The main US equity benchmark’s tumble to start 2016 has left it 9.1 per cent below its all-time high set in May. Photo: Michael AppletonLocal shares are set to open higher as shares rallied on Wall Street after crude oil dropped below $US30 a barrel overnight, for the first time in twelve years, then pared its losses.
What you need2know
SPI futures up 26 points to 4906
The Australian dollar is buying 69.79 US cents, 81.97 Japanese yen, 64.21 Euro cents and 48.34 British pence
On Wall St, late, Dow +0.4%, S&P 500 +0.1%, Nasdaq +0.6%
In Europe, Stoxx 50 +1.2%, FTSE +1%, CAC +1.5%, DAX +1.6%
In London, BHP -2.9%, Rio -2.7%
Spot gold -0.4% to $US1090.02 at 2.50pm New York time
Brent crude -2.5% to $US30.75 at 2.23pm New York time
US oil -3.2% to $US30.40 per barrel
Iron ore is fetching $US41.19 per tonne
What’s on today
Economy: China trade balance for December; US MBA mortgage applications, US budget statement, Federal Reserve Beige Book. Two Fed policymakers will speak: Eric Rosengren, Charles Evans.
Stocks in focus
Price targets and recommendations for global miners are being reset. Overnight Barclays, HSBC and Jefferies cut BHP Billiton and Rio Tinto among others. BHP was cut to “underweight” by Barclays and to “reduce” by HSBC; Jefferies cut its London price target, though it has a “buy” on the stock.
China has stepped up its defense of the yuan, with the People’s Bank of China repeatedly intervening in the offshore market on Tuesday, according to people familiar with the matter. The yuan traded in Hong Kong rose 0.43 per cent to 6.5850 a dollar, according to prices compiled by Bloomberg. The currency in Shanghai advanced 0.11 per cent to 6.5767, leaving a spread of 0.2 per cent. That’s compared with a record 2.9 per cent reached last week.
The yen rose as investors went back to seeking haven investments. Japan’s currency strengthened versus all of its Group-of-10 peers save for the Norwegian krone. The dollar rose versus the euro to $US1.0833.
Britain’s pound fell against all its major counterparts after data showed UK industrial production unexpectedly contracted in November.
US oil fell below $US30 a barrel in mid afternoon trade in New York on Tuesday, before paring its losses. The rout for oil though appears intact. Oil prices have become detached from the fundamentals of supply and demand, making a plunge to $US10 a barrel possible, according to Standard Chartered. “No fundamental relationship is currently driving the oil market towards any equilibrium,” London-based head of commodities research Paul Horsnell wrote. “Prices could fall as low as $US10 a barrel before most of the money managers in the market conceded that matters had gone too far.”
Iron ore may tumble below $US35 a metric ton as steel mills in China face weak demand at home and increasing barriers to exports, according to Australia & New Zealand Banking Group. The steel-making raw material will remain weak through March and trade between $US35 and $US40, the bank forecasts in an emailed report. The probability of prices declining below this range in the short term is “rising daily”, ANZ said.
Nickel prices slid to their weakest levels in over 12 years, amid worries about high inventories, while copper sunk to fresh 6-1/2 year lows on persistent worries over China’s economy. LME three-month nickel, which was the worst performer on the LME last year with losses of over 40 per cent, tumbled to $US8120 a tonne, the lowest since May 2003, before paring losses to close at $US8220, a decline of 0.6 per cent.
Benchmark LME copper hit another multi-year low, ending down 0.7 per cent at $US4355 a tonne, its weakest since May 2009.
The Standard & Poor’s 500 Index erased a rally of 1.2 per cent in afternoon trade, as the plunge in commodities overwhelmed optimism sparked by China’s renewed efforts to shore up its currency. The Nasdaq Composite Index was on track for the longest losing streak since 1984.
The main US equity benchmark’s tumble to start 2016 has left it 9.1 per cent below its all-time high set in May. It is 3.7 per cent above the bottom of an August swoon, which was also sparked by anxiety over the impact of China’s weakness on worldwide growth.
A rally in car makers pushed European stocks to their best performance of the year as investors assessed valuations following a four-day losing streak. Auto-related companies rose the most on the Stoxx Europe 600 Index after an industry association forecast an acceleration in Chinese sales in 2016. Energy stocks reversed gains, falling after oil retreated toward a 12-year low. Declines of more than 2.6 per cent each in Rio Tinto Group and BHP Billiton dragged a gauge of miners to its lowest level since July 2003 as commodity prices slipped.
The Stoxx 600 rose 0.9 per cent to 343.22 at the close of trading, paring an earlier advance of as much as 1.9 per cent. After a 7 per cent slide this year through yesterday, shares are trading at 14.4 times projected earnings, the lowest in about a year.
Goldman Sachs sees the Stoxx 600 rallying 18 per cent in the next 12 months from Monday’s close, about double the gains it estimates for the S&P 500. Last week’s rout changed nothing to its outlook. The bank forecasts profit growth of 8 per cent for Stoxx 600 companies this year, compared with 5.7 per cent for the average analyst projection compiled by Bloomberg.
What happened yesterday
A strong start to the Australian sharemarket turned sour on Tuesday, as declining commodity prices weighed heavily on resources and energy stocks. The benchmark index ultimately ended 0.1 per cent, or 7 points, lower at 4925.1, chalking up an eighth straight decline. The All Ordinaries closed 0.2 per cent, or 8 points, lower at 4982.2.
This story Administrator ready to work first appeared on Nanjing Night Net.