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Market report: Thursday, April 28


UPDATED: The share market is higher due to strong gains by mining and energy companies.

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The benchmark S&P/ASX200 index was 0.65 per cent higher at noon (AEST) with the iron ore miners among the best performers, even though iron ore prices fell overnight.

BHP Billiton was up more than 4 per cent, Rio Tinto had gained 3.5 per cent and Fortescue Metals was more than six per cent stronger.

The energy sector was also driving the market higher, with Origin Energy close to 4 per cent higher, Santos more than 3 per cent higher and both Woodside and Oil Search were close to 2 per cent stronger.

Three of the big four banks were in positive territory, while Westpac was weaker.

At noon (AEST) on Thursday, the currency was trading at 75.90 US cents, down from 76.11 cents on Wednesday.

“The fallout from the extremely tepid CPI reading has been somewhat dramatic,” OANDA Australia and Asia Pacific senior trader Stephen Innes said.

Trader sentiment quickly shifted from zero expectations for a rate cut at next week’s Reserve Bank meeting to a 50 per cent probability.

To make matters worse, the Northern China benchmark iron ore price fell 5.6 per cent on Wednesday, Innes said.

The benchmark S&P/ASX 200 was up 0.5 per cent in early trade Thursday as investors flocked to mining companies after the iron ore price jumped more than eight per cent to $US70.46 overnight.

The miners and other exporters, including Brambles and Amcor, are also benefiting from a lower Australian dollar at 76.03 US cents, Macquarie Private Wealth division director Lucinda Chan said.

“Overall, its been a fairly strong open for the market… with materials leading and energy stocks up,” she added.

Wall Street closed mixed overnight, with the Dow Jones up 0.28 per cent but Nasdaq down 0.51 per cent following the Federal Open Market Committee’s decision to leave the Federal Funds rate target range unchanged between 0.25 per cent and 0.50 per cent.

The UK’s FTSE 100 rose 0.56 per cent, while Japan’s Nikkei fell 0.36 per cent.

Rio Tinto jumped $1.00 to $49.42, BHP gained 53 cents to $20.18 and oil company Woodside Petroleum rose 52 cents to $27.97.

The country’s major banks were mixed, with the Commonwealth Bank up eight cents to $73.84 and ANZ gained five cents to $23.93.

Westpac dropped 24 cents to $30.70 and National Australia Bank slipped six cents to $26.84.

At 7.51am (AEST) on Thursday, the share price index was up 52 points at 5,206.

Locally, in economic news on Thursday, the Australian Bureau of Statistics releases international trade price indexes for the March quarter.

In equities news, Stockland is expected to release its third quarter trading update.

NEW YORK – US stocks have ended mainly slightly higher after fears eased that the Federal Reserve would strongly signal it would raise interest rates in June, though a slump in Apple shares weighed on the Nasdaq index.

Stocks in the telecom and utilities sectors, seen as proxies for fixed income returns when Treasury yields are expected to remain low, rose sharply after the Fed’s announcement.

That indicates market participants expect US government yields to remain subdued.

“The big takeaway here is they (the Fed) continued to be positive on the domestic economy,” said John Bailer, senior portfolio manager at The Boston Company Asset Management.

“They have taken out some of the risk on the global economy.

“It is slightly hawkish in my mind but not enough to get the market worried about it.”

WASHINGTON – The Federal Reserve kept interest rates unchanged but signalled confidence in the US economic outlook, leaving the door open to a hike in June.

The US goods trade deficit narrowed sharply in March as imports tumbled, suggesting economic growth in the first-quarter was probably not as weak as currently anticipated.

LONDON – European shares were little changed amid a mixed set of corporate earnings, while the Greek market underperformed after eurozone officials delayed a meeting on the country’s bailout.

Greece’s benchmark ATG equity index fell 3.7 per cent, making it the worst-performing market in the region.

The Athens market fell after the Eurogroup said late on Tuesday that eurozone finance ministers would not meet on Thursday and needed more time to discuss two sets of Greek reforms that would unlock new loans.

“We’ve had a good run-up in the last couple of weeks, but I think we’re still in a bear market. My overall roadmap from here is down,” said Andreas Clenow, hedge fund manager at Zurich-based ACIES Asset Management.

British authorities say the UK economy grew by 0.4 per cent in the first quarter of 2016, down from 0.6 per cent in the fourth quarter of last year, amid concerns about a global slowdown and a vote on European Union membership.

HONG KONG – Asian shares fell ahead of the US Federal Reserve’s rates decision and Japan’s central bank’s policy announcement.

“The main event tonight is the (Federal Reserve) decision and the question of how much they acknowledge the clearly better global environment,” wrote Sam Tuck, senior FX strategist at ANZ.

“With volatility back to more normal levels, equities again pushing their highs, (European Central Bank President Mario) Draghi indicating they need time to assess existing policy, and Chinese and Asian data showing some signs of picking up, the door is open for the Fed to again signal gradual normalisation.”

The Bank of Japan makes its policy decision on Thursday amid some speculation it could ramp up its already extensive monetary stimulus scheme, which includes negative interest rates on some deposits at the BOJ.


The Federal Reserve’s decision to keep its key interest rate on hold has given oil prices a boost.

The US central bank’s policy-setting committee said the labour market had improved further despite slowed economic activity, adding that it was keeping a close eye on inflation. It also removed references to worries about the global economy from its statement.

Oil prices turned upward, with Brent crude, the international benchmark, up 3.32 per cent, or $US1.51, to $US47.26.

US, or WTI, crude rose 2.93 per cent, or $US1.29, to $45.33 a barrel and had earlier rallied on expectations for a drop in crude oil inventories, but US crude inventories rose sharply, reducing oil’s gains.


Gold has risen for a third straight session, but has pared gains after the US Federal Reserve held interest rates unchanged but left the door ajar to a rise in June.

The US central bank’s policy-setting committee said the labour market had improved further despite a recent economic slowdown and that it was keeping a close eye on inflation.

“By de-emphasizing global risks but acknowledging slower growth, the FOMC executed an equivocal pirouette that keeps a June/July move open but only just,” said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

“Gold has traded in a choppy $US10 range but ultimately the FOMC has not impaired the constructive sentiment in gold and silver.”


Copper has dipped to the lowest in a week on its third straight day of losses as a crackdown on speculators in China dampened sentiment, though metals markets were supported by a weaker dollar and strong oil prices.

Iron ore and steel futures in China led a retreat as the authorities raised trading costs to deter speculative investors believed to be behind last week’s big spike in prices and volumes that raised fears of a destabilising crash.

“That is negative for risk sentiment and that has played out in the short term across the base metals. But we don’t think there’s been nowhere near the same increase in speculative participation in base metals as we’ve seen in the ferrous complex,” Standard Chartered analyst Nicholas Snowdon said.

During the second quarter, Snowdon expects copper to be trapped in its recent range between last week’s peak of $US5,091 and the April low of $US4,631.

“On the one hand we expect the positive momentum in the Chinese economy that we’ve seen year to date to continue through the second quarter, although we do expect a slightly more restrained environment for credit supply,” he said.

ASX stocks to watch Thursday, April 28




The iron ore price has fallen again, drawing closer toward the $US60 mark, down $US1.69 to $US61.09.

SGP – STOCKLAND: Stockland is slated to release its third quarter trading update.




Benchmark oil prices have risen around three per cent with WTI crude up $US1.29 to $US45.23 and Brent crude up $US1.51 to $US47.26.



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