Article / 11 December 2017 at 23:31 GMT

Today's Trade: ASX200 gets a boost from commodities

Trading Desk / Saxo Capital Markets
Australia
  • US oil climbed to $58 a barrel overnight as a key North Sea pipeline shut down
  • Iron ore and copper prices rose after stronger than expected China data
  • Traders are looking ahead to the US Federal Reserve’s final policy meeting of 2017
  • The ASX200 opened higher on commodity strength

By Saxo Capital Markets (Australia)

Overnight and early trade

After Wall St's advance overnight the local market opened higher, buoyed by commodities. The ASX200 was up 0.2% in early trade to 6,011.

Asian equities look set to build on recent gains after US stock indices hit fresh records and traders look to the start of the Federal Reserve’s final policy meeting of 2017 for clues on the pace of tightening next year. Oil climbed to $58 a barrel.

Futures gained on equity indices in Tokyo, Sydney and Hong Kong.

Rising technology and energy shares pushed the S&P 500 higher on Monday ahead of a series of central bank meetings around the world this week.

Stock gains were scattered, with six of the S&P 500’s 11 sectors recently higher for the day.
Shares of oil and gas companies led advances in the broad index, rallying as US crude oil prices climbed, while consumer staples stocks fell 0.3% in the S&P 500, among the worst-performing sectors in the index.

Meanwhile, rising technology shares lifted the Nasdaq past other major indices, with Apple jumping 1.9%, Nvidia up 1% and Facebook adding 0.5%.

The S&P 500 climbed 0.2%, heading towards a fresh record close. The Nasdaq Composite rose 0.5% while the Dow Jones Industrial Average added 37 points, or 0.2%, to 24366.

Later this week, investors’ attention will turn to the Federal Reserve, which is set to hold its final policy meeting of the year. With many expecting the central bank to raise interest rates on Wednesday, the focus should shift to the Fed’s economic and rates projections for 2018, analysts said.

The European Central Bank and Bank of England also hold policy meetings on Thursday. Few market participants expect any changes to be announced at this juncture but investors will also watch for clues into their analyses of the years ahead, with the ECB set to release forecasts for 2020 for the first time.

Elsewhere, London’s export-heavy FTSE 100 rose 0.8%, among the biggest gainers in Europe, while the Stoxx Europe 600 fell less than 0.1%.

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 Bitcoin futures jumped after they began trading on a major US exchange. Photo: Shutterstock

In other markets, Bitcoin futures jumped after they began trading on a major US exchange.
The first Bitcoin futures started trading late on Sunday on an exchange run by Cboe Global Markets Inc., triggering a sharp jump in the price of the digital currency as the exchange provider’s website experienced outages from heavy traffic.

