Today's Trade: Aussie shares continue to climb
- The S&P/ASX 200 index up 23 points at 5770 in the first 20 minutes
- Westpac Consumer Confidence Index is due to be released later
- Miners are showing the way forward with BHP and Rio the stars
- AUD keeps its value above US 80 cents
By Saxo Capital Markets
Overnight and early trading
- S&P/ASX 200 Index futures are up 0.4% to 5770 as of 0650 AEDT. Futures relative to estimated fair value suggest an early gain of 0.5%.
- Bank of New York Australia ADR Index is up 0.6% to 281.0, BHP Billiton ADRs are up 0.6% to A$27.40 equivalent, a 1.0% premium to last Sydney close, Rio Tinto ADRs are up 0.9% to A$61.93 equivalent, a 10.0% discount to last Sydney close.
- Gold prices fell for the second straight day on Tuesday after United Nations sanctions against North Korea were less severe than many initially expected. Gold for December delivery settled down 0.2% at $1,332.70 a troy ounce on the Comex division of the New York Mercantile Exchange, falling further after its worst day in more than two months Monday.
- US officials eased their demands for sanctions against North Korea Monday after North Korea didn’t conduct a weekend missile test as many had previously predicted. Some analysts said the latest developments between the two countries removed some fear in the markets, with the UN Security Council sanctions less stringent than the US initially requested. Gold stocks in Toronto recovered from previous session selling to trade over 1% overnight. Gold stocks: GOR, NCM, NST, AQG, EVN, KCN, RMS, RRL, SAR, SLR.
- Crude futures turned higher after Opec said its oil output fell in August and as US refiners continued to ramp up following Hurricane Harvey. US crude futures rose 16 cents, or 0.33%, to $48.23/barrel on the New York Mercantile Exchange. Brent, the global benchmark, rose 43 cents, or 0.8%, to $54.27/b.
- In its monthly oil report, Opec said its production fell for the first time since April in a sign that its efforts to rein in the global supply glut are starting to pay off. Opec said on Tuesday that its output edged lower by 0.24% to 32.76 million barrels a day in August. It also said demand will be higher than it previously thought. Meanwhile Opec and its allies are discussing extending by more than three months the oil production cuts that expire in March 2018, potentially prolonging them well into the second half of next year in an effort to boost prices, according to people familiar with the matter. An extension of that duration would be needed under the worst-case scenario for the oil market that Opec ministers are now contemplating, the people said, asking not to be named because the talks were private. One option under discussion is a six-month extension, one person said.
- Opec and other producers including Russia, Mexico and Kazakhstan pledged to reduce output by about 1.8 million barrels a day to eliminate a global surplus that was depressing prices. The deal, reached in late 2016, initially called for a six month period, which later was extended with another nine months until the end of March 2018. Despite the cuts, oil prices have struggled to break above $50/b after being weighed down by the resurgence of US shale production. Oil stocks: WOR, WPL, STO, SEA, BPT, OSH, HZN, AWE, KAR, ORG, SXY.
- Iron ore and steel prices rose strongly as traders start ramping up buying ahead of the peak demand season. Both spot and futures markets in iron ore were stronger, driven by a rebound in steel futures prices in China. While inventories have climbed in recent weeks, this comes amid continue supply side curbs, which is likely to keep the market tight. The sector was also buoyed by the stronger producer price index (PPI), which should help support margins in the steel sector. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, BCI, SDL.
- Copper for December delivery closed down 1% at $3.0360 a pound. Since crossing $3.15 last week, the industrial metal has fallen roughly 4%. Many analysts have cautioned that record amounts of speculative buying have left copper susceptible to a pullback because the market is currently relatively balanced. Aluminium closed up 0.7% at $2,137/tonne, zinc fell 0.7% to $3,061/t, lead rose 1.5% to $2,312/t, tin slipped 0.4% to $20,675/t and nickel climbed 2% to $11,990/t. Copper stocks: OZL, SFR; Nickel stocks: IGO, WSA; Aluminium stock: AWC.
- In other news:Companies trading ex-dividend today: Brambles, Cleanaway, Costa Group, Seven Group; Alumina (AWC): Peer Alcoa raised to buy at Deutsche Bank on aluminum forecast hike; AMP (AMP): Advisers UBS, Macquarie Capital testing Asian buyer interest for life insurance operations, although sales process isn’t imminent; Asset review likely to include divestments: AFR; ASX (ASX): Likely to make decision on blockchain-based clearing and settlement system in next 3 months: AFR; Syrah Resources (SYR): 1H results expected.