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The spot price of iron ore was 2.2 per cent higher overnight, reflecting a surge in both Chinese iron ore and steel futures, and is edging back towards the $US80 a tonne mark. Brendon Thorne
It's a good morning to be a metal bull, ore to be come one.
Copper rose 3 per cent in London, nickel added 2.2 per cent and nickel advanced 2 per cent after China's producer price index lifted at its fastest pace in more than five years. That's good news because it will help lift prices around the world at a time when central bankers are running out of measures to bolster inflation and there's increasing pressure to get interest rates off their record lows. Higher producer prices also should help with corporate profits too. (The US fourth-quarter reporting season begins later this week and expectations are high.)
Back to metals though. The spot price of iron ore was 2.2 per cent higher overnight, reflecting a surge in both Chinese iron ore and steel futures, and is edging back towards the $US80 a tonne mark.
Among producer prices in China, those for mining surged 21.1 per cent in December from a year earlier while raw materials increased 9.8 per cent.
Mining shares, as one would expect, paced the FTSE 100 to its ninth consecutive record close. Rio Tinto was up 6.4 per cent; BHP was up 4.4 per cent. In New York trading, Rio was up 6 per cent and BHP was up 4.7 per cent.
Besides the FTSE, shares traded in a narrow range in Europe with traders saying investors await President-elect Donald Trump's first news conference since winning the November 8 election. It is scheduled to begin at about 3am AEDT Thursday.
Shares in New York were higher with the Nasdaq touching an intraday high amid a wave of health-care merger and acquisition activity. Goldman dragged the Dow after it was cut to "sell" by Citigroup, citing its valuation. Goldman's one-year return is 50.3 per cent. Today's Agenda
Local data: Job vacancies November, NZ house prices December
President-elect Donald Trump will hold his first news conference since winning the November 8 presidential election. It is scheduled to begin about 3am AEDT Thursday.
Overseas data: UK trade balance November Market Highlights
SPI futures rose 33 points or 0.6% to 5749
AUD +0.1% at 73.63 US cents (overnight range: 73.31 to 73.85)
On Wall St, Dow +0.2%, S&P 500 +0.4%, Nasdaq +0.5%
In New York, Rio +6%, BHP +4.7%
In Europe, Stoxx 50 flat, FTSE +0.5%, CAC flat, DAX +0.2%
In London, Rio +6.4%, BHP +4.4%
Spot gold +0.2% to $US1183.63 an ounce
Brent crude -1.1% to $US54.32 a barrel
Iron ore +2.2% to $US79.43 a tonne
LME aluminium +1.3% to $US1749 a tonne
LME copper +3% to $US5760 a tonne
10-year bond yield: US 2.38%; Germany 0.28%; Australia 2.71% From Today's Financial Review
James Packer lays out his plan for Crown: James Packer has made an extraordinary return to the Crown Resorts board and laid out a five-step strategy for the company. How investment banks can lift profits: The masters of the universe will have to get used to sharing and bringing in the robots, says EY. How to manage a Millennial workforce: Have Millenials been dealt a poor hand and do they have every reason be disconnected and disillusioned? United States
The Nasdaq hit a record intraday high on Tuesday, extending its bullish run as healthcare stocks rose for the sixth straight session, while banks helped the S&P 500 and the Dow reverse small losses.
"We've shifted from that exuberance post the election and the rotation into some of the sectors and now we are entering a wait-and-see mode with earnings knocking at the front door," said Art Hogan, chief market strategist at Wunderlich Equity Capital Markets in News York. "Earnings may be the pivot to move things higher."
S&P 500 companies look unlikely to disappoint. They are set to post their strongest quarterly growth in three years, with earnings estimated to have risen 5.8 per cent in the fourth quarter, according to Thomson Reuters I/B/E/S.
Big US banks will kick off the earnings season, with JPMorgan, Bank of America and Wells Fargo scheduled to report on Friday. Bank of America and Wells Fargo were up about 1 per cent.
Citigroup downgraded Goldman Sachs to "sell" citing valuation, sending its stock down as much as 1.6 per cent and making it the biggest drag on the Dow Jones Industrial Average. Citi analyst Keith Horowitz said Goldman would need an additional $US4 billion of revenue above current full-year estimates to bridge the gap between current and expected return on tangible equity. "While we expect Goldman will see improved trading revenues going forward, the path is relatively uncertain and the bar is relatively high," Horowitz wrote in a note to clients.
The downgrade comes days before the large US banks start reporting fourth-quarter results, their first after the election in November and the Federal Reserve's rate hike in December. Goldman is expected to report on January 18. Europe
The FTSE 100 climbed 0.5 per cent on Tuesday, reaching a fresh record high for the ninth session in a row, as miners gained and better-than-forecast sales at Wm Morrison Supermarkets lifted shares of grocers.
While some strategists are saying it's time to sell, European-listed funds tracking the FTSE 100 have continued to attract money this month. Analysts have upgraded their profit forecasts for the benchmark's members, predicting a 25 per cent gain this year, and member valuations on an estimated earnings basis remain below its three-year average.
Despite recent gains, there's little evidence from options data of traders rushing to protect against future losses in the FTSE 100. It remains to be seen if UK bulls hold out as long as their German counterparts did two years ago, sending the DAX Index to 27 fresh records in the first four months of 2015.
The Stoxx Europe 600 Index added 0.1 per cent at the close, erasing an earlier slide of as much as 0.4 per cent. A rotation out of defensive shares into cyclical companies resumed - miners surged the most in a month after data showed China's factory prices rose at the fastest pace in more than five years in December.
