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ASX looks at soft start despite European surge

Local shares have had a rough start to the year, with the benchmark S&P/ASX200 down 1.5 per cent for 2015. Photo: Angus Mordant Local shares have had a rough start to the year, with the benchmark S&P/ASX200 down 1.5 per cent for 2015. Photo: Angus Mordant
Nanjing Night Net

Local shares have had a rough start to the year, with the benchmark S&P/ASX200 down 1.5 per cent for 2015. Photo: Angus Mordant

Local shares have had a rough start to the year, with the benchmark S&P/ASX200 down 1.5 per cent for 2015. Photo: Angus Mordant

need2know: Soft start in store for ASX

Soaring European shares, thanks to a shock move from the Swiss central bank to scrap a cap on its safe-haven currency and a surging Australian dollar against the euro, don’t look to be enough to help the local market shake off concerns about global growth on Friday morning.

Local shares have had a rough start to the year, with the benchmark S&P/ASX200 down 1.5 per cent for 2015. SPI futures are down 12 points, at 7.25AM AEDT and the index is starring down the barrel at five straight losing sessions.

On Thursday, the ASX200 slipped 0.4 per cent to 5331.36. Shares did start the day lower, thanks to poor leads from the United States, but recovered thanks to better-than-expected employment data, showing the jobless rate fell 0.2 per cent to 6.1 per cent.

The Australian dollar surged 2.4 per cent against the euro to 70.75 euro cents, and at one point touched 71.07 euro cents, its highest level since September.

The jump was stirred by the Swiss central bank’s shock decision to abandon its cap on the Swiss franc, which had been in place for three years. The cap was put in place to prevent the strong franc from causing deflation and recession. The moved triggered a 17.8 per cent jump for the franc against the euro.

Against the greenback, the Australian dollar pushed 0.8 per cent higher to US82.12¢.

Concerns about economic growth have weighed on global markets since Wednesday morning when the World Bank revised down its forecast for world gross domestic product to 3 per cent in 2015.

The news hit commodity prices hard, especially copper, which plummeted 5.2 per cent on Wednesday. However, it has since pared back some of its losses, adding 2.6 per cent overnight.

Brent crude continued its decline below $US50 per barrel, slumping 3.2 per cent to $US48.28, while iron ore posted a modest 0.5 per cent gain to $US68.63 per tonne.

Disappointing financial results from banks as well as global growth concerns are likely to push Wall Street to its fifth straight losing session, despite the World Bank report that revised down global GDP pointing out the strength of the US economy. The S&P500 is down 2.9 per cent this year.

European markets soared thanks to the removal of the cap on the Swiss currency, with most major markets finishing more than 1 per cent higher. The Eurostoxx 50 jumped 2.2 per cent, London’s FTSE100 lifted 1.7 per cent, France’s CAC surged 2.4 per cent and Germany’s DAX finished 2.2 per cent higher.

The Australian 10-year government bond recovered from the record low reached Thursday morning, 2.57 per cent, adding 4.1 per cent to be trading at 2.674 per cent on Friday morning.

This story Administrator ready to work first appeared on Nanjing Night Net.

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