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AFR Lower open seen, base metals mixed


Mar 20 2017 13:54:54

By Timothy Moore
March 21 (Financial Review) -- The ASX is poised to
extends its losses amid listless trading in Europe and the US.
Base metals were mixed in London. Oil slid lower before paring
most of its losses, iron ore fell. The Australian dollar is
higher, though off its overnight peak. ASX futures are down 13
points.
There was no real negative sentiment, more a lack of any
fresh positive development at the start of the trading week
overseas.
Shares in Deutsche Bank shed 3.7 per cent in Frankfurt
after it detailed plans to sell new shares at a 35 per cent
discount to last week's closing price as it seeks to bolster
its finances.
The UK said it is now poised to trigger divorce
proceedings with the European Union on March 29, setting the
stage for two years of negotiations. Talks could begin in May.
President Donald Trump was actively tweeting to start his
week, seeking to discredit the continuing investigation into
his team's links with Russian efforts to disrupt the recent US
elections. The tweets came hours before FBI chief James Comey
confirmed to US lawmakers in a public hearing that the FBI has
been investigating since July potential Russian interference in
the US election, including any links with Trump associates and
Moscow.
Comey also said he had seen no evidence to support Trump's
claim that Barack Obama wiretapped the Trump campaign's offices
in New York.
Today's Agenda
Local data: Australia house price index December, RBA
March meeting minutes; NZ net migration February, NZ credit
card billings
USB on the RBA minutes: "While we still view the April
Financial Stability Review as the most likely platform for the
RBA (and APRA) to announce further macroprudential policy, the
March meeting minutes will be closely watched for any clues."
Overseas data: UK CPI; Fed speakers: Dudley in London,
George in Washington, Mester in Richmond
Market Highlights
SPI futures down 13 points or -0.2% to 5753
AUD +0.3% to 77.28 US cents (overnight range: 76.86 -
77.48)
On Wall St, Dow flat, S&P 500 -0.1%, Nasdaq -0.1%
In New York, BHP +0.6%, Rio +0.4%
Shares in Apple reach record $US141.34
In Europe, Stoxx 50 -0.3%, FTSE +0.1%, CAC -0.3%, DAX
-0.4%
Spot gold +0.3% to $US1233.43 an ounce
Brent crude -0.1% to $US51.73 a barrel (overnight low
51.01)
Spot iron ore -0.9% to $US91.49 a tonne
Dalian iron ore -2% to 702 yuan
LME aluminium +0.4% to $US1922 a tonne
LME copper -0.9% to $US5880 a tonne
Copyright (c) 2017
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AFR Lower open seen, base metals mixed
Mar 20 2017 13:54:54
10-year bond yield: US 2.48%; Germany 0.44%, Australia
2.82%
From Today's Financial Review
Morrison backs new lender crackdown
Downer to launch $1.2b Spotless bid
Byres won't use the 'B' word but says risks elevated
United States
US stocks were little changed on Monday, with the Nasdaq
Composite easing off its record intraday high, as investors
looked for fresh catalysts after the Federal Reserve's interest
rate hike last week.
Six of the 11 major S&P sectors were lower, with the
utilities index's 0.7 per cent fall leading the decliners.
Apple rose nearly 1 per cent, hitting a new record-high of
$US141.34, lifting the tech-heavy Nasdaq Composite index to yet
another intraday high. The iPhone-maker's stock could rise
another 10 per cent in six months, Barron's wrote in an article
posted Saturday.
David Rockefeller, the US banker, philanthropist,
presidential adviser and heir to one of history's most fabled
fortunes, has died. At 101, he was the world's oldest
billionaire. He died Monday at his home in Pocantico Hills, New
York, according to an emailed statement from Fraser P. Seitel,
a family spokesman. The cause was congestive heart failure.
Uber Technologies has been fallen deeper into turmoil with
the departure of company president Jeff Jones, a marketing
expert hired to help soften its often abrasive image.
Europe
European stocks ended the session little changed after
three days of gains, weighed down by declines in oil-and-gas
shares and lenders.
The Stoxx Europe 600 Index fell 0.2 per cent at the close.
Energy firms posted the biggest losses, falling for the first
time in four days and tracking crude prices lower.
Investors should be overweight equities versus bonds and
credit, Credit Suisse strategists led by Andrew Garthwaite
wrote in a note, saying that they now see less chance of a
correction in stocks in the second half of the year.
Share buybacks in Europe, while rarer than in the US, work
better, according to Morgan Stanley strategists. Stocks of
companies that offer the program have yielded higher returns
for investors in the region than in the US.
Prime Minister Theresa May will file divorce papers to
leave the European Union on March 29, launching two years of
complex negotiations that will pit the UK's need for a trade
deal against the bloc's view that Britain shouldn't benefit
from Brexit.
Deutsche Bank fell 3.7 per cent after saying it will raise
???8 billion by selling stock at a 35 per cent discount to last
week's closing price as Germany's largest lender seeks to shore
up its finances and boost growth.
London property asking prices rebounded to an all-time
high this month, boosted by areas on the periphery of the UK
capital, according to Rightmove. The average price of a home
coming to market climbed to ??649,772 in March, rising 1.4 per
cent from a month earlier, the property website said. Values