"A market backdrop where risk aversion continues to decrease in conjunction with falling stock correlations suggest that this may be the start to an improving environment for stock selection," Citigroup strategists wrote in a note dated January 9.
French conservative ex-prime minister Francois Fillon will beat far right leader Marine Le Pen 64 percent to 36 percent if they meet in a runoff next May in the presidential election, a poll showed. Asia
Hong Kong stocks advanced to a one-month high, buoyed by mainland buying via an exchange link, as investors speculated a recent selloff was overdone.
The Hang Seng Index rose 0.8 per cent to 22,744.85 at the close. Belle International Holdings and Wharf Holdings were the biggest gainers. Intime Retail Group surged 36 per cent, the most since its 2007 debut, after Alibaba Group and Intime's founder offered to privatise the department store chain. Chow Tai Fook Jewellery Group advanced 5.3 per cent after saying same-store sales in China rose 4 per cent last quarter from a year earlier. The Shanghai Composite Index slipped 0.3 per cent.
Hong Kong's benchmark equity gauge has advanced 3.4 per cent this year after slumping 5.6 per cent in the fourth quarter. Mainland investors bought a net 25.6 billion yuan ($US3.7 billion) of Hong Kong stocks through the Shanghai link from December 21 through Monday, according to data compiled by Bloomberg. This compares with just 2.2 billion yuan during the previous 12 sessions.
A stronger yen weighed on Japanese shares. The Nikkei dropped 0.8 per cent to 19,301.44. The broader Topix was down 0.7 per cent at 1542.31. Currencies
Federal Reserve Bank of Richmond president Jeffrey Lacker plans to retire October 1, marking the exit of one of the US central bank's most hawkish inflation fighters.
The US Justice Department was set to bring charges against three ex-traders at JPMorgan Chase & Co, Citigroup and Barclays arising from a probe into the manipulation of foreign-exchange prices at major banks, a person familiar with the matter said.
Annual consumer price inflation in Egypt's cities soared to a second straight eight-year high in December, hitting 23.3 per cent on the back of the government's decision to float the pound, effectively halving its value. Urban consumer inflation hit an eight-year high of 19.4 per cent in November, the month when Egypt abandoned its currency peg of 8.8 to the US dollar in a dramatic move that has since seen the currency depreciate roughly by half. Commodities
Iron ore prices rose $US1.70 to $US79.43 a tonne after the Chinese government set a deadline of June 30 to weed out the production of substandard steel products within China's borders.
Shanghai steel futures jumped 7 per cent to their highest in nearly three weeks, supported by promises from China's top steelmaking province to further reduce production capacity. Raw material iron ore followed steel's rally, soaring 8 per cent to its strongest in more than three weeks, with coking coal climbing nearly 8 per cent. Hebei, which accounts for about a quarter of China's total steel output, plans to slash 31.86 million tonnes of steel and ironmaking capacity this year, the official Xinhua news agency reported on Sunday. That would be more than double the 14.62 million tonnes of steel capacity that Hebei cut last year.
Copper prices hit a one-month high as inflation figures in China pointed to further signs of economic recovery, while zinc hit a three-week peak on persistent supply shortages.
"Near term, we could see a slight correction, copper has done a lot over the last couple of months and needs to consolidate, but the longer term outlook is positive. We see a deficit in 2017," said Warren Patterson, commodities strategist at ING.
Three-month copper on the London Metal Exchange closed 3 per cent higher at $US5760 per tonne, having earlier hit its highest level since December 13 at $US5779.
In industry news, Indonesia will issue new rules on mineral concentrate exports and taxes on shipments in the next few days. A full ban on exports of concentrates like copper is due to start on January 12 but the government will allow shipments to continue beyond that deadline in some cases.
Zinc closed up 2 per cent at $US2720 a tonne, having earlier hit its highest level since December 16 at $US2766. Lead closed up 3.9 per cent at $US2190, having earlier hit $US2191, its highest level since December 21.
Aluminium ended up 1.3 per cent at $US1749, having earlier hit $US1752, its highest level since December 12. The price has been aided by the recent rally in oil prices, as energy accounts for about 40 per cent of the total cost of producing aluminium.
Nickel closed up 2.2 per cent at $US10,615, while tin ended up 0.1 per cent at $US21,145.
Milk production to fall to 20-year low: Australian milk production is tipped to slide to its lowest level in more than 20 years even as global prices surge.
Global commodities trader Cargill reported a sharply higher adjusted quarterly profit led by strong results from its beef and turkey businesses in North America. In the second quarter ended November 30, Cargill's adjusted operating earnings jumped nearly 80 per cent to $US1.03 billion from a year earlier. Quarterly net income including one-time items fell to $US986 million, when sales of Cargill's US pork business and a steel mill bolstered results. Revenue slipped to $US26.9 billion. Australian Sharemarket
CBA tipped to be most traded again in 2017: CBA pipped BHP to become the most traded ASX stock by value in 2016, and pundits expect the bank will retain the title for several years.
The benchmark S&P/ASX 200 Index and the broader All Ordinaries Index each fell 0.8 per cent to 5760.7 points and 5813 points, respectively.
"There doesn't seem to be an impeccable chain of logic that is driving sentiment in financial markets," said Ray Attrill, global co-head of FX strategy at National Australia Bank. "People might be getting a bit nervous ahead of Mr Trump's inauguration."
Investors sold out of every sector, with banking stocks leading the bourse south. Commonwealth Bank of Australia slid 0.5 per cent, while Westpac slipped 0.8 per cent. ANZ Banking Group fell 1.5 per cent and National Australia Bank finished the day down 1.2 per cent. Street Talk
