BHP Billiton’s 4th Qtr production report is set for release at 8.30am Sydney. Photo: Matthew BrownUS oil has dropped, taking Wall Street lower and setting the stage for local shares to fall at the open. BHP’s latest output report is pending.
What you need2know
SPI futures down 44pts at 4804
AUD at 69.06 US cents, 81.35 Japanese yen, 63.36 Euro cents and 48.80 British pence
On Wall St, late, S&P 500 -0.8%, Dow -0.3%, Nasdaq -1.1%
In Europe, Stoxx 50 +1.5%, FTSE +1.7%, CAC +2%, DAX +1.5%
In London, BHP +3.01%, Rio +1.5%
Iron ore added 0.3% to $US42.78 per tonne
Spot gold -0.1% to $US1088.10 at 2.57pm New York time
Brent crude +1.3% to $US28.91 at 2.33pm New York time
US oil -3.2% to $US28.47 at 2.32pm New York time
What’s on today
BHP Billiton 4th Qtr production report at 8.30am Sydney. US consumer prices December, US housing starts December. Bank of Canada rate decision. Brazil rate decision. US Department of Agriculture releases annual estimate for world citrus crops
Stocks in focus
Macquarie Wealth Management has an “outperform” recommendation for Woolworths (ASX:WOW) and has a target price of $23.08.
Deutsche Bank has a “buy” recommendation for Alacer Gold (ASX:AQG) and has a target price of $3.50.
Konrad Bialas, a strategist in Warsaw at TMS Brokers, sees the Australian currency clawing back to 71 US cents by December 31, more optimistic than the median forecast of 69 cents, but still implying a fourth year of losses.
South Africa’s rand led gains in the currencies of commodity producing nations, rising for first time in three days. It strengthened 1.3 per cent to 16.65 per dollar. Russia’s rouble advanced 1 per cent.
The pound declined to the lowest level since 2009 after Bank of England governor Mark Carney signalled that an increase in interest rates is still some way off, citing slowing growth and the outlook for inflation.
“While the pace of stock building eases in the second half of the year as supply from non-OPEC producers falls, unless something changes, the oil market could drown in oversupply,” the International Energy Agency said in its monthly oil report. Global oil demand fell to a one-year low in the fourth quarter of 2015, the IEA added, due to mild weather.
Most analysts expect Iran’s full return to oil markets to be relatively slow due to the need to overhaul its infrastructure following years of underinvestment, but the country is also estimated to have stored 12-14 million barrels of crude and 24 million barrels of condensates for immediate sale.
Mills in China, which make half of global supply, churned out less last year for the first time since at least 1991 as local demand dropped, prices sank and producers struggled with overcapacity. Crude steel production shrank 2.3 per cent. Output in December fell 5.2pc.
The S&P 500 is headed for the lowest close in 15 months, while the Russell 2000 Index of small caps dropped to the cheapest since June 2013.
“I don’t think we’ve resolved all the issues in the market,” said Nick Sargen, who helps manage $US46.2 billion as chief economist and senior investment adviser for Fort Washington Investment Advisors. “The questions left are how much is China’s economy in fact slowing down, and when will we see a floor for the price of oil.”
Bank of America fell 2.4 per cent, even as its results exceeded estimates. Apple lost 1.3 per cent to weigh on technology shares. Energy shares sank 3.3 per cent to the lowest since 2010.
European stocks snapped a three-day decline, rising for the first time since they entered a bear market last week. All 19 industry groups climbed, with commodity producers and energy companies leading gains.
The Stoxx Europe 600 Index climbed 1.3 per cent at the close of trading. It rose as much as 2.4 per cent earlier after a report showed China’s economy grew at an annual pace that was just shy of a government target, while leaving open the possibility of further stimulus.
The STOXX Europe 600 Basic Resources index, which houses major mining stocks, rose 5.7 per cent, while the European oil and gas index was up 2.9 per cent, tracking gains in prices of commodities such as oil, copper, nickel and aluminium.
Shares in Anglo American, Glencore, Rio Tinto and BP rose 2.3 to 11 per cent.
What happened yesterday
At close of trade, the benchmark S&P/ASX 200 ended 44 points, or 0.9 per cent, higher at 4903.1. The broader All Ordinaries index posted a gain of 43 points, or 0.9 per cent, to 4955.1.