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Market report: Tuesday, March 8

Business

The Australian share market has opened higher.

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At 10.11am (AEDT) on Tuesday, the benchmark S&P/ASX200 index was up 35.4 points, or 0.69 per cent, at 5,178.2, while the broader All Ordinaries index was up 36 points, or 0.69 per cent, at 5,240.7.

On the ASX 24, the share price futures index was up 35 points at 5,166, with 9,613 contracts.

NEW YORK – Major US stock indexes were mixed on Monday as a spike in energy shares offset declines in large-cap technology names, with the S&P 500 ticking up to a two-month high.

The S&P notched its fifth consecutive session of gains, a streak not seen since October, and closed above 2,000 for the first time since January 5.

Crude prices, which have largely dictated the direction of
the stock market this year, were up more than 5.0 per cent.

“Oil is stabilizing and that is helping to bolster sentiment in overall equity returns,” said Terry Sandven, chief equity strategist at US Bank Wealth Management in Minneapolis.

LONDON – Gains for the mining sector after a surge in the price of iron ore have helped Britain’s blue-chip stock index off its lowest levels, and a rise in Old Mutual shares also lent support.

The blue-chip FTSE 100 index was down 17.03 points or 0.3 per cent at 6,182.40 points by the close on Monday, following a three-week-long rally which has seen the index gain more than 8 per cent.

Monday’s drop was broad-based, with all sectors, bar the materials sector, finishing in negative territory.

HONG KONG – Asian shares generally rose on Monday.

Japanese shares snapped a four-day winning streak as the yen strengthened and investors took profits on last week’s sharp rally. The Nikkei 225 index closed down 0.6 per cent.

Chinese shares rose after Prime Minister Li Keqiang spelled out on Saturday a new five-year economic plan, which included an average growth target of 6.5 to 7 per cent and a moderate increase in the fiscal deficit to 3 per cent of GDP this year.

The CSI300 index of the biggest listed companies in Shanghai and Shenzhen closed up 0.4 per cent and the Shanghai Composite rose 0.9 per cent.

SYDNEY – The Australian market looks set to open higher despite a mixed session on Wall Street overnight.

At 0825 AEDT on Monday, the share price index was UP 32 points at 5,163 points.

Locally, major mining stocks will be in focus after an 18 per cent leap in iron ore prices overnight.

Fortescue Metals is due to brief the media at 0830 AEDT, while the Global Iron Ore and Steel Forecast conference is due to start in Perth.

In economic news, the latest ANZ-Roy Morgan weekly consumer confidence survey and National Australia Bank’s monthly business survey are due for release.

RBA deputy governor Philip Lowe will address the Urban Development Institute of Australia’s national industry congress in Adelaide and BIS Shrapnel unveils its economic outlook.

ENERGY

Global oil markets jumped more than 5.0 per cent on Monday, with Brent hitting a 2016 peak above $US40 a barrel, after Ecuador said it was holding a meeting of Latin American crude producers as OPEC sought a higher anchor price for oil.

Technically-driven buying in crude and a commodities rally also boosted oil. Industry data showing a smaller-than-expected build in stockpiles at the Cushing, Oklahoma delivery hub for US crude futures was another supportive factor.

PRECIOUS METALS

Gold rose on Monday, hovering just below last week’s 13-month high as the US dollar turned lower, while a fall in average US earnings lessened expectations the Federal Reserve could raise interest rates at its next policy meeting.

Spot gold was up $US7.80 to $US1,266.86. The metal had peaked at $US1,279.60 on Friday, its strongest since February 2015, before slipping on US data.

US gold futures for April delivery settled down 0.5 per cent at $US1,264 per ounce.

A pitched battle over the right path for US interest rates is expected at next week’s Fed policy-setting meeting.

On Monday, the internal battle lines at the Fed were in full view as two of the central bank’s most influential policymakers delivered duelling reads on the US economy and the appropriate monetary policy response in simultaneous appearances.

BASE METALS

Copper and zinc pulled back from their highest levels in more than four months on Monday, weighed down by a firmer dollar and as misgivings surfaced over China’s ability to shore up economic growth.

Three-month copper on the London Metal Exchange slipped 0.5 per cent to close at $US5,000 a tonne, handing back some of last week’s rally, but off an earlier low of $US4,940.

Speculators have switched to a net-long position in copper futures, the latest US data showed, while fresh longs have also appeared on the LME with rising prices and open interest at its highest since June.

Weighing on the metals markets was a firmer dollar as the likelihood of a US recession diminished, making commodities priced in the US currency more expensive for buyers outside the United States.

 

ELSEWHERE:

WASHINGTON – US President Barack Obama has defended his efforts to rein in Wall Street, telling Americans that his administration cracked down effectively on banks and trading firms after the financial crisis of 2007-2009.

BEIJING, March 7 AP – Seeking to douse fears about China’s economy, the finance minister says Beijing can manage its rising debt load as it steps up deficit spending to prevent a slide in growth.

BEIJING – China’s foreign exchange reserves have fallen $US28.57 billion ($A38.56 billion) in February, slightly less than expected and easing from a sharp slump in January, suggesting the central bank is scaling back its interventions to support the yuan as capital outflows ease.

LONDON – British Chambers of Commerce director-general John Longworth has resigned after he breached the group’s neutral stance on the referendum on EU membership.

STOCKS TO WATCH ON THE AUSTRALIAN STOCK EXCHANGE:

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTO

The price of iron ore has soared 18 per cent overnight, with major producers gathering in Perth for the first day of the Global Iron Ore and Steel Forecast conference.

WPL – WOODSIDE PETROLEUM

STO – SANTOS

The price of Brent crude oil surged above $US40 a barrel to their highest level since December on news that there had been a smaller-than-expected buildup in crude stockpiles in the United States.

CBA – COMMONWEALTH BANK

Federal Labor is urging the Turnbull government to consider a royal commission into the Commonwealth Bank life insurance scandal.

WOW – WOOLWORTHS

WES – WESFARMERS

HVN – HARVEY NORMAN

JBH – JB HI FI

Retail stocks will be in focus when the latest ANZ-Roy Morgan weekly consumer confidence survey is released on Tuesday morning.

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