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Market report: Friday, March 4

Business

UPDATED:  The Australian dollar is higher against a weaker greenback, and had little reaction to slightly disappointing retail sales figures.

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At noon (AEDT) on Friday, the currency was trading at 73.47 US cents, up from 73.17 cents on Thursday.

Australian retail spending rose by 0.3 per cent in January, just missing economists’ expectations.

A 0.5 per cent rise in household goods spending was behind the overall lift.

At 10.10am (AEDT) on Friday, the benchmark S&P/ASX200 index was up 6.9 points, or 0.14 per cent, at 5,088.0, while the broader All Ordinaries index was up 7.6 points, or 0.15 per cent, at 5,149.8.

On the ASX 24, the share price futures index was up four points at 5,081, with 9,594 contracts traded.

Earlier, the Australian market looked set to open flat following three straight days of gains and after Wall Street regained ground from early losses ahead of a key jobs report.

At 8.05am (AEDT) on Friday, the share price index futures contract was up five points at 5082.

In local economic news on Friday, the Australian Bureau of Statistics is due to release retail trade figures for January.

The Insurance Council of Australia has its annual forum with assistant treasurer Kelly O’Dwyer and federal opposition treasury spokesman Chris Bowen, speaking at the Hilton Hotel in Sydney.

The Australian Institute of Company Directors conference continues in Melbourne, while the Women In Resources Awards is on in Perth.

No major equities news is expected.

The Australian dollar is refusing to roll over, soaring to a three-month high on the back of disappointing US economic figures.

The local unit was trading at 73.52 US cents, up from 73.17 cents on Thursday.

NEW YORK – US stocks have regained ground from earlier losses with banks and energy shares rallying as improving data bolstered optimism on the economy.

Earlier in the day, data showed weekly jobless claims rose unexpectedly. The data comes ahead of the comprehensive labour report for February on Friday expected to show an addition of 190,000 jobs, compared with 151,000 in January.

Brent crude prices, which are up about 35 per cent from last month’s lows, were little changed at $US36.90. US crude was down 0.3 per cent at $US34.55.

“We’ve had a pretty nice run off late because of oil prices steadying and positive macro economic data,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

“Investors are in a wait-and-see mode ahead of the jobs report tomorrow and there is some profit taking too.”

LONDON – Britain’s top shares index has fallen, as weaker healthcare stocks weigh on the market, taking the shine off a rise in insurer Admiral.

Healthcare stocks such as GlaxoSmithKline and AstraZeneca fell after credit rating agency Moody’s cut its outlook on the global pharmaceuticals industry.

Shares in Whitbread – the company behind Premier Inn and Costa Coffee – fell 6.2 per cent after a weak fourth quarter performance, while a cautious outlook hit the shares of satellite group Inmarsat.

Aerospace engineering group Rolls Royce also rose 5.3 per cent, lifted by a price target upgrade from investment bank Jefferies.

Moody’s Investors Service has cut BHP Billiton Plc’s debt rating to “A3” from “A1”, citing a deterioration in the company’s earnings and cash flow.

HONG KONG – Asian shares closed mixed as upbeat data on US jobs and as a rally in a range of commodities whetted risk appetites globally.

“Value is starting to snap back and some sectors that pretty recently were hanging around all-time lows are showing signs of life,” said Nicholas Smith, a strategist at CLSA.

“The general updraft in oil is helping confidence as well.

Investors aren’t yet ready to take on a lot of risk, but they are adding to their positions.”

WASHINGTON – The number of Americans filing for unemployment benefits unexpectedly rose last week, but the underlying trend continues to point to a strengthening labour market. US productivity fell in the final three months of 2015 at the sharpest pace in nearly two years, though the decline was not as large as first reported.

ENERGY

Oil prices resumed their downward trajectory before recovering ground in later session trading amid news that some members of OPEC plan to meet other oil producers in Russia around March 20 for new talks on an oil output freeze.

Nigeria’s petroleum minister on Thursday (Friday AEDT) forecast the meeting would spark a dramatic reaction in crude prices.

PRECIOUS METALS

Gold has risen back towards $1,260 an ounce, coming within a hair of a 13-month high as the US dollar heads toward its biggest one-day tumble in a month after US data fuelled worries over Friday’s US payrolls data.

Data showed the US economy’s service sector expanded in February at a slower pace than January.

Fawad Razaqzada, technical analyst for Forex.com and City Index said this “bodes ill” for Friday’s employment report and caused safe-haven buying in gold.

“While still not quite out of the danger zone yet, it looks like gold may be able to extend its rally now that the $US1,250 level has been taken out,” Razaqzada said.

New orders for US factory goods rebounded less than expected in January, although it was the largest increase since June.

BASE METALS

Copper prices have hit their highest in more than three months, boosted by gains for equities, increased confidence in global growth prospects and a lower US dollar.

Equity markets in Europe and the US have rallied in recent days in response to receding worries about the health of the US economy.

In China, the impetus came from monetary easing and expectations of further stimulus.

“There will be further gains, but it will be necessary to see economic improvement, not just in China, but also globally,” Commerzbank analyst Eugen Weinberg said.

“The risks come from China. If we have more data showing a slowdown, then Chinese equities and metals could come under pressure again.”

STOCKS TO WATCH ON THE AUSTRALIAN STOCK EXCHANGE ON FRIDAY, MARCH 4:

BHP – BHP BILLITON: Moody’s Investors Service has cut BHP Billiton Plc’s debt rating to “A3” from “A1”, citing a deterioration in the company’s earnings and cash flow.

ORG – ORIGIN ENERGY

STO – SANTOS

Energy stocks could feel the impact of international oil prices movements overnight. Prices initially resumed their downward trajectory before regaining ground late in the session.

AAP

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