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Market report: Thursday, March 24

Business

UPDATED: The Australian share market is lower, taking its cue from a decline on Wall Street amid cautious trade and falling oil and commodities prices.

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The benchmark index was down nearly 0.8 per cent after the first half hour of trade, with banking, mining and energy shares all trending lower.

“The market is generally reacting to the developments in Europe, so it is no surprise we are following the mood,” Macquarie Private Wealth division director Lucinda Chan said, referring to the terror attacks in Belgium.

“We expect it to be a quiet day ahead of the Easter break, but there could be a fair bit of profit taking,” she added.

Earlier, US stocks closed lower, with oil and materials share prices among the losers, with investors cautious after deadly bombing attacks in Belgium. The Dow Jones industrial average closed down 0.45 per cent.

Locally, banks and mining stocks led the losses.

ANZ shares fell $1.00, or four per cent, to $24.34 after the lender said its bad debts will jump by at least $100 million for the first half of its financial year, because of its exposure to the downturn-hit resources sector.

Shares in the other three large lenders, CBA, Westpac and NAB were also trading down, by between 1 to 3 per cent.

Among mining stocks, BHP Billiton lost 67 cents, or 3.8 per cent, to $16.93, Rio Tinto fell $1.02 to $42.84, while Fortescue slid 14 cents to $2.50.

Woodside Petroleum, which on Wednesday shelved its $50 billion Browse LNG plant amid weak market conditions, fell 33 cents to $26.79, while Santos was down five cents at $3.87 after news that China’s ENN Group had taken an 11.7 per cent stake in the company.

The market was expected to trade lower, but with limited volatility, Chan said.

At 8.08am (AEDT) on Thursday, the share price index was down 34 points at 5,098.

Locally, in economic or equities news on Thursday, the Australian Bureau of Statistics is due to release international trade price indexes for the March quarter.

No major equities news is expected.

And the Australian share market looks set to open sharply lower after Wall Street fell, dragged down by plunging commodity prices amid cautious trade following the suicide bombings in Belgium.

NEW YORK – Falling oil and materials prices have dragged the benchmark S&P 500 index lower for the year, while investors remain cautious a day after deadly bombing attacks in Belgium.

Wall Street’s fading five-week rally was further diminished by comments over the past two days by US Federal reserve officials, who indicated the possibility of more interest rate hikes than investors had anticipated.

The possibility of more than the expected two rate rises for 2016 has sent the US dollar higher, pushing down commodity prices.

“That has caused somewhat of a headwind for stocks,” said Bucky Hellwig, senior vice president at BB&T Wealth Management in Birmingham, Alabama.

Adding to the downturn, investors were deterred by the shortened trading week and uncertainty tied to the bombings in Brussels, said Brad McMillan, chief investment officer at Commonwealth Financial in Waltham, Massachusetts.

LONDON – UK shares have advanced as Kingfisher, Europe’s largest home improvement retailer, beat profit expectations and investors dipped back into the travel sector.

Trade was quiet, with volumes at just three-quarters of the 90-day average.

“There was some initial disdain for Kingfisher’s turnaround plan but today’s results confirm the company has gotten a head start over its rival Homebase,” said Jasper Lawler, market analyst at CMC Markets.

Investors bought back into travel stocks, which recovered after a sell-off in the previous session following deadly attacks in Brussels.

“You have the usual bit of aggressive bargain-hunting coming through in these sectors, (they were) quite heavily sold down yesterday,” IG analyst Chris Beauchamp said.

HONG KONG – Asian shares slipped in subdued trading as investors pulled back on positions ahead of the long Easter weekend, opting for caution following the bomb attacks in Brussels.

Financial markets took in their stride news of the attacks in Brussels that killed at least 30 people.

Risk appetite quickly recovered to help MSCI’s emerging market index rise 0.2 percent to four-month high early in the Asian day, but it had eased back 0.5 percent towards the end.

“Generally, the impact of terror attacks has become less and less dramatic after 9/11,” said Berard Aw, market strategist at online brokerage IG in Singapore. “But investors may be squaring positions ahead of the long weekend, especially in light of the Brussels attacks.”

BEIJING – China has offered $US11.5 billion ($A15.1 billion) in loans and credit lines to five Southeast Asian countries for infrastructure and other projects.

SHANGHAI – The World Bank has approved a $US500 million ($A656.25 million) loan to China to support financing of projects to help control air pollution in and around Beijing.

HARARE – Zimbabwe will from April 1 cancel licences for foreign firms, including those operating mines and banks, that have not complied with a law to sell majority shares to locals, Empowerment Minister Patrick Zhuwao says.

ENERGY

Oil prices have plunged with WTI crude falling below the $US40 mark.

At 0750 Thursday AEDT, WTI, or US, crude as down $US1.62, or 3.91 per cent, at $US39.83 a barrel.

Brent crude was down $US1.26, or 3.02 per cent, at $40.53 a barrel.

PRECIOUS METALS

Spot gold has fallen about two per cent, one of its deepest declines of the past year, as the US dollar strengthened following hawkish comments by Federal Reserve officials on the path of US interest rates.

Bullion tumbled to its lowest in a month, reversing the gains made the previous day when investors sought “safe haven” assets after deadly bomb attacks on Brussels.

“The market rejigged its outlook after comments from the Fed hinted a rate hike could come in April or in June,” said Bart Melek, head of commodity strategy for TD Securities in Toronto.

BASE METALS

London copper fell, pressured by a stronger US dollar after hawkish comments from US Federal Reserve officials and as investors locked in recent gains.

Trading volumes in most metals were lighter than usual, as investors held off taking positions ahead of Easter and opting for caution following Tuesday’s bombs in Belgium.

A stronger US dollar, following comments supporting more US interest rate rises from the heads of the Philadelphia and Chicago Federal Reserves, weighed on metals markets as it makes commodities priced in the currency more costly for buyers outside the United States.

Traders and analysts said uncertainty over the size and timing of any US rate rises prompted some investors to take profits.

“We’re starting to see the sugar high from the weak dollar fading, and its starting to weigh across the commodity complex, hitting copper particularly hard,” said Dane Davis, metals analyst at Barclays Capital.

“There are positive signs in the data but I’d be reluctant to feel too confident about demand,” said Caroline Bain, senior commodities economist at Capital Economics.

STOCKS TO WATCH ON THE AUSTRALIAN STOCK EXCHANGE ON THURSDAY, MARCH 24:

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTO

The price of iron has again fallen, but remains above the $US57 mark.

ORG – ORIGIN ENERGY

STO – SANTOS

WPL – WOODSIDE PETROLEUM

Oil prices have again tumbled, with WTI crude down almost 4 per cent.

AAP

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