Local shares are set to edge higher at the open, though given the rapid shift from gains to losses on Wall Street overnight, investors may remain on the defensive.
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What you need2know:
• SPI futures up 10 pts at 5242
• AUD at 87.57 US cents
• In late trade, S&P 500 +0.1%, Dow -0.2%, Nasdaq +0.2%
• In Europe, Euro Stoxx 50 -0.6%, FTSE -0.3%, CAC -0.5%, DAX +0.1%
• Yield on US 10-year government bond 2.15%
• Spot gold down $US1.84 to $US1240.18 an ounce
• Brent oil up 69 US cents to $US84.47 per barrel
What’s on today
US housing starts, building permits, FOMC Narayana Kocherlakota, Fed chair Janet Yellen speaks.
Stocks to watch
Morgan Stanley is underweight Cochlear and changed its target price on the hearing device manufacturer from $48.31 to $53.56.
Morningstar raised Beach Energy to “accumulate” from “hold”, but with a “very high fair value uncertainty” and a $1.60 a share fair value call.
The following stocks will trade ex dividend today: Clifroy, Mt Evelyn and Districts, New Hope Corp, Valley Community Financial.
Currencies
The greenback mostly recovered on the view that Wednesday's sell-off was overdone given the relative strength of the US economy and the Federal Reserve's commitment to tighten monetary policy. A disappointing auction of Spanish debt and data showing that deflation hit five peripheral euro zone countries in September underscored the relative health of the US economy and the divergent outlook for Fed and European Central Bank policy.
The euro was last down 0.28 per cent against the US dollar at $US1.2800. The euro hit an 11-month low against the yen, at 134.16 yen. The dollar was last up 0.23 per cent against the yen at 106.14 yen.
Two former derivative traders for Dutch lender Rabobank were charged in a New York court on Thursday for allegedly manipulating the Libor benchmark, the US Department of Justice said.
Commodities
Three-month copper on the London Metal Exchange was untraded at the close but was bid at $US6552 a tonne, or 1.4 per cent lower, adding to a more than 2 per cent drop the previous day.
Spot platinum fell 0.6 per cent to $US1246.50 an ounce, briefly trading at parity with gold. Platinum’s value is usually higher than that of gold.
Metallurgical coal prices have been mixed this week, RBC Capital Markets notes, with gains seen in premium low-vol FOB Australia (+0.4 per cent) and CFR China (+0.8 per cent), as well as low-vol HCC (+0.7 per cent).
UBS has cut its long term iron ore price to US$75/t cfr (from US$89/t cfr) based on their incentive pricing methodology, and reflecting both rising global iron supply and a lower global demand environment.
United States
The S&P 500 and Nasdaq moved in and out of positive territory in late afternoon trading Thursday after starting the day with losses, as economic reports eased fears about the potential impact of a weakening global economy on the United States. The Dow, which has closed down for five straight sessions, was slightly lower.
St. Louis Federal Reserve Bank president James Bullard said policy makers should consider delaying the end of bond purchases to halt the decline in inflation expectations.
“The Bullard comments were a short-term shot of adrenaline,” Chad Morganlander, a money manager at St. Louis- based Stifel Nicolaus & Co., which oversees about $US160 billion, said. “The overall markets are hooked on QE and liquidity being withdrawn.”
Fed officials are scheduled to next gather on October 28-29 and have said they expect to end asset purchases after that meeting. US 10-year Treasury yields were up two basis points to 2.16 per cent today after falling below 2 per cent yesterday for the first time since June 2013.
Europe
European equities trimmed their losses late on Thursday after hitting a 13-month low."The market was technically extremely 'oversold' and investors were looking for an excuse to jump back into the market," said Philippe Gijsels, head of research at BNP Paribas Fortis Global Markets in Brussels.
The FTSEurofirst 300 index of top European shares ended 0.5 per cent lower at 1,245.78 points. The relative strength index (RSI) for the index fell to 19.6 on Thursday, the lowest in more than three years. A level below 30 is seen technically as "oversold" and often attracts buyers.
"It's too early to talk about a major bear market. We will probably be looking for trading buy opportunities in the near-term," said John B Smith, senior fund manager at Brown Shipley.
Analysts said that cyclical stocks, which are more sensitive to economic conditions, would remain under pressure as global growth concern persisted. Weaker oil prices may further damage energy companies, they said. The euro zone's banking index fell 2.1 per cent, the insurance index was down 1.3 per cent and the European oil and gas index dropped fell 0.6 per cent.
What happened yesterday
After dipping by as much as 1.6 per cent in early trade on Thursday, the benchmark S&P/ASX 200 Index added 0.2 per cent to 5254.9 points, while the broader All Ordinaries Index edged up 0.1 per cent to 5244.3 points.
Commonwealth Bank of Australia rose 0.6 per cent to $75.93, while Westpac Banking Corporation lifted 0.8 per cent to $32.73. ANZ Banking Group gained 0.7 per cent to $31.58, and National Australia Bank jumped 1 per cent to $32.88.