Local shares are poised to open higher after the US central bank suggested it remains in no rush to increase interest rates until a more enduring jobs recovery takes hold.
What you need2know:
• SPI futures up 20 pts at 5626
• AUD at 92.86 US cents, 96.40 Japanese yen, 70.06 Euro cents and 55.98 British pence
• On Wall St, S&P 500 +0.3%, Dow +0.4%, Nasdaq flat
• In Europe, Euro Stoxx 50 -0.3%, FTSE -0.4%, CAC -0.3%, DAX -0.2%
• In London, BHP rose 0.7%, In New York, it rose 1.4%
• Iron ore slips 0.8% to $US92.30 per metric tonne
• Spot gold down 0.3% to $US1291.63 an ounce
• Brent oil up 0.7% to $US102.26 per barrel
What’s on today
Australia: Asciano, CFS Retail Prpperty Trust, Super Retail Group, Transpacific, Origin Energy, AMP, Tatts Group, Mirvac Group, iiNet, Treasury Wine, Sydney Airport, Fortescue Metals, ASX Ltd report earnings;
New Zealand, August consumer confidence,
EU Q2 GDP, Germany Q2 preliminary GDP report, US June business inventories.
Stocks to watch
RBC Capital Markets has maintained an “outperform” on Oil Search and kept its $11 a share price target after the 2014 interim result was reported.
Goldman Sachs has maintained a “buy” recommendation on mining supplies company Bradken, with a 12-month price target of $5.70.
Japara Healthcare may soon have some news for patient investors who have waited for the company to strike the first deal in its post-float roll-up.
Currencies
The market appears to have turned against the once highflying New Zealand dollar, says Chris Tedder, research analyst at FOREX.com. “Falling commodity prices and deteriorating growth and inflation outlooks have hit the kiwi hard."
The US dollar hit fresh multi-month highs against a basket of major currencies on Wednesday after minutes from the Federal Reserve's July policy meeting signaled the potential for an earlier-than-expected hike in interest rates. The Fed has been surprised by how quickly the US labour market is healing but does not want to bring forward a planned rate hike until the recovery looks more convincing, the minutes showed.
The US dollar index, which measures the greenback against a basket of six major currencies, hit a fresh 11-month high of 82.277. The index was last up 0.47 per cent at 82.267.
The British pound, which had gained after minutes showed two of the Bank of England's policymakers unexpectedly voted earlier this month for an interest rate hike, was last down 0.15 per cent against the dollar at $US1.6590.
Commodities
US crude oil rose in choppy trading ahead of the September contract’s expiration and after government data showed crude stocks in the United States fell sharply last week. Front-month October Brent and US October crude saw more modest gains.
Metallurgical coal prices decreased this week, including premium LV FOB Australia (-1.8 per cent), mid-vol (-1.6 per cent), LV PCI (-3.6 per cent), SSCC (-1.3 per cent), and low-vol HCC (-0.7 per cent). Premium LV CFR China saw a slight 0.2 per cent gain, RBC Capital Markets reports.
Implied volatility, an estimation of an asset's future volatility, has dropped in gold to around 12 per cent this month from an average of 19 per cent in August last year, and from highs of nearly 60 per cent in mid-2008.
"We are pretty unexcited by the outlook of gold," Charles Morris, head of absolute return at HSBC Global Asset Management, said. "It could stay in this range for another five years."
United States
The Dow and the S&P 500 rose for a third straight session on Wednesday, with the S&P ending a hair under a record reached in late July as minutes from the Federal Reserve's July meeting showed the central bank remains accommodative.
Lowe’s Cos, the No. 2 US home improvement products retailer, echoed larger rival Home Depot in anticipating higher spending on renovations in the second half of the year as the US housing market showed signs of a recovery.
Hewlett-Packard posted a surprise increase in quarterly revenue, as it works through an internal overhaul aimed at cutting costs and re-orienting the sprawling computing company.
Bank of America is expected to pay more than $US16.5 billion to end investigations into mortgage securities that the bank and its units sold in the run-up to the financial crisis, in a deal that could be announced as early as Thursday in New York, a person familiar with the matter said.
Europe
European shares dipped on Wednesday, ending a two-day rally, with investors rattled by Carlsberg’s warning that profits would fall this year due to deteriorating conditions in Russia.
Shares in Carlsberg fell 3.6 per cent after warning on profits. The Danish brewer derives 35 per cent of its profits from Russia, making it a test case of how European companies will be affected by tit-for-tat sanctions between the West and Russia over the conflict in Ukraine.
Luxottica, the world’s largest eyewear maker by revenue, shed 3.6 percent on reports that CEO Andrea Guerra may step down over differences of opinion with founder and chairman Leonardo Del Vecchio.
What happened yesterday
On Wednesday, Australia’s sharemarket closed at the highest since the financial crisis, despite the second-biggest company on the ASX posting its largest fall in five months.
Investors rushed to sell BHP Billiton, with the dual-listed miner losing about $8 billion of its combined market capitalisation spread across Australia and Britain. BHP’s local stock fell $1.55 or 3.9 per cent, to close at $38.13.
The broader market finished at its highest since June 2008, as the S&P/ASX 200 firmed 10.8 points, or 0.2 per cent, to 5634.6 points, while the broader All Ordinaries also added 10.8 points, or 0.2 per cent, to 5629.2.
