need2know: Wild ride ahead

Taking their queue from overseas markets, local investors should prepare themselves for a day of volatility.
Shanghai night field

What you need2know:

• SPI futures down 31 pts at 5190

• AUD at 88.10 US cents

• In late trade, S&P 500 -1%, Dow -1.2%, Nasdaq -0.4%

• In Europe, Euro Stoxx 50 -3.6%, FTSE -2.8%, CAC -3.6%, DAX -2.9%

• Spot gold up $US7.70 to $US1240.53 an ounce

• Brent oil down $US1.58 to $US83.46 per barrel

What’s on today

Ten Network Holdings full-year results; Australia employment data, Reserve Bank of Australia assistant governor Guy Debell panel participation at Thomson Reuters FX Benchmark event, Sydney; US industrial production, Philadelphia Fed index, unemployment; FOMC Charles Plosser speaks.

Stocks to watch

At one point overnight, SPI futures were down as much as 80 points.

Morningstar raised News Corp from “hold” to “accumulate” with a fair value uncertainty pegged at “high”.

RBC Capital Markets has an “outperform” recommendation on Rio Tinto. It notes that third quarter attributable iron ore production of 60.4mt was a record, “but 6 per cent below our 64.1mt forecast”, though in line with consensus.

Global insurers are lining up for National Australia Bank’s life insurance division, despite the fact there’s no formal process under way, according to The Australian Financial Review’s Street Talk column.

Currencies

The $A traded in a wide range overnight, according to Bloomberg data; it slid to a low of 86.76 US cents before rallying to as high as 88.12 US cents in late New York trading.

The US dollar hit a three-week low against the euro and a more than one-month low against the yen after weak US economic data led to a rethink on the timing of a Federal Reserve interest rate hike.

The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.83 per cent at 85.106.

Commodities

Brent and US crude futures fell, a day after posting their biggest daily drop in years, with more production, less demand and deflation expectations weighing heavily. US crude closed below the $US82 a barrel mark.

Bank of America has lowered its 2015 forecast for Brent to $US98 a barrel from $US108, and its outlook for WTI to $US90 from $US96. Brent still has “strong support” at $US85 a barrel because OPEC will probably trim the supply surplus, while WTI may fall to $US75 as new pipelines bring additional supply to the US storage hub at Cushing, Oklahoma, the bank said in a report.

Gold continues to struggle for direction. Bullion overnight rose to less than $US1 below key resistance at $US1250 an ounce before sharply paring gains. “Gold is vulnerable to more selloffs after it failed to hold earlier flight-to-safety gains,” said Eli Tesfaye, senior market strategist at RJO Futures in Chicago. “With the IMF cutting its global growth forecast last week, inflation is not a key concern right now.”

United States

US stocks were down more than 1 per cent in late trading as economic data added to worries over the health of the world economy and concern increased about the spread of Ebola. But each of the three major indexes were well off their lows of the session. The S&P 500 had been down more than 3 per cent earlier in the day.

The pace and depth of the selloff have taken many investors by surprise, while others had been anticipating a pullback. “It’s normal and it’s long overdue – markets can’t grind higher for that long without some sort of get-back here,” said Scott Armiger, portfolio manager at Christiana Trust in Greenville, Delaware.

Europe

A sell-off in European stocks accelerated on Wednesday with a key index suffering its biggest one-day slide in nearly three years, as investors slashed exposure to risky assets such as equities on mounting worries about global growth.

Greek equities were among the biggest losers as Athens’s benchmark ATG index succumbed to a second day of selling pressure and sank 6.3 per cent. Traders cited political uncertainty and a spike in Greek 10-year bond yields, which rose above 7.6 per cent.

What happened yesterday

The Australian sharemarket extended its recovery to a second day running on Wednesday, as Telstra Corp and the banks took over from the miners in leading the rebound and upbeat corporate news helped to lift spirits.

The benchmark S&P/ASX 200 Index rose 38.2 points, or 0.7 per cent to 5245.6, extending the previous session’s strong gains.