The Australian share market opened higher, in line with gains on Wall Street overnight.
In early trade the benchmark S&P/ASX200 index was up 6.9 points, or 0.2 per cent, at 4,445.5 while the broader All Ordinaries index was up 7.0 points, also 0.2 per cent, at 4,465.8.
On the ASX24, the SPI futures contract was 13 points higher to 4448. The Aussie dollar has continued its slide, triggered on Tuesday by the RBA's decision to cut official interest rates, and continued yesterday on news of a widening trade deficit. It was recently buying $US1.0214, roughly in line with yesterday's close. It was also buying 63.5 pence, 79.16 euro cents, and 80.18 yen.
China iron ore remains unchanged at $US104.20 while the nation is on holiday. The big miners were lower in US trade, however. BHP fell 1.35 per cent on Wall Street, and Rio lost 0.87 per cent.
What you need to know
- The SPI was 13 points higher at 4448
- The $A was trading at $US1.0214
- In the US, the S&P500 added 0.36% to 1450.99
- In Europe, the FTSE100 lost 0.28% to 5825.81
- Gold added 0.1% to $US1776.18 an ounce
- WTI crude oil lost $US3.75 to $US88.14 a barrel
- RJ/CRB commodities index 0.63% to 311.26
Service industries in the US expanded in September by the most in six months, underpinning an economy that lost momentum in the first half of the year. The Institute for Supply Management's non-manufacturing index climbed to 55.1, exceeding the most optimistic projection in a Bloomberg survey, from 53.7 in August.
But this offset fresh data from China yesterday which showed China's normally robust services sector weakened sharply in September to its lowest point since November 2010.
Making news today
In economics news:
- ABS Building approvals for August - A Bloomberg survey expects a a 4.7% rise for the month, up from a 17.3% fall in July. The year-on-year result is expected to show a 14.3% slide in building approvals
- ABS Retail trade for August - A Bloomberg survey expects a 0.4% rise for August, turning around a 0.8% drop in July
In company news:
- Transurban Holdings annual general meeting in Melbourne
Analyst rating changes:
- Flexigroup rated new 'buy' at Deustche Bank
- Tiger Airways cut to 'sell' at Phillip Capital
- Macquarie Atlas raised to 'outperform' at Macquarie
- Commonwealth Bank raised to 'neutral' at Macquarie
The dollar
The Australian dollar is slightly higher after a significant fall in recent days on weak trade data and monetary easing from the Reserve Bank of Australia (RBA).
At 7am AEST, the currency was trading at $US1.0214, up from $US1.0204 yesterday.
Westpac New Zealand senior market strategist Imre Speizer said comments from the RBA on Tuesday and evidence on Wednesday of falling exports had weakened the Australian dollar.
‘‘It’s had a very ambitious sell-off in the last few days, so naturally it’s cresting a bit of that now,’’ he said.
‘‘But I think the bears have got their claws out, and global sentiment is not good. The Aussie currency has got some particular negatives going for it - the RBA’s new dovishness, and weakening fundamentals, including signs of cooling in the export sector.’’
Offshore overnight
Bonds
Portugal’s government securities advanced, with 10-year bonds rising for a third day, amid speculation that a bond-swap plan will pave the way for the nation to return to long-term debt markets.
- Germany’s 10-year yield was one basis point lower at 1.45%
- Italian 10-year yields rose two basis points to 5.05%
- Spain’s two-year yield added eight basis points to 3.22%
Treasury 10-year notes gained, with yields touching a three-week low, as Spain’s economy minister said the country’s recovery depends on clearing up doubts about the euro.
- US 10-year note yields fell one basis point to 1.61%
United States
Wall Street ended modestly higher on Wednesday on stronger-than-expected US labor and service-sector data, but the Dow industrials were hobbled by a slide in Hewlett-Packard.
Key numbers:
- S&P500 added 0.36% to 1450.99
- Dow Jones Indus Avg added 0.09% to 13,494.61
- Nasdaq Composite added 0.49% to 3135.23
Europe
European stock markets have wavered with traders on edge amid heated speculation over a bailout for Spain and ahead of a policy meeting at the ECB.
Key numbers:
- London's FTSE 100 added 0.28% to 5825.81
- In Frankfurt's the DAX 30 added 0.22% to 7322.08
- In Paris the CAC 40 lost 0.24% to 3406.02
Asia
Asian stocks fell as Chinese services industries expanded at the weakest pace since at least March 2011 and Spain’s prime minister said that a bailout request isn’t imminent.
Key numbers:
- MSCI Asia Pacific Index lost 0.3% to 121.68
- Japan’s Nikkei 225 lost 0.45% to 8746.87
- Hong Kong’s Hang Seng added 0.23% to 20888.28
- China’s Shanghai composite added 1.45% to 2086.17
Commodities
Energy
US oil prices have dropped more than four per cent, hit by glum data on China’s services sector and lowered forecasts for Asian growth.
- Despite a fall in US crude stockpiles, which normally would push prices higher, New York-traded West Texas Intermediate crude for November delivery sank to $US88.14 a barrel, a loss of $US3.75 from Tuesday.
- In London, Brent North Sea crude for delivery in November fell $US3.40 to stand at $US108.17 a barrel in late London deals.
Base metals
Copper slipped on Wednesday, ending four days of gains, as weak data from Europe and China reinforced concerns about the outlook for industrial metal demand despite recent efforts by central banks to stimulate economic growth.
Weak readings for purchasing managers indexes (PMIs) suggested it was almost inevitable the euro zone returned to recession in the third quarter, one more in a succession of indications the global economy is struggling.
- Copper, highly sensitive to changes in China’s economy, fell 1.7 cents to $US3.7840 a pound
Precious metals
- December gold rose $US4.20 to finish at $US1,779.80 per ounce
- December silver edged up 2.1 cents to $US34.69 per ounce, and palladium gained $US3.70 to $US657.90 per ounce
- January platinum increased $US6.90 to $US1,694.10 per ounce
How we fared yesterday
Stocks inched up to their highest close in 14 months, but the market lost a lot of its initial optimism as investors lost faith in an imminent Spanish bailout request.
The benchmark S&P/ASX200 index rose 5.6 points, or 0.1 per cent, tt 4438.6, its highest close since August 2 last year, while the broader All Ordinaries index rose 6.9 points, or 0.2 per cent, to 4458.8.
BusinessDay with agencies