need2know: Miners may drag on ASX
Local shares are poised to open flat, though weakness in commodities may weigh on resource producers.
What you need2know
SPI futures down 2pts at 5550
AUD at 73.75 US cents, 91.44 Japanese yen, 67.54 Euro cents and 47.26 British pence
On Wall St, S&P 500 -0.2%, Dow -0.4%, Nasdaq -0.7%
In Europe, Stoxx 50 0.3%, FTSE -1.5%, CAC -0.5%, DAX -0.7%
In London, BHP -5.7%, Anglo American -5.6%, Glencore -5.4%, Rio -3.6%
Spot gold down $US6.89 or 0.6% to $US1094.36 an ounce
Brent crude down $US1.04 or 1.8% to $US56 a barrel
What’s on today
New Zealand Official Cash Rate decision ;US Chicago Fed national activity index (June), US jobless claims, US leading economic indicators (June), Kansas City Fed manufacturing activity (July), Earnings: Dow Chemical, McDonald’s, Caterpillar; Canada retail sales (May); Japan trade data (June); UK retail sales (June); Russia gold and currency reserves (as at July 17).
Stocks in focus
Deutsche Bank has a “buy” on Oil Search and a target price of $8.75 a share. The broker says key risks include outages at PNG LNG, production costs and exploration failures.
RBC Capital Markets has a “sector perform” on Evolution Mining and a target price at $1.20, up from $1 previously. “Clearly FY15 has been a significant year for EVN, dramatically changing the make-up of the company with acquisitions, as well as continuing to deliver from an operational perspective.”
Macquarie Group said “WSA (Western Areas) remains our preferred pure play nickel stock” and has an “outperform” on the stock with a 12-month price target at $4.90 a share.
The US dollar rose to almost a four-month high as a better-than-forecast housing report supported US moves toward higher interest rates, reinvigorating a selloff in commodity currencies.
The greenback advanced versus Norway’s krone, the Brazilian real and the dollars of Canada and New Zealand on speculation sliding commodity prices will necessitate further stimulus in resource-exporting nations. Australia’s currency halted a two- day advance versus the US dollar after central-bank governor Glenn Stevens said further interest-rate cuts were “on the table.”
“Investors are continuing to view dollar weakness as a buying opportunity, given the medium- and longer-term outlook remains pretty bright for the dollar,” said Omer Esiner, chief market analyst at the currency brokerage Commonwealth Foreign Exchange in Washington. “The prospect of higher rates in the US is a key headwind for the commodity currencies.”
Iron ore fell by the most in two weeks after BHP Billiton reported quarterly production that topped expectations and reiterated plans for a further increase, adding to a global surplus. Ore with 62 per cent content delivered to Qingdao dropped 0.7 per cent to $US51.76 a dry ton on Wednesday, according to Metal Bulletin Ltd.
The gold rout this week has spurred a buying spree of bullion coins in the United States, dealers said, as government data showed sales for this month have hit their highest in more than two years. With more than a week still to go until the end of the month, sales of US Mint American Eagle gold coins have vaulted above 110,000 ounces so far this month, the highest monthly tally since April 2013, when the historic selloff in bullion unleashed a surge in pent-up demand, ending a decade-long run-up in prices.
Wall Street declined for a second straight session on Wednesday as the technology sector fell on disappointing results from giants including Apple. Other tech losers on the Dow Jones were Microsoft, IBM, Cisco and Intel. On a positive note, JPMorgan, Boeing and Nike each advanced at least 1 per cent.
“Investors are cautious because some of the bigger names have missed expectations,” said Robert Pavlik, who helps oversee $9.1 billion as chief market strategist at Boston Private Wealth. “The two giants reporting (Apple and Microsoft) is what’s causing the weakness today. Earnings season really isn’t that bad.”
Five of the S&P 500’s 10 main groups declined, led by technology’s 1.7 per cent slide, the biggest drop since the equity benchmark fell to a four-month low on two weeks ago.
European shares dropped on Wednesday, dragged down by tech stocks after Apple’s revenue forecast fell short of estimates, as the quarterly earnings season gathered pace in Europe and on Wall Street.
The STOXX Europe 600 Technology index shed 1.7 per cent, with chip designer ARM Holdings among those falling the most. ARM fell 6.6 per cent after the results from Apple, a major customer, despite posting a 32 per cent rise in second-quarter profit. German chipmaker Dialog Semiconductor, another company with ties to Apple, tumbled 5.2 per cent.
Credit Suisse shares were among the worst performers on the Swiss stock market after the Financial Times reported the bank’s new chief was sounding out investors for support on a potential deal to bolster asset management.
Europe’s second-biggest budget carrier, easyJet, jumped 4.9 per cent on guidance for annual profit growth of up to 14 per cent.
What happened yesterday
The ASX tumbled 1.6 per cent on Wednesday, snapping a six-day rally, with a focus on Apple’s disappointing forecasts.