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Market report: Thursday, April 21

Business

UPDATED: The Australian dollar has pushed above 78 US cents as commodity prices rise.

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At noon (AEST) on Thursday, the currency was trading at 78.03 US cents, up from 77.86 cents on Wednesday, and close to its recent 10 month highs.

St George economists said the Australian dollar had strengthened even though the US dollar had improved against other currencies like the euro.

“The improvement in risk appetite and the recovery in commodity prices have continued to be supportive of the Australian dollar,” they said in a note.

At 10.16 (AEST) on Thursday, the benchmark S&P/ASX200 index was up 55.5 points, or 1.06 per cent, at 5,271.5, while the broader All Ordinaries index was up 54.0 points, or 1.02 per cent, at 5,335.2.

On the ASX 24, the share price futures index was up 49 points at 5,254, with 13,223 contracts traded.

Earlier at 8.25am (AEST) on Thursday, the share price index was up 36 points at 5,241.

In local economic news on Thursday, the National Australia Bank’s business survey for the March quarter is expected.

In equities news, both the Ten Network and Australian Pharmaceutical Industries are expected to post half-year results, while Wesfarmers is slated to give a third quarter sales update, and South32 and Evolution Mining are expected to release March quarter reports.

CIMIC is also expected to release first quarter results and holds its annual general meeting in Sydney, while Woodside Petroleum has its annual general meeting in Perth.

Meanwhile, BHP Minerals Australia president Mike Henry speaks at a Melbourne Mining Club lunch in Melbourne.

Surging iron ore and commodity prices could maintain support for the Australian dollar and help it above the 78 US cent level.
The Australian share market looks set to open higher following strong gains on Wall Street and a lift in international oil prices.

NEW YORK – Wall Street has ended less than two per cent short of a record-high close as a rebound in oil prices added to optimism sparked by a raft of earnings reports.

Investors fixated on a parade of first-quarter results, including an upbeat report from VMWare and a di Due to the market’s recent oil-fuelled gains and the tempered outlook for corporate profits, the S&P 500 is trading at about 17.8 times expected earnings, its most expensive level since 2004, according to Thomson Reuters Datastream.

“It would be overly optimistic to assume it’s clear sailing from here,” said Alan Gayle, director of asset allocation at RidgeWorth Investments in Atlanta.

“The good news has to keep on coming for this market to keep moving higher.”

LONDON – European stocks are higher after the price of crude declined following the end to a strike by Kuwaiti oil workers.

However, the longer term outlook seems less positive, with the FTSEurofirst remaining down around five per cent so far in 2016, ACIES Asset Management says.

Recent gains by European stocks, which reached three-month highs earlier this week, were just a temporary bounce in a longer-term decline, said Andreas Clenow, a hedge fund manager at ACIES Asset Management.

“We are still in a bear market,” Clenow said.

The number of people out of work in Britain rose for the first time since mid-2015 in the three months to February, the latest sign the economy is slowing as Britain gears up for a divisive referendum on its membership of the European Union.

Senior staff at Port Talbot, Britain’s biggest steel works, are seeking to launch a management buyout plan with the support of staff, investors and the government to save the loss-making plant put up for sale by Tata Steel.

HONG KONG – All the air was sucked out of Asian shares as oil prices took a fresh spill on news Kuwaiti oil workers ended a three-day strike, leaving markets suddenly directionless.

The deflating mood was reflected in a 0.3 per cent drop in EMINI futures for the S&P500 and broad demand for safe-haven US Treasuries.

Oil prices again led the way by reversing much of Tuesday’s sharp gains. Brent crude shed 83 cents to $US43.20 a barrel, while US crude oil sank $US1.02 to $US40.11.

“In the near term we are going to see more downward pressure than upward,” said IHS analyst Victor Shum.

WASHINGTON – US home resales rebounded more than expected in March, suggesting the housing market recovery remained intact despite signs that economic growth probably stalled in the first quarter.

ENERGY

Oil prices have jumped as government data shows that US crude stocks have risen slightly less than expected, while the US dollar has advanced against the euro ahead of Thursday’s European Central Bank meeting.

US stocks climbed as a rebound in oil prices added to optimism sparked by a raft of earnings reports.

Speculation that major oil producers would meet in Russia in May for another attempt at curtailing output also boosted oil prices. Moscow, however, denied media reports that Russia planned to host such a meeting.

Last weekend, Russia and OPEC nations failed to reach an agreement on freezing production at a meeting in Doha, Qatar.

PRECIOUS METALS

Gold has steadied as a firmer tone to the US dollar has held gains in check, though silver extended gains to an 11-month peak, boosted by technical momentum and perceptions it is undervalued versus gold.

Silver prices have climbed 11 per cent so far in April, helped by a break-through chart resistance at its late October high on Tuesday, and is on track for its biggest monthly rise since June 2014.

“It needs a clearer indication of central bank policy and some other demand indicator,” said Rob Haworth, senior investment strategist for US Bank Wealth Management in Seattle, about the quiet gold market, noting upcoming meetings with the European Central Bank (ECB) and Bank of Japan.

“We don’t think we see a greater move to negative interest rate policy. It hurts the bullish case for gold at this point.”

BASE METALS

Aluminium has hit a six-month peak as the appetite for risk increased among investors who took a more upbeat view on the Chinese economy and saw commodities as relatively cheap.

A bounce in oil prices also bolstered metals markets, helping send zinc to the highest since July 2015 and copper to a four-week high.

“I think there’s some restocking coming through in China based on some stability in the economy and generally we’re seeing some risk appetite coming back. There’s a certain warming towards commodities in general,” said Robin Bhar, head of metals research at Societe Generale in London.

ASX stocks to watch on Thursday, April 21

API – AUSTRALIAN PHARMACEUTICAL INDUSTRIES: Priceline owner Australian Pharmaceutical Industries is expected to post half-year results.

BHP – BHP BILLITON: BHP Minerals Australia president Mike Henry is slated to speak at a Melbourne Mining Club lunch.

CIM – CIMIC: CIMIC holds its annual general meeting in Sydney and is due to release first-quarter results.

EVN – EVOLUTION MINING: Evolution Mining posts its March quarter results.

S32 – SOUTH32: SOUTH32 is slated to release its March quarter operational report.

TEN – TEN NETWORK: The Ten Network is slated to post half-year results.

WES – WESFARMERS: Wesfarmers is expected to release its third-quarter sales update.

WPL – WOODSIDE PETROLEUM: Woodside Petroleum has its annual general meeting in Perth.

AAP

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