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Market report: Wednesday, March 2

Business

The Australian market looks set to open higher after Wall Street surged with encouraging US factory and construction data suggesting the world’s biggest economy was regaining momentum.

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At 8.30am (AEDT) on Wednesday, the share price index futures contract was up 92 points at 4,982.

In local economic news on Wednesday, the Australian Bureau of Statistics is due to release national accounts data, including gross domestic product, for the December quarter.

The Housing Industry Association’s new home sales figures for January are also due out.

The Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) Outlook 2016 conference continues in Canberra

In equities news, the High Court is expected to release its judgment in the Tabcorp versus the State of Victoria matter.

Tabcorp appealed against The Court of Appeal of the Supreme Court of Victoria in December 2014 ruled in favour Victoria over Tabcorp’s claim for a payment of $686.83 million.

Meanwhile, Optus chairman Paul O’Sullivan is slated to speak at a Trans-Tasman Business Circle lunch in Sydney.

 

The local unit was trading at 71.79 US cents, up from 71.46 cents on Tuesday.

And the Australian share market looks set to open higher after Wall Street surged with encouraging US factory and construction data suggesting the world’s biggest economy was regaining momentum.

NEW YORK – Wall Street has surged to its highest since early January, led by financial and technology stocks after encouraging US factory and construction data suggested the world’s biggest economy was regaining momentum.

While manufacturing activity contracted in February, steadying new orders growth and improving inventories offered signs of stability.

Construction spending in January surged to the highest since 2007, while strong car sales also boosted sentiment. The data strengthened expectations the US economy is gaining steam after slowing in the fourth quarter.

“What was the spin since last August? That the Chinese slowdown is going to affect the rest of the world,” said Donald Selkin, chief market strategist at National Securities in New York. “Now we’re seeing there’s virtually no chance we’re going to have a recession.”

LONDON – Britain’s top equity index rose, as a possible counterbid lifted shares in the London Stock Exchange, offsetting drops in Barclays, Ashtead and Glencore.

“Mergers and acquisitions activity is aiding sentiment and giving the FTSE a boost,” said Brenda Kelly, head analyst at London Capital Group.

The rise in LSE offset the negative effects of a 10 per cent slump in Barclays, after the British bank reported lower profits, slashed its dividend and announced a restructuring entailing the sale of its Africa business.

“Overall these are disappointing results, particularly due to the lowering of the dividend and financial targets,” said Nicolas Ziegelasch, head of equity research at Killik & Co, commenting on Barclays’ results.

A top European Union official has warned of significant consequences for Britain’s financial services industry and access to the single market if it votes to leave the bloc.

HONG KONG – Chinese shares rose after the central bank’s surprise monetary policy easing, shrugging off disappointing manufacturing and service sector surveys that highlighted the wider challenges faced by the world’s second-largest economy.

Much of the market’s attention was on the yuan, which was firmer after the central bank set a higher midpoint reference rate for the start of trade, belying fears the policy easing could put the currency under fresh downward pressure.

“We think the PBOC easing is consistent with continued weaker-than-expected economic activity and downside risks to growth,” wrote Jian Chang, an analyst at Barclays. “It should help to support market sentiment in the near term.”

WASHINGTON – US factory activity contracted for the fifth straight month in February. US construction spending increased in January by the largest amount in eight months as weakness in homebuilding was offset by a solid rebound in nonresidential activity.

ENERGY

Oil prices have risen after Russia said it was close to sealing an international deal to cut production levels following a cap proposal floated by it, Saudi Arabia, Venezuela and Qatar in February.

Addressing top state and private sector oil executives, Putin said Energy Minister Alexander Novak “is agreeing and practically has agreed with his partners in the global market” to cap oil output, in comments reported by state news agency Tass.

Plus, Iran still faces constraints on its oil exports with buyers cautious about boosting trade immediately because of banking and ship insurance difficulties, a senior Iranian oil official said, despite seeing a “tangible” rise in shipments in February.

PRECIOUS METALS

Gold has turned lower, as the US dollar and global equity markets rose on better-than-expected US data, fuelling speculation the Fed will raise US interest rates.

Gold prices were higher earlier, buoyed by weak Chinese manufacturing data and comments by New York Federal Reserve President William Dudley, who said he sees downside risks to his US economic outlook.

This could flag a longer pause before the Fed’s next interest-rate rise than he and his colleagues had earlier signalled.

“Some US dollar strength (is putting) a headwind into the gold market here, even though you’ve got a lot of speculation now moving to be long gold and (monthly) exchange-traded product flows rising to the second-highest level since February 2009,” said Rob Haworth, senior investment strategist for US Bank Wealth Management in Minneapolis.

BASE METALS

Copper prices have risen as expectations of further efforts by China to boost its economic growth lifted sentiment despite more economic data pointing to a continued slowdown in the world’s second-biggest economy.

China’s manufacturing sector shrank in February, surveys showed, prompting smaller companies to shed workers at the fastest pace in seven years.

“The numbers disappointed, but they weren’t a big shock. Everybody knows manufacturing is weak and there is overcapacity. Copper is relaxed about the (Chinese) numbers,” said Julius Baer analyst Carsten Menke.

Another focus was a survey of US manufacturing by the Institute for Supply Management, showing the sector shrank in February, but at a slower pace than in January. The index rose to 49.5 from 48.2 in January, compared with a consensus of 48.5.

ASX stocks to watch Tuesday, March 2

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTO

Shares in the mining giants could enjoy a lift on Tuesday, as the price of iron ore tips above the $US50 mark, lifting $US1.82 to $US51.44.

CWN – CROWN RESORTS: The Chinese territory of Macau has posted its best monthly gambling revenue performance since October last year, boosted by an increase in tourist numbers over the Lunar New Year holiday in the world’s largest casino hub.

FXJ – FAIRFAX MEDIA

NEC – NINE ENTERTAINMENT

NWS – NEWS CORP

PRT – PRIME MEDIA

SWM – SEVEN WEST MEDIA

TEN – TEN NETWORK HOLDINGS

Australian media companies are finally free to marry as the federal government moves to abolish archaic legislation that has stifled the industry.

ORG – ORIGIN ENERGY

STO – SANTOS

Energy companies may see their shares rise with the price of oil gaining overnight, with WTI oil lifting 1.75 per cent to $US34.34. Brent crude rose 0.71 per cent, to $US36.83.

TAH – TABCORP: The High Court is expected to release its judgment in the Tabcorp versus the state of Victoria matter, relating to Tabcorp’s appeal of an earlier decision over its $686.83 million claim.

AAP

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