Local shares are poised to open higher, after positive factory data from Germany and an unexpected surge in jobs in the US lifted global equities.
What you need2know:
• SPI futures up 27 pts at 5360
• AUD at 82.98 US cents, 100.84 Japanese yen, 67.58 Euro cents and 53.26 British pence
• S&P 500 -0.7%, Dow -0.2, Nasdaq -1.4%
• In Europe, Euro Stoxx 50 +2.7%, FTSE +1%, CAC +2.2%, DAX +2.4%
• Iron ore adds 0.75 to $US71.77 per metric tonne
• Spot gold down 1.1% to $US1192.51 an ounce
• Brent oil slides 0.8% to $US69.07 per barrel
What’s on today
ANZ November newspaper job ads, Third-quarter manufacturing sales.
Stocks to watch
Macquarie Wealth Management has an “outperform” on Transurban Group with a $8.53 a share 12-month price target.
Deutsche Bank has a buy rating on Nufarm and a $4.85 target price.
The following stocks will trade ex dividend today: Intercept Minerals.
Currencies
The US dollar reached fresh multiyear highs on Friday after a stronger-than-forecast November US jobs report increased expectations the Federal Reserve may begin raising interest rates sooner than previously thought.
Interest rate futures contracts now show that traders see about a 53 per cent chance for a July 2015 hike, based on the CME FedWatch program. That is more in line with last month's Reuters poll of economists who see the first rate increase in June of next year.
As for USD-JPY: Steven Englander, global head of G10 foreign exchange strategy at CitiFX, says "We think dollar/yen could hit 125 yen before the end of 2014. But then it is going to stabilise. We think that the good news will be priced in at that stage," said Englander.
As for USD-EUR: Englander said the euro has more to fall, perhaps reaching $US1.20 before the end of the year and plumbing lows of $US1.12 to $US1.15 in 2015.
Commodities
US crude oil closed at its lowest since July 2009 on Friday as Brent averaged below $US70 a barrel in the week for the first time since 2010.
In the wake of the latest US jobs data, spot gold hit a low of $US1186.10, down 1.6 per cent, on Friday. Some traders said they were surprised it did not fall further. For the week, however, spot gold rose around 2 per cent after heavy short-covering lifted prices 4 per cent on Monday, its biggest daily gain in more than a year. Traders said this could attract short-term buying this week.
United States
The Dow and S&P 500 closed higher on Friday for a seventh straight weekly advance as a better-than-expected jobs report indicated strong economic growth.
Financials rose 1 per cent as higher interest rates would prop up earnings in the sector. Bank of America rose 2.7 per cent to $US17.68 while Goldman Sachs was up 1.8 per cent to $US195.45, boosting the Dow.
Nonfarm payrolls surged by 321,000 last month, the most since January 2012, the Labor Department said on Friday. The unemployment rate held steady at a six-year low of 5.8 per cent. "I think it will put pressure on the Fed to raise rates in the first half of next year by June, perhaps even March," said Craig Dismuke, chief economist at Vining Sparks in Memphis, Tennessee.
Europe
European stocks rallied on Friday, with Germany's DAX hitting a record closing high.
German factory orders, adjusted for seasonal swings and inflation, climbed 2.5 percent after a revised increase of 1.1 per cent in September, data from the Economy Ministry in Berlin showed on Friday. Economists had predicted a 0.5 per cent increase.
Vodafone Group climbed 3.1 per cent after Goldman Sachs Group upgraded the shares to buy from neutral, saying Europe’s largest mobile operator will benefit from mergers and acquisitions activity in the sector. The company is considering a combination with Liberty Global Plc, people familiar with the matter said on December 1.
What happened on Friday
On Friday, the S&P/ASX 200 slid 33.5 points, or 0.6pc, to 5335.3.
