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Market report: Friday, February 25

Business

The Australian share market has opened slightly higher.

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At 10.10am (AEDT) on Friday, the benchmark S&P/ASX200 index was up 3.9 points, or 0.08 per cent, at 4,885.1, while the broader All Ordinaries index was up 5.5 points, or 0.11 per cent, at 4,950.2.

On the ASX 24, the share price futures index was up 21 points at 4,860, with 10.116 contracts traded.

Earlier at 8.42am (AEDT) on Friday, the share price index was up 32 points at 4,871.

Locally, no major economic news is expected on Friday.

In equities news, Woolworths, Harvey Norman, Billabong, Super Retail Group, Link Administration, Beach Energy and Monash IVF are expected to post half year results.

The Australasian Oil & Gas exhibition and conference continues in Perth.

NEW YORK – Wall Street has gained as strong US manufacturing data points to a recovery in the struggling sector and some investors saw opportunities after weeks of volatility.

Orders for US durable goods rose more than expected in January as demand picked up across the board, offering a ray of hope for the downtrodden manufacturing sector.

“I have a lot of people calling me and saying:’Hey, I’ve got $50,000 in the bank earning zero per cent. Is it time to put it to work?’,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma, which has about $US50 million in assets under management.

 

LONDON – Britain’s top share index closed higher, as a rally in Lloyds and RSA following their results led gains by financial-services share.

Lloyds rose 13.6 per cent after it reported a rise in profits and said it would pay a special dividend of 0.5 pence a share, demonstrating its recovery from the financial crisis.

Lloyds was bailed out in 2009, and the government ended up owning a 43 per cent stake in the bank. The government has gradually sold off shares, reducing it stake to around nine per cent, but in February postponed plans to sell more of its stake because of market volatility.

“After today’s strong rise, the price of Lloyds is hovering close to the government’s break-even price,” said Laith Khalaf, senior analyst at Hargreaves Lansdown, but we doubt the Chancellor will bring the public sale back to the table while the Brexit vote threatens to destabilise financial markets.”

HONG KONG – Asian shares slipped as crude oil prices seesawed and Chinese shares dived, rekindling anxiety about the impact of high market volatility on the global economy on the eve of a G20 meeting in Shanghai.

Market players said investors have focused on the Feb 26-27 G20 meeting of finance ministers and central bankers in Shanghai as one potential catalyst for troubled, directionless markets.

“The IMF has suggested that members of the G-20 summit use the meeting as a means of discussing a coordinated policy response for what could otherwise be a crisis,” said Stefan Worrall, director of Japan equity sales at Credit Suisse in Tokyo.

“I think investors are closely watching the G-20 for any signs of a coordinated fiscal response.”

WASHINGTON – More people sought US unemployment benefits last week, though the figure remained at a low level that suggests layoffs aren’t widespread.

Orders to US companies for long-lasting manufactured goods advanced in January at the strongest pace in 10 months.

BRUSSELS – Official figures state inflation across the 19-country eurozone was lower than previously thought in January – a development that’s likely to further strengthen expectations that the European Central Bank will unveil further stimulus next month.

ENERGY

Oil prices have rebounded from early session losses of around two per cent to be two per cent higher with Brent crude rising above $US35 and US crude above $US33.

Brent crude was up 80 US cents, or 2.32 per cent, at $US35,21 a barrel at at 3.45pm Thursday US eastern time (0745 Friday AEDT) while WTI was up 89 US cents, or 2.77 per cent, at $33.04 a barrel.

PRECIOUS METALS

Spot gold has risen, buoyed by a strong technical formation and the potential for a bullish “golden cross” to form, while the futures market pared losses after feeling earlier pressure from the strong equity markets.

“Gold is still holding above that pennant formation. It’s muted as a result of strength in equities,” said Eli Tesfaye, senior market strategist for brokerage RJO Futures in Chicago, referring to gold futures.

“Gold has put in a very good performance and the fact that we are seeing higher lows and higher highs points to a bullish scenario,” MKS head of trading Afshin Nabavi said.

“Overall, buying is safe-haven related … if we can stabilise around $US1,250, a broader range of investors will come in,” he added.

BASE METALS

Copper prices have fallen, reversing earlier gains as worries about demand in top consumer China were reinforced by equity market losses in Shanghai, but output cuts to help balance the market limited the losses.

Traders said the mood had turned negative after New York opened and reacted to the more than six per cent drop in Chinese equities, their biggest one-day loss in a month.

“It brought back into focus the problems with China’s economy and demand,” a trader said.

Copper demand growth in China slowed to about two per cent in 2015 and analysts expect a similar or lower number in 2016.

Analysts estimate about 600,000 tonnes of mined copper output has already been axed and expect up to 200,000 tonnes of additional cuts in 2016, leaving the market more balanced.

STOCKS TO WATCH ON THE AUSTRALIAN STOCK EXCHANGE ON FRIDAY, FEB 26:

BBG – BILLABONG: Billabong is slated to post half year results.

HVN – HARVEY NORMAN: Harvey Norman is is expected to release half year results on Friday.

MVF – MONASH IVF GROUP: Monash IVF Group is slated to release half year results.

SUL – SUPER RETAIL GROUP: Super Retail Group is listed as releasing half year results on Friday.

WOW – WOOLWORTHS: Woolworths is slated to post half year results.

AAP

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