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need2know: ASX set to open lower

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Nanjing Night Net

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Local shares are poised to open modestly lower, following Wall Street’s lead, as earnings from Citigroup and Best Buy disappointed investors.

What you need2know:

• SPI futures down 14 points at 5266

• AUD at 82.13 US cents, 95.75 Japanese yen, 70.79 Euro cents and 54.13 British pence

• In late trade, S&P 500 -0.6%, Dow -0.3%, Nasdaq -1.1%

• In Europe, Stoxx 50 +2.2%, FTSE +1.7%, CAC +2.4%, DAX +2.2%

• Spot gold up $US28.77 or 2.3% to $US1257.49 an ounce

• Brent oil down 81 US cents or 1.7% to $US47.88 per barrel

• Iron ore adds 0.5% to $US68.63 per metric tonne

What’s on today

US December consumer prices, industrial production, consumer sentiment, capital flows, European Union consumer price index.

Stocks to watch

Deutsche Bank has a “buy” recommendation on BHP Billiton and a $38.00 target price.

UBS has a “neutral” recommendation on Santos and a $9.60 price target.

Australia’s biggest infrastructure investor, IFM Investors, has made its first foray into Mexico after buying 25 per cent of a toll road in Mexico City from Spain’s OHL for $737 million.

Currencies

The Swiss National Bank shocked financial markets by scrapping a three-year-old cap on the franc, sending the safe-haven currency soaring against the euro. The move came a week before the European Central Bank is expected to unveil a massive bond-buying programme that might have forced the SNB to intervene repeatedly to defend the cap.

ANZ’s outlook for the $A, before the SNB’s decision: “We downgrade our AUD forecasts for the end of 2015 from USD0.82 to USD0.74, and for the end of 2016 from USD0.80 to USD0.72. We also reassess our view on AUD/NZD and expect it to remain range bound around these historic lows.”

Commodities

Gold rose to a 4-month high after a shock move by Switzerland to abandon its three-year cap on the franc sent global shares and bond yields into turmoil. Spot gold rose as much as 2.4 per cent to its highest level since September 8 at $US1260.30 an ounce.

Three-month copper on the London Metal Exchange rebounded but it likely won’t hold. “From the fundamental view, the current prices cannot be justified, but I don’t think fundamentals are playing such an important role at the moment, so we need to look at the technical side, where the next support level is between $US5000 and $US5230,” said analyst Daniel Briesemann at Commerzbank in Frankfurt.

Oil prices steadied below $US49 a barrel after a volatile day with North Sea Brent and US crude oil dipping towards near six-year lows as another big US bank slashed its oil price forecasts. Bank of America Merrill Lynch cut its crude oil forecasts saying Brent could go as low as $US31 by the end of the first quarter of 2015.

United States

US stocks are on track for a fifth day of losses as bank results disappointed and investors focused on concerns about the effect of global weakness on US earnings.

The S&P financial sector, down 1.4 per cent, led the day’s decline. Bank of America lost 4.3 per cent and was among the S&P 500’s biggest drags after the second-largest US bank by assets reported a 14 per cent slump in quarterly profit. Citigroup shares fell 3.5 per cent after its quarterly results.

The benchmark S&P has fallen for four straight sessions and nine of the past 11 days. It is down more about 4 per cent from its last record high December 29. The CBOE Volatility index was on track for a fifth day of gains.

Europe

Europe’s main stock markets shot higher after Switzerland’s central bank scrapped a policy to artificially hold down the value of its currency against the euro. Swiss stocks plunged.

“It is a period of huge confusion and you are seeing these really big seismic moves in markets,” said Nick Lawson, a managing director at Deutsche Bank in London. “These kind of wide swings deter investors rather than encourage them.”

With Switzerland’s economy heavily dependent on exports, investors feared that a strong franc could dent earnings at Swiss companies and dumped their stocks, sending the Swiss Market Index tumbling. It ended the day down 8.7 per cent to 8400.61 points. “I am at a loss for words,” Swatch group’s boss Nick Hayek told news agency ATS.

What happened  yesterday

Shares on Thursday fell for a fourth straight day, but ended well off the day’s lows thanks to strong jobs data and a rebound in Asian markets. The S&P/ASX 200 fell 22.2 points, or 0.41pc, to 5331.4.

Tribeca Investment Partners, Regal Funds Management and Katana Asset Management have topped this year’s Mercer performance tables for best performance by an Australian equities manager.

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

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