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Local shares poised for a soft start to the day on the back of a weak lead from international markets.
What you need2know:
• SPI futures down 17 points at 5389
• AUD at 88.48 US cents, 96.36 Japanese yen, 68.80 Euro cents and 53.95 British pence
• In the US, S&P -0.6%, Dow -0.7%, Nasdaq -0.4%
• In Europe, Euro Stoxx 50 -1.6%, FTSE -1.4%, CAC -1.9%, DAX -1.6%
• Iron ore slips 0.5% to $US79.40 per metric tonne
• Spot gold adds 0.6% to $US1222.89 an ounce
• Brent oil is 0.2% lower at $US96.79 per barrel.
What’s on today
Australia Financial Stability Review; US new home sales, Richmond Fed manufacturing index
Stocks to watch
Deutsche Bank has a “hold” rating for information services company, SAI Global Limited and a 12-month price expectation of $4.75 a share.
Deutsche Bank has a positive “buy” rating for aluminium refiner, Alumina Limited and a 12-month price expectation of $2.25 a share.
Morningstar has a “hold” recommendation on national carrier, Qantas, with fair value price expectation of $1.20.
Morningstar recommends a “hold” position on drug company, Acrux, with a high fair value uncertainty on its price. The fair value expectation at present is $2.00.
The following stocks will trade ex dividend today:
Capitol Health, Centrepoint Alliance, Collection House, Credit Corp, Crown Resorts, Fletcher Building, Legend Corp, Mastermyne Group, MaxiTRANS Industries, Reject Shop, Seven Group Holdings, Seymour Whyte, Spark NZ, Western Area.
Currencies
The Australian dollar was fetching US88.45¢ on Wednesday morning, compared to US89.12¢ on Tuesday afternoon.
The US dollar held steady against other major currencies on Tuesday after a flurry of profit-taking that also helped lift the battered euro. The euro, which traded near $1.40 in May, was up 0.06 percent in late New York dealings at $1.286 after trading as high as $1.29, in part on data suggesting improved economic growth in Germany. Bruised by worries about economic growth and loosening European Central Bank monetary policies, the euro on Monday had touched a 14-month low. Against the Japanese yen, the dollar on Tuesday was flat at 108.84 yen. Sterling was up 0.15 percent against the dollar, and the dollar index of six currencies traded against the greenback was off 0.1 percent after touching a 4-1/2-year peak on Monday.
St George Bank economists note that the US dollar index has touched a new four-year high this week. The Australian dollar continues to come under pressure reflecting the combination of Chinese growth concerns, further slides in commodity prices, weaker risk appetite and recent US dollar strength.
Commodities
Oil prices were mixed following better-than-expected Chinese manufacturing data but a poor showing in a key measure of eurozone activity. In New York, US benchmark West Texas Intermediate for November delivery pushed up 69 cents to close at $US91.56 a barrel. Meanwhile Brent North Sea crude for November lost 12 cents to $US96.85 a barrel in London deals.
Scott Schuberg, CEO at Rivkin Securities notes, that for those who are pointing to Africa as a boom continent, the production of commodities in Africa – due greatly to the lack of scale in operations there – is very expensive, and therefore not profitable when iron ore is being sold for about the same price as it can be produced in West Africa. “Luckily for BHP and Rio Tinto, iron ore can still be pulled out of Western Australia for a profit, but for many of the smaller producers and those who have met with unfortunate timing by kicking off operations in areas where a lack of scale leads to very high production costs, it really will be a tough slog to remain in business if this trend in base metals demand continues.”
United States
US stocks fell in a broad decline on Tuesday, with the S&P 500 down for its third straight session, as investors digested signs of slowing global growth. The Dow Jones industrial average fell 113.41 points, or 0.66 percent, to 17,059.27, the S&P 500 lost 11.35 points, or 0.57 percent, to 1,982.94 and the Nasdaq Composite dropped 19.00 points, or 0.42 percent, to 4,508.69.
US manufacturing activity hovered at a near 4-1/2-year high in September and factory employment surged, supporting views of sturdy economic growth this quarter. The economic picture was further brightened by other data on Tuesday showing an acceleration in factory and services industry growth in some areas of the country. Housing, however, continues to plod along, with home price gains decelerating sharply in July.
Europe
European stocks fell the most in 11 weeks as health-care companies tumbled amid concern tougher American tax rules will erode their takeover appeal and as manufacturing growth slowed in the euro area. All the 19 industry groups on the Stoxx Europe 600 Index declined.
The FTSE 100 retreated 97.55 points, or 1.4 per cent, to 6676.08 at the close of trading in London, after earlier falling as much as 1.9 per cent. Germany’s DAX lost 1.6 per cent, while France’s CAC Index slid 1.9 per cent.
The manufacturing PMI for Germany slumped to its lowest since June 2013, below forecasts in a Reuters poll. A services industry PMI for the bloc’s No. 2 economy, France, faltered after just two months in growth territory.
Asia
Japanese markets were closed for Autumnal Equinox Day. South Korea’s Kospi index fell 0.5 per cent.
What happened yesterday
The SPI futures index is indicating a fall in the market on Wednesday, down 17 points. A rebound in the big banks and a better than expected reading of Chinese factory activity powered a rally in Australian shares on Tuesday. The local market bounced back after trading below its 2013 closing price the morning after the spot price of iron ore fell below $US80 a tonne for the first time in more than five years.
Wires