Australian Market Leads - 27 January 2012
The Australian Stock Market is seen benefiting from overnight gains, with the commodities-related stocks taking on the limelight on Friday's trading.
As the Aussie market was closed Thursday for the Australia Day celebration, investors are in for mixed leads. Analyst Stan Shamu from IG Markets said the significant gains for risk assets will have an impact as the Asian Region pushed higher on Thursday.
"This rally extended into the European session with gains across commodities and other risk assets. US markets actually got off to a strong start, but declined following the new home sales numbers. Despite this fact, we feel there are several positives for the Aussie market to work off today.
"Ahead of the open, we are calling the Aussie market to open up 0.3% at 4282. Given the buoyant risk environment, particularly in commodities, there are plenty of upside drivers for the local market. With a high probability of further quantitative easing, commodity prices are likely to continue rising. Rio Tinto and BHP Billiton were among the best performers in Europe, advancing more than 3%. BHP's ADR is currently pointing towards a 1% gain at the open. The positive results from Caterpillar are likely to be supportive of some local mining services companies, like Bradken and Seven Group Holdings. Gold is also looking increasingly attractive given the prospect of further easing, and this will bring precious metal stocks in focus," Shamu noted in an email to clients.
Morrison Securties Pty Ltd said in a report that commodities recorded positive gains overnight.
Copper ended 2.5% higher on the London Metal Exchange Thursday at its highest since September after news that the U.S. Federal Reserve will maintain a low-interest rate environment boosted confidence in the metal's demand prospects.
LME three-month copper ended the PM kerb at $8,590 a metric ton, up $206 on the previous close. It is the red metal's highest close since Sept. 16, when it ended at $8,696/ton. Continued declines in exchange inventories have also been supportive of prices, market participants say.
Copper stocks held in LME-listed warehouses are at their lowest level since September 2009. The industrial metals largely shrugged off weaker-than-expected home sales figures Thursday, despite their wide uses in the construction sector. Crude oil futures, which had been up 2% earlier on fresh worries about an oil supply cut by Iran, pared gains into the close Thursday.
Prices had climbed after Iran said it was considering an immediate halt to crude oil exports to the European Union in response to the E.U. trade embargo set to take effect July 1.
The International Energy Agency said later it was monitoring the situation and could release strategic inventories if a supply emergency occurred. Light, sweet crude oil for March delivery on the New York Mercantile Exchange settled 30 cents higher at $99.70 a barrel.
It earlier hit a one-week high of $101.39 a barrel. Gold prices climbed to levels last seen in early December, fueled by fears of inflation and of a weaker dollar after the Federal Reserve pledged to hold U.S. interest rates near zero until the end of 2014. Gold for February delivery added $26.60, or 1.6%, to end at $1,726.70 an ounce on the Comex division of the New York Mercantile Exchange. That was gold's highest settlement since Dec. 7.