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Market report: Tuesday, March 15

Business

The Australian market looks set to open higher following an unconvincing positive lead from Wall Street where losses in energy shares were offset by consumer discretionary gains and investors laid low ahead of a US Federal Reserve meeting.

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At 8.10am (AEDT) on Tuesday, the share price index was up 15 points at 5,188.

Locally, in economic news on Tuesday, the Reserve Bank of Australia is due to release the minutes of its March board meeting.

Also, the Australian Bureau of Statistics is expected to release February’s new motor vehicle sales figures while the ANZ-Roy Morgan weekly consumer confidence survey is due out.

Meanwhile, the case management conference on the Village Roadshow anti-piracy action is on in Sydney while in Melbourne, the Australian Financial Review-BHP Billiton Business Summit, continues.

No major equities news is expected, but Transurban chief executive Scott Charlton is slated to talk on toll roads at a CEDA lunch in Sydney.

NEW YORK – Wall Street has closed little changed in light trading as consumer discretionary gains countered losses in energy shares and investors laid low ahead of a US Federal Reserve meeting.

The Fed is not expected to raise interest rates at the two-day meeting, which begins on Tuesday, but investors will be on the lookout for clues about future hikes.

“If investors are inclined to make a bet, then they’re better served by waiting a few days,” said Jack Ablin, chief investment officer at BMO Private Bank in Chicago.

“To me, it’s one of those days where the market is doing its best to digest some of those factors and to see what’s next,” said Steven Baffico, chief executive officer at Four Wood Capital Partners in New York.

LONDON – British equities have edged higher, but underperformed eurozone shares as a fall in the price of oil weighed on energy firms and counteracted a fading boost to UK-listed miners from well-received Chinese data.

Assurance from a top securities regulator that China will not reintroduce a circuit breaker mechanism to stop volatility on its stock market in the next few years cheered investors, as did some aspects of generally weaker Chinese data.

Brent crude dropped nearly three per cent, below $US40 a barrel, after Iran dashed hopes of a co-ordinated production freeze any time soon.

“Iran remains intransigent on the issue of an oil output freeze … (and) suggestions that oil has found its bottom may have been a bit premature,” Connor Campbell, analyst at Spreadex, said in a note.

HONG KONG – Shares rose in Asia, adding to gains chalked up in the wake of last week’s stimulus package from the European Central Bank, as investors turned their attention to policy decisions from the Bank of Japan and Federal Reserve.

“We believe there is enough value in the sector for continued performance on central bank stimulus – with peripheral banks likely to lead the way,” said RBC Europe analyst Robert Noble.

Mainland investors were encouraged by a regulator’s assurance that it was premature to consider withdrawing government bailout funds from the market, and comments that dispelled fears of a flood of initial public offerings.

TEHRAN – A global deal to freeze oil production could be signed in April and exclude Iran, which has the right to boost output after years of sanctions, Russian energy minister Alexander Novak says.

LONDON – OPEC has predicted global demand for its crude oil will be less than previously thought in 2016 as supply from rivals proves more resilient to low prices, increasing the excess supply on the market this year.

DUBLIN – The former head of Anglo Irish Bank has been formally charged with 33 counts relating to the collapse of the failed lender, appearing in an Irish court for the first time since his extradition from the United States.

ENERGY

Oil prices have fallen as Iran dashed hopes of a co-ordinated production freeze any time soon, returning the focus to the crude supply glut that has sent prices crashing.

Brent crude oil, whose rise has helped buoy stocks in recent weeks, fell below $US40 a barrel, as US crude stockpiles continue to lift and Iran maintained little interest in a global production freeze.

“We feel that the bulk of this stronger than expected five to six week price advance has been seen and that prices will be shifting into a near term consolidation phase,” said Jim Ritterbusch of Chicago energy consultancy Ritterbusch & Associates.

PRECIOUS METALS

Gold has turned lower and fallen below $US1,240 an ounce, as stock markets and the US dollar gained, and investors squared positions ahead of closely watched policy meetings of US and Japanese central banks this week.

The US Federal Reserve’s two-day policy meeting will start on Tuesday (US time) and be watched for clues on the future pace of US rate increases.

“The risk is that the (Fed) might be a little more hawkish than people might think,” said Bill O’Neill, co-founder of commodities investment firm Logic Advisors in New Jersey.

“Part of this is position squaring ahead of that meeting (and) we’re due for a correction here.”

BASE METALS

Aluminium has hit a three-week low and copper also has fallen, weighed by a stronger US dollar and weak Chinese industrial output.

Chinese factory output growth during the first two months of the year was the weakest since the global financial crisis, while retail sales rose by the least since May 2015.

Fixed asset investment (FAI), however, was higher than expected and there were signs of recovery in the country’s property sector.

“The China data is a bit confusing because industrial production was a very weak number, but FAI was up,” said Wiktor Bielski, head of commodities research at VTB Capital in London.

 

ASX stocks to watch Tuesday, March 15

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTO

The price of iron ore has fallen $US1.54 overnight, to $US55.55, shying away from the $US60 mark it looked to have had in its sights.

WPL – WOODSIDE PETROLEUM

STO – SANTOS

The price of Brent crude oil has lost momentum, with Brent crude losing almost two per cent overnight and WTI down more than 3 per cent.

AAP

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