Today's Trade: Ore price lifts, oil stocks in spotlight, AUD fragile
- The S&P/ASX 200 is trading sideways, but should eventually break above 6,000
- The iron ore price has edged higher, and signs are bullish for Fortescue Metals
- The AUDUSD has hit highs in recent days, but it hasn't sustained them
By Saxo Capital Markets Australia
US, European stocks up overnight
We saw stocks gaining across Europe and the US last night with US stocks being lifted by a rise in oil prices whilst automobiles helping European stocks propel higher. The Dow Jones Industrial Average gained 56.22 points, or 0.3%, to 17958.73. The S&P 500 rose 9.28 points, or 0.45%, to 2091.18, and the Nasdaq Composite Index climbed 23.74 points, or 0.5%, to 4974.56.
Iron ore has edged higher, but flagging steel output in China is driving a long-term downtrend in prices, and the fallout for miners includes falling earnings and even M&A moves. Photo: iStock
- S&P/ASX 200 Index futures contract rose 0.3% to 5,951; futures relative to estimated fair value suggest an early gain of 0.5%
- Bank of New York Australia ADR Index -1%, snapping 3-day advance; BHP Billiton ADR -1.9%, Rio Tinto ADR -1%
- Spot gold retraced yesterday’s gains, losing 0.6% to trade at US$1,195 from a stronger USD and a lack of direct influential data. Gold stocks: NCM, NST, AQG, EVN, KCN, RMS, SLR
- Brent oil climbed 1.3% to US$56.77 after strong buying from a state owned Chinese oil company that has bought 8.5 million barrels so far in April. WTI lost 0.5% to US$50.69 following yesterday's published 14 year record monthly production surplus. Oil stocks to watch include: WPL, STO, SEA, BPT, OSH, HZN, DLS, AWE, KAR, ORG, SXY
- Iron ore lifted 0.6% to US$48.34. Fortescue's recovery from lunch time yesterday has indicated a bullish signal. Given this lift in iron ore prices on little direct news, FMG offers a good entry point at these prices for a short term trade. We say this because, first, FMG failed to make a new low, and second, yesterday’s hammer candle is a bullish indicator. Iron ore stocks: FMG, BHP, GBG, GRR, MGX, RIO, ARI, BCI, SDL
- AACo (AAC): Indonesia issues import permits for 250k cattle for 2Q
- Challenger (CGF): In talks to buy Dexion Capital
- Rio Tinto (RIO), BHP (BHP): Mining earnings cuts yet to reach bottom, M&A not ruled out: Credit Suisse
- Westpac (WBC), NAB (NAB): These two big four banks are jointly arranging TPG Telecom’s (TPM) $2 billion loan: IFR; NOTE: TPG Telecom in March agreed to buy iiNet for $8.60 a share in cash
- Base metals were mixed overnight. Copper lost 0.9% after yesterday’s 1.4% lift. Aluminium fell 0.7% to US$1,771 with further pressure to be expected after Alcoa reported an expected global surplus of 326,000 tonnes in 2015, up from a deficit of 38,000 q/q. Nickel closed up 0.2% to US$12,580 after being down almost 1% as the market did believe these 6 year lows were warranted. Copper stocks: PNA, OZL, SFR; Nickel stocks: WSA, SIR; Aluminium stocks: AWC
- KVP's Macro Take: NFP brings on USD pain; and watch the RBA cut is a must-read.
- AUS Home Loans m/m (11:30am)
- CNY: CPI y/y, PPI y/y
- EUR: French Gov Budget Balance, French Industrial Production m/m
- GBP Manufacturing Production m/m, Construction Output m/m, Industrial Production m/m
- FOMC Member Lacker Speaks: Due to speak about the economic outlook, in Sarasota
- US Import Prices m/m
Current ASX trades
- Flightcentre (Ticker: FLT:xasx): Entered short position on March 9 at $43.05. Stop loss has been trailed now to our open price of $43.05 (-0.0%). First profit target was reached on Mar 11 at $40.56 (+5.8%), second profit target is $39.74 (+7.6%) and final profit target is $38.40 (+10.8%).
- AMP Limited (Ticker: AMP:xasx): Entered long position on February 6 at $6.10. First profit target was reached on February 18 at $6.49 (C +6.4%) and second profit target at $7.12 (C +16.7%) and third and final profit target at $8.00 (C +31%) remains in place. Stop loss trailed to entry price of $6.10
- Greencross (GXL): Raised to buy vs hold at Morningstar
- Independence Group (IGO): Raised to buy vs hold at Wilson HTM
- OZ Minerals (OZL): Raised to buy vs hold at Wilson HTM
- SingTel (SGT): Singapore-listed stock cut to hold vs buy at DBS Vickers with PT S$4.45
S&P/ASX 200 ready to break 6,000
The S&P/ASX 200 may go through yet another day of trading sideways, but we believe it is only a matter of time before it breaks above the resistance level of 6,000. Therefore, positioning of this anticipation would be a key focus.
S&P/ASX 200 flirts with resistance at 6,000
These price moves suggest that the AUDUSD is looking for its next catalyst. Today’s Chinese CPI (11:30am) and next Thursday’s employment number should be closely monitored while today’s home loans figure may influence AUDUSD, and offer some clues on its near-term direction.
AUDUSD can't sustain highs
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– Edited by Robert Ryan
Today's Trade is compiled by the Sydney trading desk at Saxo Capital Markets.