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Market report: Tuesday, March 22

Business

UPDATED: The Australian share market has opened slightly higher following modest overnight gains on Wall Street.

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The benchmark S&P/ASX200 was up 0.17 per cent at 10.20am (AEDT) on Tuesday, broadly in line with gains made in the US.

OptionsXpress analyst Ben Le Brun said there could be more movement once investors had heard from Reserve Bank of Australia governor Glenn Stevens when he addresses the ASIC Annual Forum.

“We’re trending back up toward that technical and psychological resistance of 5,200,” Le Brun said.

“It’ll be interesting to see if we can make a break above that in coming sessions, and that should augur well for our market if we can have a substantial close above that level at some stage.”

ANZ and National Australia Bank dragged the financial sector into the red despite modest gains for Commonwealth Bank and Westpac.

ANZ was down 18 cents, or 0.7 per cent, at $25.69, while NAB was down 12 cents, or 0.43 per cent, at $28.07.

But materials was the worst performing sector, with BHP Billiton declining 25 cents, or 1.38 per cent, to $17.92.

Rio Tinto followed its mining rival down, dropping 8.0 cents, or 0.18 per cent, to $44.02.

TPG Telecom was one of the standout performers, gaining 55 cents, or 5.31 per cent, to $10.90 after it lifted first half profit 89.8 per cent to $202.5 million.

The result was driven by the benefit of TPG’s 2015 acquisition of rival internet provider iiNet.

“The numbers were really good and that’s what the market’s rewarding,” Le Brun said.

“There’s still a lot of synergies to be realised and there’s some good growth to be expected down the track.”

At 6.45am (AEDT) on Tuesday, the share price index was up seven points at 5,174.

Locally, in economic news on Tuesday, Reserve Bank of Australia governor Glenn Stevens and assistant governor (Financial System) Malcolm Edey are slated to participate at the ASIC Annual Forum in Sydney.

The Australian Bureau of Statistics is expected to release residential property prices for the December quarter while the ANZ-Roy Morgan weekly consumer confidence survey is also due out.

In equities news, Kathmandu and TPG Telecom are slated to post half year results.

In Australia, the market on Monday closed lower, hurt by falls across financial and retail stocks after a strong three-week run on the market.

The benchmark S&P/ASX200 index was down 16.5 points, or 0.32 per cent, at 5,166.6 points.

The broader All Ordinaries index was down 14.4 points, or 0.27 per cent, at 5,224.9 points.

NEW YORK – Wall Street is flat as investors search for fresh catalysts and grapple with mixed feelings about the Federal Reserve’s dovish move last week that pushed the S&P 500 and Dow into positive territory for the year.

US stocks curved slightly higher by the afternoon after opening lower.

“The market is still digesting the Fed news from last week,” said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

“While some are saying it’s positive, some are concerned it expresses (doubt) about global economic health.”

The Fed’s decision to cut the number of expected rate rises in 2016 to two was among several recent measures by central banks to support growth and calm turmoil in global financial markets.

The Dow Jones industrial average was up 21.57 points, or 0.12 per cent, to 17,623.87, the S&P 500 had gained 2.02 points, or 0.10 per cent, to 2,051.60 and the Nasdaq Composite had added 13.22 points, or 0.28 per cent, to 4,808.87.

LONDON – UK shares have inched higher as gains in the pharmaceutical sector and in grocer Sainsbury’s outweighed a fall in mining stocks, which tracked metals prices lower.

After a subdued start to the session, the UK’s FTSE 100 index closed down 5.06 points, or 0.08 per cent, at 6,184.58, broadly in line with the wider European market.

Britain’s second-biggest grocer Sainsbury’s was among the top gainers, up 1.6 per cent after it was given a clear run to buy Argos-owner Home Retail for STG1.4 billion ($A2.66 billion) after the market closed last Friday.

Steinhoff International, Sainsbury’s rival in the bid for the takeover, has pulled out of the race.

“There will be much less upside surprise for the company with Argos in tow down the line. What still remains unclear to us though is the trajectory of underlying Argos profitability, and this will be an important variable over time,” Clive Black, head of research at Shore Capital, said in a note.

The strongest gainer on the FTSE 100 was pharmaceutical company Shire which rose 2.5 per cent.

“We’ve seen a plethora of different broker upgrades on (Shire) over the last number of weeks … I think it’s the fact that it has had a very decent Q4,” said Brenda Kelly, head analyst at London Capital Group. The company’s announcement of a dividend also cheered investors, she added.

Shares in fellow drugmakers Hikma and GlaxoSmithKline advanced 1.6 per cent and 0.4 per cent respectively.

HONG KONG – Shares have edged up in Asia, shrugging off a retreat in oil on concerns over excess supply, as gains in Chinese shares and a benign US interest rate outlook brightened the mood.

MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.1 per cent after entering positive territory for the first time this year on Friday.

