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Market report: Wednesday, April 27

Business

UPDATED: The share market is almost 1 per cent higher due to gains by the big four banks and several major resources companies at noon.

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ANZ has been the best performer in the financial sector with a gain of 1.8 per cent, while Westpac and National Australia Bank were more than 1 per cent higher and Commonwealth Bank was up 0.4 per cent.

Santos and Origin Energy were higher after a weaker US dollar helped support oil prices, and the fall in the greenback also benefited gold prices, giving gold miner Newcrest a boost of about 4 per cent.

Among the miners, Fortescue Metals had jumped about 3 per cent after the iron ore miner announced it will repay another $US577 million of 2019 debt, resulting in further cost savings.

Shares in medical device maker Resmed slid more than 5 per cent after its third-quarter income declined 3 per cent.

At 10.12AM (AEST) on Wednesday, the benchmark S&P/ASX200 index was up 30.2 points, or 0.58 per cent, at 5,250.8, while the broader All Ordinaries index was up 29.5 points, or 0.56 per cent, at 5,313.1.

On the ASX 24, the share price futures index was up 37 points at 5,232, with 7,298 contracts traded.

Earlier at 8.09am (AEST) on Wednesday, the share price index was up 20 points at 5,215.

Oil prices reached a five-month high overnight, with WTI crude prices up 3.28 per cent at 0651 Wednesday AEST, and Brent crude up 2.99 per cent, which could prompt a boost in the local energy sector.

Locally, in economic news on Wednesday, the Australian Bureau of Statistics is due to release the consumer price index for the March quarter, while the ANZ-Roy Morgan weekly consumer confidence survey is also due out.

No major equities news is expected. However, Volpara Health Technologies Limited is slated to list on the ASX.

NEW YORK – The S&P 500 has ticked up, buoyed by gains in the energy and materials sectors as soft economic data weakened the dollar, giving support to oil and gold prices.

The greenback fell after orders for long-lasting US manufactured goods rebounded far less than expected in March as demand for cars, computers and appliances slumped, while US consumers appeared a bit pessimistic on the economy’s short-term outlook and sent a measure of confidence lower.

Federal Reserve officials, starting a two-day policy meeting, are expected to hold interest rates steady but may be more upbeat on the economic outlook, leaving the path open for future rate rises.

“Commodities and oil are up, the dollar trending lower, the things that started this rally are still there but there’s a pause on temporary uncertainties,” said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.

“Technical resistance, weaker data, uncertainty about the Fed, weak earnings numbers are giving people pause.”

LONDON – Encouraging company results and firmer oil prices have helped European shares rebound, with pulp and paper maker UPM and oil major BP moving higher after better-than-expected reports.

“European equity markets are trading moderately higher on positive corporate earnings surprises from several companies,” said Markus Huber, a trader at City of London Markets.

In addition, markets see no chance the Federal Reserve will raise US interest rates when it meets on Wednesday and Thursday. They see only one chance in five it will move at the next meeting, on June 14-15.

That means “many traders are at least temporarily moving their overall exposure to more neutral from previous negative, consequently closing some of their short positions,” Huber said.

HONG KONG – Asian stocks retreated as investors remained cautious, bracing for central bank policy meetings in the United States and Japan this week.

Markets see no chance of a rate increase at this week’sFederal Reserve meeting and are pricing in just about a one in five chance of a move at the June meeting despite Fed officials repeatedly saying a rise in June is on the cards.

“Even dovish policy makers such as (Boston Fed President Eric) Rosengren are saying market expectations are too low. And it is not hard to imagine many at the Fed feel current market rates are too low,” said Tomoaki Shishido, fixed income strategist at Nomura Securities.

“So the Fed may try to urge markets to price in higher rates. On balance, we are more likely to have a hawkish surprise than a dovish surprise,” he added.

The Bank of Japan will make its policy announcement on Thursday.

NEW YORK – Low oil prices have helped cost Exxon its pristine AAA credit rating from Standard & Poor’s, a label it held for over six decades.

LITTLE ROCK, Arkansas – The Chinese company Sun Paper has announced plans for a $US1 billion ($A1.30 billion) bio-products mill in southern Arkansas, the paper company’s first facility in North America.

SAN FRANCISCO – Apple says quarterly revenue fell for the first time in more than a decade, as iPhone sales fell compared with a year ago.

ENERGY

Expectations that a persistent global oil glut would ease has lifted oil prices more than four per cent.

WTI, or US, crude oil futures, for January delivery, rose 4.64 per cent, or $US1.98, to $US 44.62 a barrel, while Brent crude was up 4.20 per cent, of $US1.87 per cent, at $US46.35 a barrel at 0729 Thursday AEST.

Meanwhile, Venezuela has proposed that non-OPEC oil producers attend the group’s June meeting in Vienna to continue “dialogue and co-ordination,” according to a letter from the South American country’s oil minister to the Qatari energy minister, who is also the current OPEC president.

A deal to freeze oil output by OPEC and non-OPEC producers fell apart in Doha earlier in April.

PRECIOUS METALS

Gold has rebounded after weaker-than-expected US durable goods data knocked the US dollar to a session low against the euro, but prices remained hemmed into a narrow range as a two-day Federal Reserve policy meeting began.

“Our economists are looking for rates to remain unchanged (this week),” Standard Chartered analyst Suki Cooper said.

“We think risks are rising for the Fed to maintain a dovish view, and that’s going to set quite a positive background for gold prices,” she said.

“If we get a hawkish tint in the statement, and the physical market remains weak, I can see prices falling towards $US1,200 before they start to pick up.”

BASE METALS

Copper prices have fallen in a sell-off fuelled by worries that expectations of stronger demand in top consumer China were overly optimistic, though a weaker US dollar helped support prices.

“Going back to January, everybody was extremely bearish about China and they are way too optimistic now,” Oxford Economics analyst Dan Smith said.

“We’re going to see a significant pullback over the next month or so, possibly over the next couple of weeks.”

Signs of economic improvement in China, which accounts for nearly half of global consumption, fuelled copper’s rise last week to $US5,091. But much of the rise was due to short-term speculators and funds in China, traders said.

“Authorities of the Dalian, Shanghai and Zhengzhou exchanges have moved quickly to impose various trade controls,” Morgan Stanley said in a note.

“The move to cap the trade surge suggests that China’s enhanced credit liquidity may soon be curtailed. This, together with China’s upcoming Labour Day holiday (May 1), should see a short-term pullback in trade activity and commodity prices.”

ASX stocks to watch on Wednesday, April 27

BHP – BHP BILLITON

FMG – FORTESCUE METALS GROUP

RIO – RIO TINTO

The price of iron has continued its recent decline, falling $US3.29, but remains comfortably above the $US60-mark, at $US62.78.

ORG – ORIGIN ENERGY

STO – SANTOS

WPL – WOODSIDE PETROLEUM

Oil prices have surged more than four per cent, with Brent crude up $US1.87, or 4.2 per cent, at $US46.35 and WTI up $US1.98, or 4.64 per cent, at $US44.62.

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