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need2know: Flat open for new quarter


US stocks rallied in September's final session, with the Standard & Poor's 500 Index rising the most in three weeks.

US stocks rallied in September’s final session, with the Standard & Poor’s 500 Index rising the most in three weeks. Photo: AP

Local shares are poised to open the final quarter of 2015 little changed, despite a strong rally on Wall Street and in Europe.

What you need2know

SPI futures down 3pts at 5004

AUD at 70.14 US cents, 84.13 Japanese yen, 62.79 Euro cents and 46.41 British pence 

On Wall St, S&P 500 +1.9%, Dow +1.5%, Nasdaq +2.3%

In Europe, Stoxx 50 +2.3%, FTSE +2.6%, CAC +2.6%, DAX +2.2%

China’s will be shut from Thursday for weeklong National Day holidays. 

Spot gold slipped 1% at $US1115.30 an ounce at 3.05pm New York time

Iron ore added 0.5% to $US56.32 per tonne 

Brent crude settled up 14 US cents to $US48.37 a barrel

What’s on today

September AiG Performance of manufacturing, Australian September monthly home prices, August job vacancies; US September ISM manufacturing index; China September purchasing managers’ index.

Stocks in focus

Credit Suisse cut its Brambles recommendation to “underperform” from “outperform” and dropped the price target to $8.60 from $11 a share. “We now expect capital intensity to increase and margin to remain weak over the next couple years. Efforts to rectify previous pallet repair lapses are likely to increase plant costs, while transport costs could continue to hit margin.”

Deutsche Bank says Alumina is well-positioned and undervalued and has a “buy” on the stock. In an interview with the AFR’s Jamie Freed, Alcoa chief executive Klaus Kleinfeld​ says his company’s plans to demerge its upstream and downstream businesses will give the company “optionality” for dealmaking, with analysts pointing to the potential for multi-billion dollar transactions involving Alumina Ltd, Rio Tinto and South32.

Trading ex dividend today: Austbrokers, Clime Capital, Joyce Corp.

Currencies

The Bloomberg JP Morgan Asia Dollar Index, which tracks the region’s 10 most-active currencies outside of Japan, has dropped 4.1 per cent this quarter, its worst performance since 2008.

The Australian dollar pared its worst quarter since 2013, rising 0.6 per cent. The Aussie has lost 8.8 per cent since the end of June.

Overnight, the US dollar got a lift from American private-sector jobs data, which bolstered bets a hike in US interest rates will come in 2015, while the euro fell back on a report euro zone inflation had turned negative. American private employers added 200,000 jobs in September, beating forecasts in a report that suggests jobs growth may be sufficient for the Federal Reserve to raise interest rates later this year, according to the ADP National Employment Report.

Commodities

The world’s top iron-ore producer has some bad news for the oversupplied market: its biggest project is running ahead of schedule. The S11D project, part of the Carajas mining complex in northern Brazil, is on track to beat a targeted December 2016 start date, Vale chief financial officer Luciano Siani said in an interview Wednesday. “It’s going to be the highest margin iron-ore operation in the world.” The project, the industry’s largest, will add 90 million metric tons of annual capacity to global supply, although Vale intends to control the speed at which it hits the market.

Chile’s second-biggest copper mine Collahuasi, owned by Anglo American Plc and Glencore, said on Tuesday it planned to cut output by 30,000 tonnes. “Although individually this cut (in Chile) isn’t meaningful, we’re starting to see a few, maybe it’s a reflection of financial stress in general in the big mining companies,” said analyst Daniel Morgan of UBS in Sydney. The global copper market is seen in a small 262,500 tonne surplus this year, according to median forecasts of analysts polled by Reuters in July.

United States

US stocks rallied in September’s final session, with the Standard & Poor’s 500 Index rising the most in three weeks, bringing traders some comfort as equities trimmed their worst quarterly decline since 2011. Investors targeted their buying in some of the third quarter’s most-battered companies.

Energy, raw-material and health-care shares were among the leaders of the S&P 500’s 10 main groups after falling the most since June. All 10 industries in the benchmark advanced Wednesday, while a gauge of volatility had its steepest decline in more than a week.

Stock repurchases may accelerate enough toward the end of the year to salvage an annual gain for the Standard & Poor’s 500 Index, according to David Kostin, Goldman Sachs Group’s chief US equity strategist. November is the busiest month of the year for buybacks among S&P 500 companies, as shown in the chart below. Thirteen percent of annual spending occurs during the month, according to figures that Kostin presented in a report two days ago. The data is based on averages for 2007 and 2009-2014.

Europe

European stocks advanced, rebounding from yesterday’s decline, as investors bet that the worst quarter in four years already reflects concerns about weaker economic prospects. The Stoxx Europe 600 Index jumped 2.5 per cent to 347.77 at the close of trading.

The equity gauge fell 8.8 per cent in the third quarter, its worst performance since 2011. It also posted its first back-to-back monthly drop in more than a year. A gauge measuring swings on euro-area stocks is at its highest level since 2011 on a monthly basis, data compiled by Bloomberg show.

Glencore led commodity producers higher, adding 14 per cent as metal prices rose and investors accepted reassurances that it can withstand current market conditions.

PSA Peugeot Citroen paced gains in auto-related stocks, rising 6.4 per cent, as China said it would halve purchase tax on certain vehicles. Volkswagen, which has lost more than a third of its value since admitting to cheating on emission tests, increased 2.7 per cent.

What happened yesterday

Led by the banks, Australian shares bounced back above 5000 after Tuesday’s rout although uncertainty continued to linger as to whether the market had reached its bottom amid the ongoing global turmoil. The benchmark ASX200 index lifted 2.1 per cent to 5021.6, while the broader All Ordinaries gained 2 per cent to 5058.6.



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