Chinese stocks rose. The CSI 300 index of the largest listed companies in Shanghai and Shenzhen closed up 2.4 per cent while the Shanghai Composite gained 2.2 per cent.

The Hang Seng index rose 0.1 per cent, to 20,684.15, while the China Enterprises Index gained 0.5 per cent, to 8,928.65 points.

China’s state margin lender, the China Securities Finance Corp, said it would resume some short-term lending after suspending parts of its business 18 months ago. It also cut brokerages’ borrowing costs.

“It’s a clear signal that regulators are ready to provide the market with easier, and cheaper funding,” said Wang Yu, analyst at Pacific Securities.

Top Chinese officials on Sunday said the economy was showing signs of improvement while capital outflows from the county were moderating.

WELLINGTON – The NZX 50 rose 18.44 points, or 0.3 per cent, to 6,641.94.

PRECIOUS METALS

Gold has turned lower, consolidating from a 2.5 per cent surge in the previous session when the Federal Reserve cut the number of interest rate rises it forecasts for this year, sending the dollar sharply lower.

The US central bank held interest rates steady and indicated it would tighten policy this year, but fresh projections showed policymakers expect two quarter-point increases by year-end, half the number forecast in December.

Spot gold was down 0.4 per cent on Thursday at $US1,257.11 an ounce in afternoon trade after climbing 0.7 per cent to $US1,270.90.

“Yesterday was the excitement. Today is more the consolidation phase,” said James Steel, chief metals analyst for HSBC Securities in New York, referring to the prior session’s rally in response to the Fed’s dovish statement.

US gold futures for April delivery settled up 2.9 per cent at $US1,265 an ounce.

The futures market’s move higher was due to its lower close prior to the Fed statement on Wednesday.

Expectations the Fed would raise rates steadily this year had faded since the bank’s initial hike in December, as concerns over global growth roiled financial markets.

Wednesday’s statement suggested the Fed remained cautious on the potential risks posed by an uncertain global economy.

Further gains in gold prices could prove elusive without further stimulus, analysts said.

“I … think we shouldn’t expect too much strength immediately after this announcement, since not that many people thought rates would rise again at this point,” Glaux Metal consultant David Jollie told the Reuters Global Gold Forum.

Among other precious metals, spot silver briefly rose above $US16 an ounce for the first time since October, up 2.8 per cent to $US16.03.

Platinum was up 0.7 per cent at $US983 an ounce and palladium was up 2.2 per cent at $US592.40.

BASE METALS

Copper has jumped to its highest in more than four months, boosted by signs from the US Federal Reserve it will not raise rates to the extent flagged last year, falling inventories and higher stock markets.

Benchmark copper on the London Metal Exchange was untraded at the close on Thursday, but bid up 2.7 per cent at $US5,069.50 a tonne after hitting $US5,074 earlier in the session, its highest since November 5.

In December, about four rate rises were expected this year but the majority of Fed policymakers now say it would be appropriate to raise rates by about a half a percentage point by the end of 2016.

The shift in stance undermined the US currency, making dollar-denominated commodities cheaper for non-US firms, which is a relationship used by funds to generate buy, sell signals using numerical models.

Stocks of copper in LME approved warehouses stood at 160,925 tonnes, down about 30 per cent since late November.

Of those stocks, cancelled warrants, or metal earmarked for delivery, was at nearly 46,000 tonnes, meaning only about 121,000 tonnes of copper was available for the market.

However, much of the inventory in LME warehouses has moved to warehouses monitored by the Shanghai Futures Exchange.

Copper stocks in ShFE warehouses have nearly doubled since the middle of December to reach 350,138 tonnes.

Premiums for copper in bonded warehouses in Shanghai fell $US5 to $US82.50 a tonne, the weakest since January 6.

Traders said copper’s break above the 200-day moving average puts the next upside target at $US5,140, a 38.2 per cent Fibonacci retracement of the May 2015 to January 2016 fall.

Three-month aluminium traded up 1.1 per cent at $US1,526, zinc gained 4.2 per cent to reach $US1,821, lead rose 3.2 per cent to $US1,835, tin added 1.8 per cent to hit $US17,000 and nickel rose 3.5 per cent to $US8,890.

ENERGY

Crude oil prices have risen after OPEC suggested Iran may agree to freeze production levels to support prices at a later date.

Producers from the Organisation of the Petroleum Exporting Countries (OPEC) and non-members are due to meet on April 17 in Qatar to discuss an output freeze. But Iran currently wants to increase exports, following the lifting of Western sanctions in January.

“I hope the result of the meeting will be positive,” OPEC’s secretary general Abdullah al-Badri said at a news conference in Vienna on Monday.

“They are not objecting to the meeting but they have some conditions for the production and maybe in the future they will join the group,” he said of Iran.

Brent crude was up 39 US cents, or 0.95 per cent, at $US41.51 a barrel while WTI was up 47 US cents, or 1.19 per cent, at $US39.91, at 7.45am Tuesday (AEDT)

AAP

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