Local shares advanced in early trade on Wednesday despite mixed signals from US and European markets overnight. Indices on Wall St lacked initiative as investors look ahead to speeches from President Obama and President-elect Trump. Energy stocks weighed on markets once more as oil prices fell. At the close of US trade the Dow Jones index was lower by 32 points or 0.2% after being up 70 points. The S&P 500 index was unchanged while the Nasdaq continued its recent trend rising almost 20 points or 0.4% to new record highs.
Most ASX sectors were higher over the course of the morning, albeit with modest gains. The Materials sector was the clear leader in terms of gains, while Utilities and Property names lagged. Participation saw around 1.1 billion transactions being measured by the ASX valued at $1.03 billion. At lunch 526 shares were higher, 340 were lower and 349 were unchanged.
The Materials sector recovered the losses of yesterday, following improvements for similar sectors in overnight trade. Investors globally have taken heart from the latest data from China which showed producer prices accelerating by 5.5% yoy in December, up from 3.3% in November, and considerably faster than market expectations of 4.6%. The higher producer prices have led to higher industrial profits and recovering investment growth which is a key positive for China’s economic outlook in 2017. Iron ore rose by US$2.50 or 3.2% in the last day to US$80.10 a tonne. Fortescue Metals Group (FMG) was lately 3.8% higher at $3.70.
Energy stocks were mixed. Coal miners rose despite the continued moderation in coal prices. Thermal coal for January delivery fell by US55 cents or 0.7% to US$81.50 a tonne in the last day. Global oil prices fell in the last 24 hours on doubts that cuts by key oil producers will be sufficient in supporting prices. The US Energy Information Administration revised its forecast for 2017 crude output, expecting growth of 110,000 barrels per day, up from last month's forecast of a 80,000 bpd year-over-year decline. Shares in Whitehaven Coal (WHC) shares were 2.9% higher at $2.83, Newhope Corporation (NHC) was flat at $1.65, Oilsearch (OSH) fell 0.5% to $7.31.
Bank shares were a weight on the index. ANZ announced the sale of its New Zealand asset finance business UDC Finance. Chinese conglomerate HNA Group will pay US$461 million, pending regulatory approvals, in a deal that will include the Esanda name and trademarks in Australia and New Zealand. The transaction is the latest example of the lenders present strategy of improving the capital use and focussing on core operations. The strategy includes winding back it’s Asian exposure; a week ago ANZ sold its 20% stake in Shanghai Rural Commercial Bank for US$1.32 billion. ANZ shares were at $31.33 for a gain of 0.16%
Major currencies were mixed against the US dollar in the preceding day . The Aussie dollar rose from lows near US73.30 cents to just below US73.85 cents and was near US73.65 cents in afternoon US trade. In early Asian trade the local unit was firmer at US.7370 cents.