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Market report: Tuesday, April 26

Business

UPDATED: The Australian share market is slightly lower, with gains in some financial stocks offsetting falls in Rio Tinto and BHP Billiton.

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The benchmark S&P/ASX 200 is down 0.11 per cent in early morning trade following falls across major international equity markets and commodity prices overnight.

In the US, the Dow Jones slipped 0.15 per cent and Nasdaq fell 0.21 per cent. The UK’s FTSE 100 closed 0.78 per cent lower, while Japan’s Nikkei dropped 0.76 per cent.

The price of iron ore eased fractionally to $US66.07, while oil prices fell.

Given the three-day long weekend, “our market is playing catch-up,” Patersons Securities economist Tony Farnham said.

Investors are keenly awaiting a raft of data, including Australia’s consumer price index on Wednesday, which could reignite rate cuts talk, Farnham said.

The outcome of the US Federal Reserve policy meeting will also be closely watched later this week, along with a long list of US companies reporting earnings, including Apple, Procter & Gamble, Dupont and AT&T.

Three major Australian banks will report their interim earnings next week, and the federal budget will be brought down, Farnham said.

On Tuesday, Rio Tinto dropped $1.38 to $49.62, BHP Billiton fell 49 cents to $19.87 and Fortescue Metals lost 17 cents to $3.19.

Financial stocks were mixed, with Macquarie Group down 69.5 cents at $66.35, Suncorp losing 12 cents to $12.47, ANZ falling 10 cents to $24.25 and National Australia Bank dropping 6.5 cents to $27.57.

Among the risers was the Commonwealth Bank, which gained 22 cents to $75.26 and Westpac which rose 13 cents to $31.45.

Newcrest Mining gained 14 cents to $18.04 after reporting a slight improvement in gold production, helped by a return to full production at its biggest mine.

The company also maintained its annual production guidance.

Woodside Petroleum rose 15 cents to $28.00. At 8.13am (AEST) on Tuesday, the share price index was down 25 points at 5,211.

Locally, in economic news on Tuesday, the ANZ-Roy Morgan weekly consumer confidence survey is due out.

In equities news, Newcrest Mining March is expected to release its quarter production report, while Asaleo Care has its annual general meeting.

A dip in global oil prices has dragged the Australian dollar lower.

And the Australian share market looks set to open lower after Wall Street fell, dragged down by energy shares amid a decline in oil prices.

NEW YORK – Energy shares have dragged Wall Street slightly lower, tracking a decline in oil prices, while earnings and guidance from companies including Perrigo and Xerox have also weighed on US stocks.

“This is hardly a big selloff but we are having trouble breaking through (to new highs on the S&P) because of a lack of consistently good earnings and economic data,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey.

“One of the few positives is a weaker dollar but it is hard to see a reason for that to continue; rates are being lowered around the world and expected to rise here (in the United States), there’s no clear path to a lower dollar.”

The Federal Reserve is expected to hold interest rates steady after a two-day meeting set to begin on Tuesday, but policymakers may be more upbeat on the economic outlook, leaving the path open for future rate hikes.

LONDON – European equities have sunk as falls for miners and oil firms pushed the FTSEurofirst 300 down for a third straight day ahead ahead of central bank meetings in the United States and Japan this week.

Signs that a three-month rally in stocks and commodities markets was cooling, a US Federal Reserve rate decision on Wednesday and a Bank of Japan policy update on Thursday meant there was little incentive for traders to be bold.

Talk has been that Japan could push deeper into negative interest rate territory, while there is intense interest on where the Fed currently stands on another rate hike.

“Central banks are still the name of the game,” said Nordea’s chief strategist for developed markets, Jan von Gerich.

“There is a chance that the Fed could surprise with a bit of hawkishness on Wednesday. The dollar hasn’t really strengthened and the S&P 500 is back near its all-time high, so they could certainly test the market.”

Global investors are expected to pull $US538 billion ($A699.25 billion) out of China’s slowing economy in 2016, the Institute of International Finance (IIF) has estimated, although the pace of outflows has dropped.

HONG KONG – Asia markets sank as Tokyo gave back 0.8 per cent of the 4 per cent it had made last week.

As well as signs the three-month rally in stocks and commodities markets is cooling, a US Federal Reserve rate decision on Wednesday and the Bank of Japan meeting on Thursday meant there was little incentive for traders to be bold.

Talk has been that Japan could push deeper into negative interest rate territory, while there is intense interest on where the Fed currently stands on another rate rise.

“Central banks are still the name of the game,” said Nordea’s chief strategist for developed markets, Jan von Gerich.

“There is a chance that the Fed could surprise with a bit of hawkishness on Wednesday. The dollar hasn’t really strengthened and the S&P 500 is back near its all-time high, so they could certainly test the market.”

DUBAI – Oil exporting countries in the Middle East lost a staggering $US390 billion ($A506.89 billion) in revenue due to lower oil prices last year, and should brace for even deeper losses of more than $US500 billion this year, the International Monetary Fund says.

RIYADH – The powerful young prince overseeing Saudi Arabia’s economy has unveiled ambitious plans aimed at ending the kingdom’s “addiction” to oil and transforming it into a global investment power.

ENERGY

Oil prices have fallen, but a weaker US dollar limited the drop.

Brent oil futures for June delivery were down US36 cents or 0.80 per cent at $US44.75 a barrel, while US, or WTI, oil futures, also for June delivery, fell $US1.09 or 2.49 per cent to $US42.64 following a report that showed a spike in US crude inventory.

PRECIOUS METALS

Gold has risen as a retreat in the US dollar helped to tempt back some buyers after the previous session’s 1.3 per cent slide, but moves were muted ahead of a Federal Reserve policy meeting this week.

The Fed is not expected to raise interest rates at its April 26-27 meeting, but markets will be looking for the US central bank’s take on the global economy and its monetary policy outlook.

“It all depends on the Fed for the time being,” Julius Baer analyst Carsten Menke said.

“Inflows into exchange-traded products have really levelled off in the second half of March and into April.”

“We’re in this narrow band somewhere between $US1,200 and $US1,250.

The market is really looking for guidance here,” said Stefan Wieler, vice president of GoldMoney in Toronto.

BASE METALS

Prices of industrial metals have fallen as the market adopted a more cautious attitude towards demand growth in top consumer China, but losses were limited by the weaker US dollar.

“The jury is still out on whether this (last week’s high) is the usual seasonal uptick after the Chinese new year before the summer lull kicks in or whether this is really a genuine increase in demand,” Julius Baer analyst Carsten Menke said.

“The price recovery in copper has been argued as evidence that China has turned, and a new stimulus driven recovery is at hand,” Barclays said in a note.

“Having reviewed the most recent China downstream copper demand data, we are yet to find evidence of a permanent turn.”

ASX stocks to watch on Tuesday, April 26

AHY – ASALEO CARE: Asaleo Care has its annual general meeting on Tuesday.

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTO

The price of iron ore has eased fractionally, to $US66.07.

ORG – ORIGIN ENERGY

STO – SANTOS

WPL – WOODSIDE PETROLEUM

Oil prices have fallen again, heading back toward the $US40 mark.

NCM – NEWCREST MINING: Newcrest Mining is expected to release its quarterly production report.

AAP

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