Wall Street was higher on Wednesday afternoon as a strong recovery in oil prices pushed energy shares higher. Photo: Richard DrewLocal shares are poised to open higher as oil and metals rallied overnight. $A surges through 75 US cents. NZ cuts key interest rate.
What you need2know
SPI futures up 15pts or 0.3% to 5170 at 7am Sydney time
AUD up 1% to 75.09 US cents, 85.11 Japanese yen, 68.19 Euro cents and 52.80 British pence
On Wall St, in late trade, Dow +0.2%, S&P +0.5%, Nasdaq +0.5%
In Europe, Stoxx 50 +0.6%, FTSE +0.5%, CAC +0.6%, DAX +0.4%
In London, BHP +1.1%, Rio +0.2%
Spot gold -0.6% to $US1253.82 at 2.59pm New York time
Brent crude +3% to $US40.84 at 2.34pm New York time
US oil +4.4% to $US38.10
Iron ore -8.8% to $US58.02
What’s on today
ECB rate decision. South Korea rate decision.
Overseas data: China inflation (Feb.), China new lending, money supply (Feb.) anytime March 10-15, US jobless claims (weekly), US quarterly services survey (4Q), US household net worth (4Q), US budget statement (Feb.), Germany trade data (Jan.)
Overseas earnings: Dollar General, Linde, Aviva, Carrefour
The Kiwi has fallen in the wake of the RBNZ’s unexpected 25 basis point rate cut, putting the official cash rate at 2.25%. In a statement, RBNZ governor Graeme Wheeler said the outlook for global growth has deteriorated. “There are many risks to the outlook. Internationally, these are to the downside and relate to the prospects for global growth, particularly around China, and the outlook for global financial markets. The main domestic risks relate to weakness in the dairy sector, the decline in inflation expectations, the possibility of continued high net immigration, and pressures in the housing market.”
Wheeler said the NZ central bank will remain accommodative. “While long-run inflation expectations are well-anchored at 2 per cent, there has been a material decline in a range of inflation expectations measures. This is a concern because it increases the risk that the decline in expectations becomes self-fulfilling and subdues future inflation outcomes.
“Headline inflation is expected to move higher over 2016, but take longer to reach the target range. Monetary policy will continue to be accommodative. Further policy easing may be required to ensure that future average inflation settles near the middle of the target range. We will continue to watch closely the emerging flow of economic data.”
The euro erased losses against the greenback to trade at $US1.1006 in New York. “There’s talk of rates cuts, increasing the size of the asset-purchase program, and expanding the range of products that the ECB will buy,” said Daniel Murray, the London-based head of research at EFG Asset Management. “Let’s see tomorrow how good Draghi is at playing the market. He has built up expectations before and found them hard to meet.”
Russia’s rouble jumped 2.7 per cent versus the US dollar. Turkey’s lira strengthened for a second day, rising 0.3 per cent. Brazil’s real was the best performer, followed by the currencies of other commodity-producing nations.
Ore with 62 per cent content delivered to Qingdao fell 8.8 per cent to $US58.02 a dry metric ton, according to emailed data from Metal Bulletin. The price dipped 0.2 per cent on Tuesday after Monday’s 19 per cent rally to the highest since June. The retreat was preceded by losses on futures in Singapore and China.
Oil rose to near the highest level in two months after a US government report showed gasoline inventories dropped more than expected last week. West Texas Intermediate futures climbed as much as 4.2 percent. Gasoline supplies fell by 4.53 million barrels, the Energy Information Administration said. Analysts surveyed by Bloomberg had expected a drop of 1.5 million. Crude stockpiles rose by 3.88 million, the EIA said. “This is certainly a bullish report,” said Bart Melek, head of commodity strategy at TD Securities in Toronto.
Copper, zinc and other base metals rebounded as speculators piled back into the market on hopes more production cuts would lead to shortages. However, copper-output cuts spurred by lower prices aren’t enough to end a surplus this year and demand won’t catch up with supply until 2017, according to Javier Targhetta, a senior vice president of marketing and sales at Freeport-McMoRan, the largest publicly traded producer of the metal.
Wall Street was higher on Wednesday afternoon as a strong recovery in oil prices pushed energy shares higher. “It’s the same three culprits that have been driving the first two months of the year and that is – central bank policy, China and oil,” said Bill Northey, chief investment officer of the private client group at US Bank in Helena, Montana.
Biotechs came under pressure after the US government proposed a test program aimed at lowering Medicare drug costs. The Nasdaq Biotechnology sector was down 1.3 per cent.
Sentiment has improved on Apple. Shares in the iPhone maker have increased 5 per cent in the past two weeks as Wall Street bets the company this month will launch a less expensive phone to boost sales in developing countries like China. Ahead of the stock’s 20-per cent drop that started in December, 41 analysts recommended buying Apple shares while just one recommended selling, according to Thomson Reuters data. Currently, no analysts recommend selling, while 38 recommend buying.
European shares advanced as investors speculated on further stimulus from the ECB when it meets tomorrow. Glencore paced miners higher, rising 2.3%, while gains in oil helped energy shares rebound from their deepest selloff in two weeks. BHP Billiton added 1.1% and Rio Tinto edged 0.2% higher.
The Stoxx 600 added 0.6 per cent to 339.39 at 4.30pm in London, after earlier rising as much as 1.3 per cent. The equity gauge has recovered 12 per cent from a 2013 low reached last month amid concern over global growth and a rout in banks. Investors are once again looking to the ECB for reassurance that monetary policy will focus on boosting growth. President Mario Draghi said in January that officials will consider the possibility of more stimulus at the upcoming gathering.
“Expectations are quite high for tomorrow,” said Daniel Murray, the London-based head of research at EFG Asset Management. “There’s talk of rate cuts, increasing the size of the asset-purchase program, and expanding the range of products that the ECB will buy. Let’s see how good Draghi is at playing the market: he has built up expectations before and found them hard to meet.”
What happened yesterday
The Australian sharemarket shrugged off a weak lead to resume its March rally, lifted higher by buying in the big banks and a strong day for healthcare stocks. Early in trade the market fell by as much as 26 points before staging a 1.5 per cent turnaround to close at the day’s highs.
The benchmark S&P/ASX 200 index ended 1 per cent or 49 points higher to 5157.2. The broader All Ordinaries rose 0.9 per cent or 46 points to 5215.7.
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