold moved up even when the dollar was stronger, so for me that signals that it is mainly central bank-policy driven,” ABN Amro analyst Georgette Boele said.

“It just continues to build a base well above $US1,200,” said James Steel, chief metals analyst for HSBC Securities in New York.

BASE METALS

Copper, zinc and nickel prices have hit their highest levels in about two weeks on brighter prospects for Chinese demand and concern about the potential for looming shortages.

Copper was set to post a fourth weekly gain in five, as traders bought into low prices to build stocks ahead of a stronger season for demand in top user China.

“There are a number of factors that have come into play that suggests we’re at a market bottom,” said Wiktor Bielski, head of commodities research at VTB Capital in London, referring to the broad industrial metals market.

“You’ve got a change in fundamentals from surplus to deficit, you’ve got the dollar peaking and you’ve got help beginning to come in China from stabilisation and certainly a significant monetary boost.”

ASX stocks to watch Monday, February 22

BSL – BLUESCOPE STEEL: Bluescope Steel is slated to post half year results on Monday.

BXB – BRAMBLES: Brambles half year results

HTA – HUTCHISON AUSTRALIA: Vodafone Hutchison is scheduled to release full year results.

MAH – MACMAHON HOLDINGS: MacMahon Holdings on Monday is expected to release half year results.

MYS – MY STATE: MyState is slated to post half year results.

NHF – NIB HOLIDINGS: NIB half year results

PMP – PPMP: PMP is due to release half year results.

SXL – SOUTHERN CROSS MEDIA: Southern Cross Media is slated to post half year results on Monday.

AAP

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