Local shares are poised to open lower as Wall Street slumped late amid sliding oil prices and third-quarter earnings season wariness while the price of iron ore jumped 4.9% overnight.
What you need2know:
• SPI futures down 17 points to 5120
• AUD at 87.60 US cents, 94.04 Japanese yen, 69.08 Euro cents and 54.54 British pence.
• S&P 500 -1.7%, Dow -1.4%, Nasdaq -1.5%
• In Europe, Euro Stoxx 50 +0.2%, FTSE +0.4%, CAC +0.1%, DAX +0.3%
• Spot gold up 0.7% to $US1231.87 an ounce
• Iron ore (out of the Qingdao port) jumped 4.9% to $US84.17 per metric tonne
• Brent oil down 1.6% to $US88.64 per barrel
What’s on today
Australia NAB business survey, Reserve Bank of Australia assistant governor Guy Debelle speech 9.30am Citi’s 6th annual Aust and NZ investment conference.; Europe industrial production.
Stocks to watch
After four weeks of trading well under 48¢ a share, Arrium’s underwriter UBS will hand out the losses among its hedge fund clients from 9am on Tuesday morning.
Deutsche Bank has a “buy” on Rio Tinto with a $86.75 a share target price.
Morningstar cut Goodman Group to “hold” with a “medium” fair value uncertainty and a fair value of $6.
Currencies
FXCM market analyst, David de Ferranti says that local data is playing second fiddle at the moment to broader global themes like general investor sentiment, which remains jittery. “If we see risk appetite continue to sour, it could keep pressure on the AUD/USD. This is likely to keep the pair capped below the US90¢ figure over the near term. Downside risks are centred on the 0.8660 mark."
The US dollar index edged lower to start the US trading week. “If the US is not going to raise rates as aggressively as the market anticipated ... you can make the case for being short dollars,” said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago. He said Germany’s signs of weakness remained “a big concern”.
Commodities
Kuwait said OPEC was unlikely to cut production to support prices, while Saudi Arabia has privately told oil market participants it could be comfortable with $US80 oil. “In light of these comments, one should not expect any OPEC output cuts before the November 27 meeting,” said Bjarne Schieldrop, chief commodity analyst at SEB in Oslo.
The world's biggest copper producer Codelco apparently had a neutral view on the market, having offered 2015 copper term premiums at $US112 a tonne for customers in Europe, unchanged from this year, two sources with direct knowledge of the offer said on Monday.
United States
US stocks are nearly flat in afternoon trading on Monday but were off the lows of the session following the S&P 500’s break below 1900 and another key technical support level. The index briefly fell below 1900, trading as low as 1890.67 earlier in the session. It remained below its 200-day moving average of around 1905.
Stock traders on Wall Street are bracing for the first real wave of third-quarter earnings, with many expecting the next move in equities to take its cue from corporate outlooks for the rest of the year. “I think you are going to be surprised, earnings are going to be solid and the guidance forward is going to be OK, so I don’t think this nervousness is justified,” said Ken Polcari, Director of the NYSE floor division at O’Neil Securities in New York.
Canadian Pacific Railway has approached CSX Corp about merging the two North American railroad operators to create a transcontinental carrier worth more than $US60 billion, according to the Wall Street Journal.
Europe
European stocks held steady on Monday, breaking their three-week slide as shares in airlines rebounded on cheaper oil prices that lower their operating costs.
Shares in German lender Commerzbank rose 2.3 per cent after sources told Reuters preliminary talks with the European Central Bank have given the bank no reason to believe its capital will fall below stress test requirements.
Volatility was seen in the Milan market Monday, closing down 1.26 per cent, as shares of Italian eyeglass manufacturer Luxottica, maker of the Ray Ban and Oakley brands, plunged 9.67 per cent to close at 37.29 euros, after announcing that its new boss Enrico Cavatorta was resigning after less than a month.
What happened yesterday
The Australian sharemarket retreated from the brink of a technical correction on Monday as the biggest miners jumped in response to a bounce in the iron ore price and some stronger than expected Chinese trade figures. However, the rally in the miners was not enough to buoy the index, as falls in the big four banks dragged it down.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each dropped 0.6 per cent on Monday, to 5155.5 points and 5153.1 points.