Source: Bloomberg, TradingFloor.com, WSJ.com, CNBC

Local markets

  • Bank of New York Australia ADR Index is up 0.8% to 266.4, BHP Billiton ADRs are up 1.6% to A$27.69 equivalent, a 1.8% premium to last Sydney close, Rio Tinto ADRs are up 1.7% to A$63.68 equivalent, a 8.4% discount to last Sydney close
  • Gold steadied below $1,250 an ounce on Monday after its biggest weekly drop in more than six months, with moves muted ahead of an expected interest rate hike from the US Federal Reserve this week. Spot gold was down 0.2% at $1,244.77 per ounce. US gold futures for February delivery settled down $1.50, or 0.1%, at $1,246.90 per ounce. Spot prices fell 2.5% last week, their biggest weekly drop since May. The Fed is widely tipped to lift rates at its two-day policy meeting ending Wednesday, but its accompanying statement will be closely watched for any surprises. The bank is expected to increase rates another two or three times in 2018, but still-sluggish inflation and wage growth has raised question marks over that view. Hedge funds and money managers sharply reduced their net long positions in COMEX gold and silver contracts in the week to Dec. 5, US data showed on Friday. Gold stocks in Toronto rallied fell 0.74% on Friday. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR
  • Brent crude jumped to its highest since June 2015 as a key North Sea pipeline shut down. The Forties Pipeline System, one of the most important oil conduits in the world, is to be fully halted after a crack was discovered, the link’s operator Ineos said. Repairs will take about two weeks, according to a spokesman. The announcement boosted pricing that had been largely muted over the last week following an Opec-led agreement by major producers to extend output curbs through the end of 2018. Brent rallied in London, pulling New York futures up to near $58 a barrel. Brent for February settlement gained $1.29 to settle at $64.69 barrel on the London-based ICE Futures Europe exchange. The global benchmark traded at a premium of $6.64 to February West Texas Intermediate, the largest premium since early November. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY
  • Iron ore prices inched higher as steel cuts deepened and authorities promised to closely monitor their adherence. Steel futures in China rose after reports of further cuts to steel capacity, with cities including Shanxi and Shandong now included in areas that need to improve their environment conditions. The China Iron & Steel Association also said that production cuts at mills will be ensured by monitoring their electricity use. This also helped drag iron ore prices higher. The sector was also buoyed by the stronger-than-expected credit growth data that helped push industrial metals higher. Spot iron ore added 0.1% or $0.08 to close at $68.15. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL
  • Copper prices gained for a fourth straight session, supported by a weaker dollar and data from top consumer China that indicated higher demand. The benchmark copper price on the London Metal Exchange rose 1.5%, its highest intraday jump in nearly two months, to close at $US6670 a tonne. The price has dipped by about 8% since hitting a three-year high in October. London Metal Exchange zinc was 1.4% higher at $US3125 by the end of trade. The premium of cash zinc over the three-month contract has eased to $US6 from a high of $US91 hit on October 12. LME aluminium closed 0.5% higher at $US2002 a tonne, nickel ended 2.7% higher at $US11,240, lead ended the session up 1.6% at $US2488 and tin finished 0.3% lower at $US19,400. Copper stocks: OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC
  • Companies trading ex-dividend today: James Hardie
  • ANZ Bank (ANZ AU): Zurich Insurance to Acquire ANZ Life Unit for $2.2 Billion
  • Australian Agricultural Co. (AAC AU): Australia Lifts Beef Export Est.; Competition Seen Increasing
  • BHP Billiton (BHP AU): Vale JV Gets First Permit as It Seeks to Restart Mining
  • Commonwealth Bank (CBA AU): Close to Hiring Two Investment Banks to Work With JPMorgan on Potential Float of Colonial First: Australian
  • Cromwell Property (CMW AU): In A$170m Placement to Singapore Investors
  • Graincorp (GNC AU): Australia Reduces 2017-18 Wheat Export Est. on Smaller Crop
  • Suncorp (SUN AU): Second Round of Life Unit Auction Won’t Occur Until Jan.: AFR
  • Tatts Group (TTS AU): Holder Meeting to Vote on Tabcorp Deal

Broker upgrades and downgrades

  • Blackmores (BKL AU): Downgraded to Neutral at Evans and Partners; PT A$147
  • Nufarm (NUF AU): Upgraded to Buy at Bell Potter; PT A$9.50
  • Retail Food Group (RFG AU): Downgraded to Hold at Wilsons; PT A$3.27
  • Domain Holdings Australia (DHG AU): Rated New Positive at Evans

USDCAD

USDCAD is again looking to test the recent resistance level of 1.2927 which corresponds to 50% retracement (2017 high 1.3793 and 2017 low 1.2061). 1.2664 proved to be a valid support level earlier this month when USDCAD broke the level but failed to print a daily close below it. The technical setup looks bullish as the downtrend (from the 2017 high) has been breached again.

USDCAD chart
All charts: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more.  

Sources: AFR, SMH, CNBC, BBG, WSJ, The Australian, Reuters 


– Edited by Susan McDonald


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Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets

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