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Wednesday, August 21st, 2019

need2know: Miners surge in London

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by June 6, 2016 General

Local shares are poised to open higher as commodities rallied overnight. In London, both Rio Tinto and BHP Billiton surged more than 6 per cent. Base metals, oil and iron ore gained.

What you need2know

The S&P eyeing a new all-time high

Despite Janet Yellen’s speech next week, plus a raft of Chinese data and a looming referendum vote in the UK, the US stock market looks poised for new highs. (This video was produced in commercial partnership between Fairfax Media and IG Markets)

SPI futures up 14 points or 0.3% to 5377 at about  6am Sydney time

AUD up 0.1% at 73.69 US cents

Two major components of the S&P 500 could break out, according to the note sent out by HSBC's Murray Gunn and team. They ... Two major components of the S&P 500 could break out, according to the note sent out by HSBC’s Murray Gunn and team. They are industrials and the “FANG” stocks. Photo: Michael Nagle

On Wall St, at about 4pm, Dow +0.6%, S&P +0.5%, Nasdaq +0.5%

In Europe, Stoxx 50 +0.1%, FTSE +1%, CAC flat, DAX +0.2%

In London, Anglo American +11%, Rio +6.4%, BHP +6.3%, Glencore +6.2%

Spot gold +0.4% at $US1248.00 ounce at 3.38pm New York time

Brent crude +1.4% to $US50.32 barrel at 2.14pm New York time

Iron ore +2.1% to $US51.11 a tonne

What’s on today

RBA rate decision, AIG performance of construction May.

Overseas data: US productivity and costs (1Q, revisions), US consumer credit (April), China foreign reserves (May), Euro-area GDP (1Q), German industrial production (April), Halifax UK house prices (May), Hong Kong foreign reserves (May), Taiwan CPI (May), Taiwan imports, exports, trade balance (May), South Africa gross and net reserves (May), South Africa business confidence (May), Israel foreign currency balance (May).

Overseas earnings: Valeant Pharmaceuticals, Michaels Cos, Lukoil.

Currencies

Federal Reserve chair Janet Yellen said positive forces supporting US job growth and higher inflation will still probably outweigh negative developments, calling additional gradual interest-rate increases appropriate without specifying their precise timing.

“I continue to think that the federal funds rate will probably need to rise gradually over time to ensure price stability and maximum sustainable employment in the longer run,” Yellen said, according to the text of a speech she is scheduled to deliver Monday in Philadelphia.

Sterling dropped to a three-week low versus the US dollar after polls showed more Britons favored quitting the EU. The pound dropped 0.4 per cent to $US1.4465 as of 4.48pm in London, after earlier sinking as much as 1.1 per cent to the lowest since May 16. It slipped 0.3 per cent to 78.54 pence per euro, touching the weakest in more than three weeks. One-month implied volatility in the pound-dollar pair climbed above 22 per cent, the highest since February 2009.

Commodities

Iron ore futures in China climbed the most since trading started in 2013 as rebar stockpiles continued to shrink, signaling the surge in steel production to a record may have further to run to satisfy demand.

Futures advanced 5.6 per cent to 367 yuan ($US55.91) a metric ton on the Dalian Commodity Exchange. In Singapore, the SGX AsiaClear contract for September gained 5.3 per cent to $US44.70 a ton.

The gains in Asia preceded Monday’s 2.1 per cent increase in Metal Bulletin’s benchmark price. Ore with 62 per cent content rose to $US51.11 a tonne after jumping 3.9 per cent Friday. That’s still well shy of April’s high of $US70.46 a ton after prices collapsed due to a regulatory crackdown on speculators and an increase in supply.

United States

Don’t bet on the end of the bull market just yet. While Wall Street’s average year-end target for the S&P 500 is just 2 per cent higher than where it closed last week, technical strategists at HSBC Holdings say stocks are poised for a move higher. 

Two major components of the S&P 500 could break out, according to the note sent out by Murray Gunn and team. They are industrials and the “FANG” stocks, composed of Facebook, Amazon.com, Netflix and Alphabet. 

The highest estimate for the S&P 500, according to data compiled by Bloomberg, is 2325 from Thomas Lee of Fundstrat Global Advisors. That would be 11 per cent higher than where the S&P closed on Friday. 

The S&P 500 closed at a 7-month high on Monday as Federal Reserve chair Janet Yellen painted a mostly upbeat picture of the economy but gave little sense of when a rate hike may be coming.

Europe

European stocks rebounded from their first weekly drop in a month as energy and raw-material producers advanced, while UK shares surged.

Rio Tinto Group and BHP Billiton led miners to the best performance of the 19 industry groups on the Stoxx Europe 600 Index as commodities jumped. 

BP added 2.8 per cent, pushing oil stocks higher, as crude rose after Abu Dhabi forecast prices could climb as high as $US60 a barrel. 

Air France-KLM Group slid 5.4 per cent, dragging travel-and-leisure stocks to the biggest drop on the equity benchmark as Barclays cut its price target on the airline.

What happened yesterday

The benchmark S&P/ASX 200 index added 42 points, or 0.8 per cent, to 5360.4 while the broader All Ordinaries climbed 0.7 per cent to 5431.0.

Gold miners soared after the spot price jumped more than $US30 to $US1244 an ounce on Friday night following the data. It remained above $US1240 throughout Monday’s session. The All Ordinaries Gold sub-index was up around 12 per cent, its biggest percentage gain in close to three years.

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