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Market report: Thursday, March 10

Business

UPDATED: The Australian share market has opened slightly higher off the back of a rise in US stocks, spurred by the energy sector.

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The Dow Jones industrial average finished 0.21 per cent higher overnight, with oil prices rising nearly 5 per cent.

IG market analyst Angus Nicholson said the Australian energy sector was responding well at Thursday’s open.

“Consumers are really reacting strongly to cheaper energy prices,” Nicholson said.

Origin Energy’s shares jumped 12.5 cents, or 2.5 per cent, to $5.145 at 1015 AEDT.

Woodside Petroleum climbed 41 cents to $27.24, Santos soared 15 cents to $3.94 and Oil Search rose 13 cents to $7.36.

“That move in energy also seems to have helped other equity indices,” Nicholson said.

“The decline of volatility globally is helping investors come back to the market.”

The big banks were all trading higher.

The Commonwealth Bank was up 56 cents to $76.87, the ANZ rose 19 cents to $25.67, Westpac moved 22 cents to $32.75 and the National Australia Bank climbed 30 cents $27.85.

Materials stocks were mixed with BHP Billiton going ex-dividend and dropping by six cents to $17.80.

Rio Tinto rose 60 cents to $44.90 and Fortescue Metal Group climbing three cents to $2.74.

Nicholson said global markets, including the ASX, were waiting for an important meeting of the European Central Bank on Thursday night (AEDT).

He said the ECB’s decisions about interest rates could have “major market repercussions”.

In other Australian finance news, supermarket giant Coles’ takeover of five Supabarn stores in NSW and ACT has been approved by the Australian Competition and Consumer Commission.

Coles owner Wesfarmers’ shares were down four cents to $41.52.

At 10.10am *(AEDT) on Thursday, the benchmark S&P/ASX200 index was up 19.7 points, or 0.38 per cent, at 5,176.9, while the broader All Ordinaries index was up 19.4 points, or 0.37 per cent, at 5,235.1.

On the ASX 24, the share price futures index was up 19 points at 5,174, with 12,421 contracts traded.

Earlier, at 6.45am (AEDT) on Thursday, the share price index was up 14 points at 5,169.

Locally, in economic news on Thursday, the three-day Australian Domestic Gas Outlook summit winds up in Sydney.

No major equities news is expected, but Incitec Pivot chief executive James Fazzino is slated to speak at an American Chamber of Commerce in Australia lunch in Melbourne.

In Australia, the market on Wednesday closed higher.

The benchmark S&P/ASX200 index rose 49.2 points, or 0.96 per cent, to 5,157.2 points, while the broader All Ordinaries index gained 46.2 points, or 0.89 per cent, to 5,215.7 points.

NEW YORK – Wall Street has climbed as a strong recovery in oil prices sent energy shares sharply higher.

Volatility in oil and stock prices has been linked for much of 2016 to a degree that has surprised many investors. Wednesday’s market action extended that trend, with Brent crude
rising above $US40 a barrel, continuing its recovery from decade lows that led to stock market turmoil in January.

“It’s still this puzzling correlation between the price of oil and stocks. It really is not supposed to play out this way,” said Jake Dollarhide, chief executive officer of Longbow Asset
Management in Tulsa.

“But given that oil drove the U.S. stock market down, it makes sense that stocks’ rise would be tied to oil’s comeback.”

Since Feb. 11, the S&P 500 has gained 8.7 per cent, repairing some of the damage caused by the S&P 500’s worst January since 2009. The index remains down 3 per cent for 2016.

In afternoon trading, the Dow Jones industrial average was up 0.16 per cent to 16,991.02 points and the S&P 500 had gained 0.41 per cent to 1,987.35.

The Nasdaq Composite added 0.43 per cent to 4,668.78.

LONDON – Britain’s top share index rose, boosted by an increase in insurer Prudential after it announced a special dividend with better than expected results.

Prudential rose 2.9 per cent, the top FTSE 100 riser on Wednesday, after its profit was lifted by strong performances at its British, US and Asian life businesses.

