Local shares are poised to open lower as iron ore extends its slide and as the US central bank affirmed its optimistic outlook for the US economy.
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What you need2know:
• SPI futures down 6 pts at 5369
• AUD at 86.11 US cents, 101.71 Japanese yen, 68.71 Euro cents and 55.00 British pence
• On Wall St in late trade, S&P 500 -0.3%, Dow -0.2%, Nasdaq -0.6%
• In Europe, Euro Stoxx 50 +0.1%, FTSE -0.2%, CAC +0.1%, DAX +0.2%
• Spot gold down 0.1% to $US1195.50 an ounce
• Iron ore falls 2.2% to $US70.20 per metric tonne
• Brent oil flat at $US78.51 per barrel
What’s on today
US, Europe, China “flash” manufacturing; Japan trade balance; US FOMC minutes, consumer prices existing home sales, leading index.
Stocks to watch
Iron ore miners, gold producers, banks.
Private equity player TPG Capital is losing no time pushing ahead with its sale plans for Alinta Energy, with a flyer due to land in the inboxes of potential bidders as early as next week.
Deutsche Bank has a “buy” on BlueScope Steel and a target price of $6.25 a share.
The following stocks will trade ex dividend today: Bellarine Peninsula, Incitec Pivot, Naos Emerging Opportunities.
Currencies
Many US Federal Reserve policy makers last month said they should be on the lookout for signs of a decline in expectations for inflation, minutes of their meeting show.
“Many participants observed the committee should remain attentive to evidence of a possible downward shift in longer- term inflation expectations,” according to a record of the Oct.ober 28-29 Federal Open Market Committee meeting released in Washington. “Some of them noted that if such an outcome occurred, it would be even more worrisome if growth faltered.”
Savanth Sebastian, economist at CommSec, notes that the RBA in its board minutes continued to reiterate the need for a lower $A highlighting that the “Australian dollar remained above most estimates of its fundamental value, particularly given the further declines in key commodity prices over the course of the year to date”.
Commodities
Iron ore fell for a fifth day, approaching $US70 a dry ton in a retreat to the lowest level in more than five years, as rising seaborne supplies fed a glut and Chinese data signalled slowing demand in the largest user.
On the LME, cash copper prices hit a $US77 a tonne premium against the benchmark three-month price, close to the highest since June and signalling a shortfall in nearby supply.
Nickel was the biggest LME mover, closing 3.2 per cent higher at $US16,145, having earlier hit its highest level in a month at $US16,300, as some investors bet on shortages developing next year.
United States
US stocks fluctuated as minutes of the Federal Reserve’s meeting showed many policy makers see a need to watch for a drop in inflation and that only some wanted to remove a statement saying interest rates would remain low for a "considerable time".
The S&P 500 has rebounded 9.9 per cent from a six-month low in October and is trading at 17 times the projected earnings of its members, the highest multiple since 2009.
Goldman Sachs analysts on Wednesday said the Fed, once it begins to tighten monetary policy, would raise short-term interest rates faster and to higher levels than current market expectations.
Europe
Areva shares tumbled 15.7 per cent to 10.18 euros after the company suspended its financial outlook for the next two years.
Royal Mail fell 8.4 per cent to 430 pence “after it warned that growth in parcels would slow thanks to Amazon and its competitive delivery network”, noted Brenda Kelly, chief market strategist at IG traders.
Spanish bank BBVA is in advanced talks to raise its stake in Garanti , one of Turkey’s biggest lenders, in a deal that would give it control of the board as it pursues its strategy of overseas expansion.
What happened yesterday
Australian shares fell for the third day in a row after fears of oversupply in China’s property market prompted the biggest fall in iron ore prices in almost six months.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each lost 0.6 per cent on Wednesday to 5368.8 points and 5352.5points respectively.