Copyright (c) 2017
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AFR Lower open seen, base metals mixed
Mar 20 2017 13:54:54
have increased 0.9 per cent annually, even as those in central
boroughs stagnated.
Asia
Hong Kong stocks rose, extending their best weekly gain
since September, as China Shenhua Energy jumped after
announcing a special dividend.
The Hang Seng Index added 0.8 per cent to 24,501.99, its
highest close since August 2015. Shenhua posted its biggest
gain since 2008. China Mobile and Tencent Holdings, which are
both scheduled to report earnings this week, rose at least 2.7
per cent. The Shanghai Composite Index advanced 0.4 per cent at
the close, after falling on Friday by the most this year.
Hong Kong is entering its peak season for earnings
releases, with more than 275 companies announcing their
financial results this week, including heavyweights Tencent and
Cnooc. The Hang Seng Index climbed 3.2 per cent last week,
boosted by global optimism over a dovish Federal Reserve.
Mainland investors bought a net 13 billion yuan of Hong Kong
stocks last week through exchange links, the most this year.
Their net purchases totalled 3.73 billion yuan on Monday.
Japan's markets were closed on Monday for a holiday.
Currencies
Banks say lifting rates right thing to do
The premium that investors demand to hold French instead
of German debt rose to its highest in almost two weeks on
Monday, reflecting unease among investors before the first
televised debate in France's turbulent presidential race.
French voters go the polls on April 23 and May 7 in the
two-round election.
At one stage France's 10-year government bond yield rose 4
basis points to 1.14 per cent, within sight of multi-month
highs hit in February, though it settled at 1.10 per cent
towards the close.
Most other euro zone yields edged higher, with the outlook
for ECB monetary policy the other key focus for investors.
Portugal and Spain bucked the general trend though, with
Portugal's 10-year borrowing costs dropping as much as 6 basis
points to 3.96 per cent.
The fall in yield comes after ratings agency S&P Global
affirmed the country's rating late on Friday.
South Africa's rand rose to its strongest level in 19
months, extending gains to the fourth straight session. The
rand traded 0.51 per cent firmer at 12.65 per US dollar, a
level last seen in early August 2015. Locally, the focus this
week will be on fourth-quarter current account data and monthly
consumer inflation, both due out on Wednesday.
Commodities
Iron ore: Trading at Chinese ports was thin on the first
working day of the week. Higher inventory levels at the ports
have made mills unwilling to pay more anything more than 690
yuan ($US100) per wet tonne for 62% Fe Australian fines,
according to sources. Local information provider Umetal put
iron ore inventory levels at China's 42 major ports at 130.84
million tonnes as at last Friday, according to Metal Bulletin.
Iron ore inventory at 46 Chinese ports was 131 million
tons on March 17, up 0.1 million tons or 0.77 per cent from the
Copyright (c) 2017
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Mar 20 2017 13:54:54
previous week, according to Shanghai SteelHome E-Commerce.
Record wheat output to fuel GDP: A record wheat crop is
expected to add half a percent to Australia's economic growth
this year.
Oil fell as US drilling continues to climb and Libyan
crude ports prepare to reopen, undermining the potential for
OPEC output curbs to rebalance the market, even if extended
into the second half of the year. Futures dropped as much as
1.9 per cent in New York.
Money managers cut bets on rising West Texas Intermediate
crude by a record amount during the week ended March 14, while
wagers on a further price drop doubled as oil remained below
$US50 a barrel. Hedge funds also cut bullish bets in Brent oil
during the same period.
Benchmark copper on the London Metal Exchange ended down
0.9 per cent at $US5880 a tonne, having last week touched
$US5948.50, its highest since March 6.
"There is nothing to suggest the market is tight," Julius
Baer analyst Carsten Menke said. "We need to see signs of
tightness driven by the supply disruptions, or if the market is
amply supplied, as it seems to be at the moment, I'd say prices
need to come down."
Aluminium closed up 0.4 per cent to $US1922 a tonne, zinc
slipped 0.6 per cent to $US2864, tin added 0.4 per cent to
$US20,350 and nickel lost 0.9 per cent to $US10,165. Lead was
untraded at the close, but bid down 0.7 per cent to $US2274.
Australian Sharemarket
The S&P/ASX200 Index remains unable to maintain gains
above the 5800 level, with broad-based losses across most
sectors erasing last week's positive moment.
The benchmark index shed 0.4 per cent to 5778.9, while the
broader All Ordinaries index was 0.4 per cent lower to 5820.5.
Harvey Norman tanks on insider selling: Recent sales by
two of the company's most senior executives could not have come
at a worse time.
ETFs could spark next major sell off: It has taken some
time, but index investing via exchange-traded funds is now
growing like topsy.
???Street Talk
Fairfax's Domain the main game for TPG Capital
Downer stuffs its socks with Spotless Group shares
MS and UBS hit the road for Bank of South Pacific
with Reuters, Bloomberg, AAP
Comments? Questions? Let us know what you think of Before
the Bell. You can reach Timothy Moore at
timothy.moore@fairfaxmedia.com.au

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