“Overall Prudential remains in good shape and … has allayed investor concerns on management’s ability to deliver on strategy,” said Atif Latif, director of trading at Guardian Stockbrokers.

“The announcement of a special dividend and five per cent increase of the ordinary dividend has been well received.”

Britain’s FTSE 100 index rose 0.3 per cent at 6,146.32 points.

HONG KONG – A sharp sell-off in Chinese shares has dragged world share markets lower and boosted the safe-haven yen amid renewed concerns about the outlook for China’s economy.

Tuesday’s weak Chinese trade figures and slide in oil prices have revived global growth concerns and prompted investors to push the pause button on a rally in global stocks.

European shares opened higher on Wednesday but held below recent one-month highs, while risk aversion lifted the Japanese yen against the dollar and the euro.

In Asia, Chinese shares closed more than one per cent lower, while MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.3 per cent, down 1.4 per cent from a two-month high hit on Monday.

Japan’s Nikkei ended the day down 0.8 per cent, its lowest close in a week.

WELLINGTON – The S&P/NZX 50 Index gained 10.5 points, or 0.2 per cent, to 6,457.25.ENERGY

Oil prices have resumed their recent climb on Wednesday, with U.S. crude hitting three-month highs after a big gasoline inventory drawdown amid improving demand overshadowed growing record high crude stockpiles.

Speculation that top producers might agree soon to an output freeze also supported crude oil.

Brent moved back above $US40 a barrel on speculation that the world’s largest exporters could agree this month to freeze production and help erode the largest global build in crude in years.

Brent was up $US1.32, or 3.3 percent, at $US40.97 a barrel at 0840 AEDT Thursday, while WTI futures or U.S. crude rose $US1.78, or 4.9 percent, to $US38.28.

PRECIOUS METALS 

Gold fell on Wednesday as oil prices and world stock markets rose, and expectations for further monetary easing from the European Central Bank prompted some investors to take profits after the metal’s rally to 13-month highs last week.

Outflows were seen from bullion-based exchange-traded funds after hefty inflows earlier in the year. The largest, SPDR Gold Shares GLD, said its holdings fell 2.4 tonnes on Tuesday, its biggest outflow in nearly four weeks.

Spot gold fell to $US1,252.68 an ounce at 2:36 p.m. EST (0636 AEDT Thursday), down 0.6 per cent, while U.S. gold futures for April delivery settled down 0.4 per cent at $US1,257.40 an ounce.

“The market is slowly trying to decide if things have changed globally or if (they) need to lighten up and can buy this back cheaper,” said Brad Sanderson, vice president of Commodities at Cohen & Steers in New York.

Commerzbank analyst Carsten Fritsch said gold prices were being weighed down by a combination of earlier strength in the dollar, rising stock markets and rising bond yields.

BASE METALS

Copper, zinc and other base metals rebounded on Wednesday as speculators piled back into the market on hopes more production cuts would lead to shortages and that top metals consumer China would introduce more economic stimulus measures.

Industrial metals slumped on Tuesday as many investors cashed in their previous bets on higher prices following a strong rally from multi-year lows in January.

Three-month copper on the London Metal Exchange CMCU3 closed up 1.4 per cent at $US4,935 a tonne, having shed 2.6 per cent in the previous session in its biggest one-day slide since Nov.16.

LME zinc CMZN3 climbed 2.1 per cent to finish at $US1,797 a tonne while nickel CMNI3 bounced 3.3 per cent to end at $US8,880.

Nickel drew support from news that nickel ore producers in the Philippines, the top supplier to China, have agreed to cut output and shipments this year by as much as 20 per cent.

Aluminium CMAL3 closed up 1 per cent at $US1,582 a tonne.

Lead CMPB3 climbed 1.4 per cent to end at $US1,845 a tonne in official rings while tin CMSN3 added 1.5 per cent to $16,800.

ASX stocks to watch Thursday, March 10

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTO

Shares in the mining giants could come under pressure, as the price of iron ore has slipped below the $US60 mark.

ORG – ORIGIN ENERGY

STO – SANTOS

Energy companies may see their shares extend gains after a strong recovery in oil prices sent energy shares sharply higher globally.

AAP

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