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Market report: Friday, April 22

Business

UPDATED: The Australian share market has opened lower after US shares fell and oil prices retreated overnight.

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The local bourse is also taking a breather after two days of strong rallies, including a stellar performance on Thursday, Phillip Capital senior client adviser Michael Heffernan said.

The benchmark S&P/ASX 200 rose 1.09 per cent, outperforming most other markets, to end Thursday at 5,272.7 points, its highest level since December 31.

“The market has been galloping away in recent days and it’s not surprising that it is now pausing,” Heffernan said.

“Oil and iron ore are holding up pretty well. You can’t keep increasing everyday.”

US sharemarkets fell for the first time in four sessions overnight following a mixed bag of company profit results.

The Dow Jones fell by 0.6 per cent, the S&P 500 index dropped 0.5 per cent, while the Nasdaq shed 0.1 per cent.

Global oil prices reversed early gains to close lower on Thursday weighed down by a stronger US dollar.

Brent crude dropped 2.1 per cent to $US44.85 a barrel, while US Nymex fell 2.3 per cent to $US43.18 a barrel.

Oil and gas company Santos reported a rise in oil production and sales for the first quarter, and reaffirmed its annual production guidance.

Despite the positive news, shares in Santos were down 12 cents, or 2.59 per cent, at $4.51 by 10.20am (AEST).

Rival Woodside Petroleum was also lower, down 30 cents, or 1.07 per cent, at $27.65.

Global miner BHP Billiton was down 50.5 cents, or 2.4 per cent, at $20.545, Rio Tinto dropped 90 cents, or 1.71 per cent, to $51.65, and Fortescue Metals shed seven cents, or 1.93 per cent, to $3.55.

As for the major banks, National Australia Bank dipped 19 cents to $27.33, ANZ was minus 19 cents at $24.11, Commonwealth Bank declined 61 cents to $74.87, and Westpac was 10 cents off at $31.05.

At 10.10am (AEST) on Friday, the benchmark S&P/ASX200 index was down 45.5 points, or 0.81 per cent, at 5,295.0, while the broader All Ordinaries index was down 46.0 points, or 0.86 per cent, at 5,229.2.

On the ASX 24, the share price futures index was down 44 points at 5,214, with 11,196 contracts traded.

Earlier at 6.45am (AEST) on Friday, the share price index was down 29 points at 5,228.

In equities news, oil and gas producer Santos will detail quarterly production data, while creditors of Clive Palmer’s beleaguered Queensland Nickel will find out at a meeting if the company should be wound up.

In Australia, the market on Thursday closed higher as energy and mining stocks continued to rally on higher commodity prices.

The benchmark S&P/ASX 200 index rose 56.7 points, or 1.09 per cent, to 5,272.7 points.

The broader All Ordinaries index added 55.2 points, or 1.05 per cent, at 5,336.4 points.

NEW YORK – Wall Street suffered its first loss in four sessions on Thursday after a mixed bag of quarterly reports.

The benchmark S&P 500 index had rallied to within 1 per cent of its May record high in recent days, buoyed by a softer dollar and recovering crude prices. But investors had little
patience for quarterly earnings failing to meet already toned-down expectations.

“Earnings have been decent, outperforming, but outperforming expectations that have been dramatically lowered,” said Charlie Johnson, a sales trader at Greentree Brokerage Services in
Philadelphia. “So it’s like a shell game.”

Crude fell about 1 per cent, but hovered near five-month highs after the International Energy Agency said 2016 would see the biggest fall in non-OPEC production in 25 years. Oil and
U.S. stock prices have been moving in lockstep for several months.

The Dow Jones industrial average declined 0.63 per cent to end at 17,982.52 points and the S&P 500 lost 0.52 per cent to 2,091.48.

The Nasdaq Composite edged down 0.05 per cent to 4,945.89.

After the bell, Google parent-company Alphabet, Microsoft, Visa and Starbucks all posted disappointing quarterly reports, sending their stocks down more than 4 per cent.

“We think the market has already discounted the weak first quarter and possibly even some negative earnings in the second quarter,” said Paul Christopher, head global market strategist
at Wells Fargo Investment Institute.

“If the second quarter were as disappointing as the first quarter, you’d see another
downturn.”

LONDON – European shares fell slightly after the European Central Bank kept rates unchanged.

ECB President Mario Draghi kept borrowing costs at record lows, sticking to his course of ultra-loose monetary policy, and said the bank would start corporate bond purchases and a new
round of cheap bank refinancing in June.

Although details about the corporate bond purchase programme were seen as a boost, the fact that Draghi did not mention the strength of the euro as a concern weighed on stocks, said
Anthilia Capital Partners fund manager Giuseppe Sersale.

The euro initially rose after Draghi spoke but later was down against the dollar, as traders weighed the potential for a more hawkish Federal Reserve next week, helping the FTS Eurofirst 300 index end off lows and down 0.3 per cent.

The new round of cheap ECB money is seen helping the region’s lenders and the sector also saw a rally in Greek banking stocks on signs that Athens and its international
creditors were making progress in talks on economic reforms.

The Italian banking index rose 1.6 per cent after Draghi said Italy’s new bank bailout fund, created this month to boost confidence in the country’s banks, was a “small step” in
the right direction.

HONG KONG – MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.8 per cent, brushing its highest since early November.

Japan’s Nikkei gained 2.6 per cent, while the MSCI world equity index rose to its highest level since early December.

Driving the positive sentiment in global stock markets was the rally in oil, after Brent crude extended Wednesday’s strong gains to hit a five-month peak.

WELLINGTON – The S&P/NZX 50 Index gained 4.8 points, or 0.07 per cent, to 6,906.1.

ASX stocks to watch Friday, April 22

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTO

The iron ore price has jumped more than 8 per cent to $US70.46.

WPL – WOODSIDE PETROLEUM

ORG – ORIGIN ENERGY

STO – SANTOS

AAP

 

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