need2know: Weak lead from Wall St

Local stocks will have to find their own way at the opening as Wall Street fluctuates between slightly positive and slightly negative after both the Dow and S&P 500 set fresh intraday record highs.

What you need2know:

• SPI futures down 5 pts at 5526

• AUD at 87.00 US cents

• In late trade, S&P 500 -0.1%, Dow -0.1%, Nasdaq flat

• In Europe, Euro Stoxx 50 +0.3%, FTSE +0.2%, CAC +0.5%, DAX +0.2%

• Spot gold up $US18.06 to $US1169.53 an ounce

• Brent oil down 76 US cents to $US81.58 per barrel

What’s on today

Australia credit/debit card lending, wage price index, lending finance, consumer confidence; US wholesale sales.

Stocks to watch

The following companies are hosting AGM’s today: Nine, Fortescue Metals Group, Commonwealth Bank, Asciano, Computershare, Aurizon.

Dulux Group is scheduled to release full-year results.

CIMB is maintaining a “reduce” rating on Commonwealth Bank and dropped its target price to $75.86 from $75.95 a share.“Relative to peers, we view CBA as more at risk from measures to cool the housing market, an increase in mortgage risk weights and a rise in ‘D-SIB’ capital targets. We still think CBA is overvalued,” it said.

Bank of America Merrill Lynch has maintained an “underperform” recommendation on Scentre Group and a price objective of $3.40 a share.


Near-zero US interest rates are too low and should make the Federal Reserve nervous, one of its top policymakers, Charles Plosser, said. In an interview with broadcaster CNBC, Plosser said that even though inflation was below the Fed’s preferred level of 2 per cent, there was no reason to keep interest rates at current crisis-era levels, especially with US unemployment now so low.

“That are many indicators that tell us rates are too low,” Plosser said. “We have been at zero for nearly six years and there is no precedent in history, even when inflation is too low, to have rates at zero when unemployment rates are as low as they are. We are really behaving in a way that is outside historical norms and that should make us nervous.”

The rouble resumed its dramatic slide on Tuesday, a day after the Russian central bank floated the currency that has been driven sharply lower by falling oil prices and economic sanctions imposed over Russia’s policy in Ukraine.


Zinc prices rose, supported by a strike at a Peruvian mine and concerns over expected tight supplies. “The mine supply side for zinc is going to be tight next year but more recently smelter output expectations in China have become more muted. We see zinc prices averaging above $US2300 a tonne next year,” Macquarie analyst Vivienne Lloyd said.

Chile’s Codelco, the world’s top copper producer, has lowered its term premium by 3.6 per cent to $US133 a tonne for 2015 term shipments of the metal to China. The premium is in step with the Chinese spot market, where the surcharge has more than halved this year.

A subtle shift may be taking place within OPEC as it heads into its most important meeting in years as the discussion over whether it needs to cut output to defend oil revenues quietly intensifies.

United States

US stocks edged lower on Tuesday afternoon after the Dow and S&P 500 managed to touch fresh intraday records for a fifth straight session in early trading.

Among the S&P 500’s biggest percentage decliners, the stock of Juniper Networks fell 3.8 per cent, a day after the company’s chief executive resigned following a board review of his conduct in a negotiation with a customer.

The benchmark has rallied more than 9 per cent from a six-month low in October, buoyed by supportive economic data and solid corporate earnings reports. For the year, the index is up over 10 per cent. “We have come pretty far, pretty fast. I wouldn’t be surprised to see the market consolidate a little, in the form of hovering around here or pulling back a little bit,” said David Lebovitz, global market strategist at J.P. Morgan Funds in New York.


Europe’s leading stock markets have pushed higher, with traders reacting to corporate updates while keeping a watch over escalating tensions in eastern Ukraine in the absence of major economic data releases.

Vodafone shares jumped 5.4 per cent to 219.4 pence after the British mobile phone giant hiked its full-year profits forecast despite tumbling profits in the first six months of its financial year, mainly on exceptional charges.

Shares in German consumer goods group Henkel rose 4.6 per cent after it also posted better than expected quarterly earnings and raised its full-year forecast. Outside the blue chips, Germany provided further earnings support after mid-cap construction group Hochtief, controlled by Spain’s ACS, rose 2.6 per cent. It reported a 12 per cent rise in underlying third-quarter net profit, beating market expectations

What happened yesterday

Heavy falls in the biggest miners pushed the Australian sharemarket lower, as the outlook for commodity prices continued to worsen.

The benchmark S&P/ASX  200 Index and the All Ordinaries each slipped 0.1 per cent on Tuesday.

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