Local shares appear poised to rise at the open, taking their queue from gains in Europe and Wall Street, after China cut interest rates in a bid to brake that nation's economic slowdown.
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What you need2know:
• SPI futures up 52 pts at 5360
• AUD at 86.67 US cents, 102.12 Japanese yen, 70.05 Euro cents and 55.43 British pence
• On Wall St, S&P 500 +0.5%, Dow +0.5%, Nasdaq +0.2%
• In Europe, Euro Stoxx 50 +3%, FTSE +1%, CAC +2.7%, DAX +2.6%
• Spot gold up 0.6% to $US1201.55 an ounce
• Brent oil up 1.3% to $US80.36 per barrel
• Iron ore slips 0.9% to $US70.31 per metric tonne
What’s on today
UGermany business climate, import price index.
Stocks to watch
Iron ore miners. Shares of both Rio Tinto and BHP Billiton surged higher in London on Friday after the China rate cut was announced.
Deutsche Bank said that with the stock trading below its $2.95 price target (unchanged), it would retain a “buy” recommendation on OzForex (OFX).
Morningstar raised Domino’s Pizza to a “reduce” recommendation from a “sell” with a “high” fair value uncertainty and a $17 a share fair value price. It says the stock suits investors seeking exposure to the food and beverage sector.
Currencies
On the outlook for the yen: “The (US) dollar had been bid so high so quickly that a sudden, deep selloff would be totally logical,” said Daisuke Uno, strategist at Sumitomo Mitsui Banking. “Still, the longer-term direction of the dollar remains higher, perhaps to the 120-125 yen range."
The euro fell sharply on Friday after European Central Bank chief Mario Draghi said the bank will do “what we must to raise inflation and inflation expectations as fast as possible”.
Unconfirmed talk that Swiss National Bank intervened on Friday to defend its cap on the franc at 1.20 per euro saw the Swiss currency move away from 26-month highs.
Commodities
On Friday, ore with 62 per cent content delivered to Qingdao slipped 0.9 per cent to $US70.31 a dry ton, according to data from Metal Bulletin Ltd. It shed 6.8 per cent on the week.
Most LME traded metals were higher in the wake of China's rate cut. Nickel marched 1.7 per cent higher to finish at a five-week high of $US16,630 a tonne as prices also benefited from expectations of a scarcity of ore. It gained more than 6 per cent in the week, the strongest weekly gain since early May.
Oil prices rose on Friday for their first weekly gain in two months.
Gold climbed on Friday to its highest in three weeks, helped by short-covering.
United States
Volatility may pick up this week as many investors and traders take off for Thanksgiving. Markets are closed in the US on Thursday and will close early on Friday. Still, December has historically been the best month of the year for the S&P, according to the Stock Trader’s Almanac, averaging a rise of 1.7 per cent.
Last week, the Dow rose 1 per cent, the S&P added 1.2 per cent and the Nasdaq rose 0.5 per cent. It was the fifth straight weekly advance for all three.
Gains in the Nasdaq were limited by declines in large-cap tech companies. Microsoft fell 1.5 per cent to $US47.97 while Netflix slid 2.1 per cent to $US360.28. Apple edged up 0.1pc, Google added 0.5pc.
Europe
European shares shot higher after the European Central Bank signalled it is ready to act quickly to deter deflation and China's rate decision.
Shares in mining companies that supply Chinese factories with raw materials surged on the news. In London, Anglo American soared 6.7 per cent 1380 pence, Rio Tinto jumped 6.2 per cent to 3042 pence and BHP Billiton gained 5.0 per cent to 1662 pence.
Royal Bank of Scotland admitted on Friday it submitted erroneous data for European bank stress tests in October and had in fact only just scraped through, calling into question whether it can pass a tougher British test.
What happened on Friday
Shares ended sharply lower last week, erasing the year’s gains in the process, after further weakness in the iron ore price put the listed miners under heavy pressure.
The S&P/ASX 200 index on Friday closed 11.9 points, or 0.2 per cent, lower to 5304.4. The benchmark declined in every one of the week’s sessions, closing 2.8 per cent lower over the five days – its biggest weekly loss since June 2013.
The broader All Ordinaries index fell 10.4 points, also 0.2 per cent, on Friday to 5292.1, taking the weekly loss to 2.6 per cent.
