Local shares are poised to open higher as a surge in the price of oil, up almost 7 per cent in New York, has bolstered risk tolerance.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
What you need2know
SPI futures up 12 points to 4836
AUD is buying 71.78 US cents, 84.58 Japanese yen, 64.70 Euro cents and 49.15 British pence
On Wall St, late, S&P 500 +0.1%, Dow +1.1%, Nasdaq -0.25%
In Europe, Stoxx 50 -1.9%, FTSE -1.4%, CAC -1.3%, DAX -1.5%
In London, Rio +4.2%, BHP +1.7%
Spot gold +0.9% to $US1139.01 at 6.43am Sydney time
Brent crude +6% to $US34.67 at 6.19am Sydney time
US oil +6.9% to $US31.95 at 6.19pm New York time
Iron ore up, fixed at $US44.63
What's on today
The 12 nations in the Trans-Pacific Partnership will formally sign the regional trade agreement in Auckland. Bank of England policy meeting. IMF chief Christine Lagarde speaks. The United Nations Food and Agriculture Organisation publishes its food-price index and cereal supply and demand data. Earnings: ConocoPhillips, LinkedIn, Occidental Petroleum, Philip Morris International, News Corp, New York Times Co, Mitsubishi Heavy Industries, Tata Steel, Statoil, Credit Suisse Group, Munich Re, AstraZeneca Plc, ING Groep, Daimler.
Currencies
The US currency fell the most in seven years against its major counterparts after a report showed service industries expanded in January at the slowest pace since 2014, fanning concern that economic growth is cooling.
Peter Gorra, head of foreign-exchange trading in New York at BNP Paribas: "There's a disconnect where the Fed says it's four hikes while the market says it's like 0.7 hike this year - someone is wrong."
The Bloomberg Dollar Spot Index, which tracks the US currency against 10 global peers, slumped 1.8 per cent as of 1.43pm in New York. The dollar slid 2.3 per cent to 117.23 yen, erasing all the gains since the Bank of Japan's surprise January 29 move to negative interest rates on certain deposits.
The greenback fell 1.8 per cent to $US1.1118 per euro , after sinking to the lowest since October.
Commodities
Crude surged more than 7 per cent after its biggest two-day plunge in seven years, and commodities gains led Brazil's Ibovespa to the biggest equities gain in the world.
Oil bulls distressed that last week's rally fizzled can find some comfort in forecasts for a bigger and longer rebound by the end of the year. Analysts are projecting prices will climb more than $US15 by the end of 2016. New York crude will reach $US46 a barrel during the fourth quarter, while Brent in London will trade at $US48 in the same period, the median of 17 estimates compiled by Bloomberg this year show.
London Metal Exchange (LME) copper ended up 1.9 per cent at $US4635 a tonne, having earlier risen to $US4648, the highest since January 5, extending gains seen since mid-January when prices hit a six-year low. "It looks like the metals market is forming a bottom, price curves have flattened, some are even backwardated," said a London-based trader.
United States
Gains in Exxon Mobil and Chevron helped the Dow Jones Industrial Average erase a loss of almost 200 points early on Wednesday. The broader index is looking for its first gain in February following a 5.1 per cent drop last month that delivered the weakest start to a year since 2009.
"This is an emotional, sentiment-driven market and it's likely to remain tied to oil," Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, said.
The Institute for Supply Management's non-manufacturing index fell last month to 53.5, the lowest since February 2014, from 55.8. The result was less than the 55.1 median forecast in a Bloomberg survey.
"Manufacturing weakness seems to be spreading to the services side of the economy," said Thomas Costerg, a senior US economist at Standard Chartered Bank in New York. "There's definitely no decoupling here. It's a shaky outlook."
Europe
Markit Economics said its composite purchasing managers index for January declined to 53.6 - a four-month low - from 54.3 in December. In a worrying sign for the ECB's inflation goal, output prices dropped to their lowest level since March 2015
China National Chemical agreed to buy Swiss pesticide and seeds maker Syngenta for more than $US43 billion in cash, with the deal expected to close by year end.
Declines in banks dragged European stocks lower for a third day, while investors weighed financial results amid concern over global growth. Novo Nordisk slid 7.6 per cent and Royal KPN lost 1.2 per cent after they reported worse-than-estimated earnings. The Stoxx 600 fell 1.5 per cent at the close of trading, capping its longest losing streak in two weeks. It briefly inched into positive territory on at least three occasions today, but failed to sustain gains.
"The extent of the correction is unjustified in a world where economic conditions haven't drastically changed," said Dirk Thiels, head of investment management at KBC Asset Management in Brussels. "Sentiment is still below freezing. But fundamentals look pretty solid if you look under the hood. We've added to our equity positions and will be looking at earnings to trigger a shift."
What happened yesterday
More than $30 billion was wiped off the sharemarket on Wednesday in the biggest fall of the year as a sharp dive in oil prices over the past two days shattered investor confidence and sparked a broad-based sell-off. The S&P/ASX 200 index closed 2.3 per cent lower to 4876.8 while the All Ordinaries was 2.2 per cent lower at 4930.8.
