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need2know: Wall Street rally to boost ASX

Local shares are poised to rise at the open, as Wall Street rallies on strong corporate news from Boeing, Apple and McDonald’s.
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What you need2know:

SPI futures up 47pts at 5553

• AUD at 77.58 US cents, 91.81 Japanese yen, 68.58 Euro cents and 51.55 British pence

• In late trade, S&P 500 +0.4%, Dow +0.9%, Nasdaq +0.3%

• In Europe, Stoxx 50 +0.4%, FTSE -0.2%, CAC +0.4%, DAX +0.3%

• Spot gold down $US27.03 or 2.1% to $US1257.46 an ounce

• Brent oil up 41 US cents or 0.9% to $US48.88 per barrel

• Iron ore adds 0.3% to $US63.27 per metric tonne

What’ on today

US Q4 GDP estimate, Australia producer price index, Australia December private sector credit.

Stocks to watch

The falling Australian dollar and oil price collapse have buoyed Fortescue Metals Group’s cost cutting drive, as the miner races to keep its breakeven price comfortably ahead of huge falls in the iron ore price.

UBS upgrades Western Areas to a “buy” and gives it a $4.50 target price.

Deutsche Bank has a “buy” recommendation on AGL Energy and a $13.61 target price.

“AGL Energy is amongst our top picks in the utilities sector. Following the recent completion of the Macquarie Generation acquisition, we believe AGL’s increased vertical integration increases returns whilst reducing risks.”

Currencies

The Australian dollar has shed 1.8pc to US77.47¢ at about 6.01am AEDT, earlier touching a low of US77.20¢, according to Bloomberg data. At Thursday’s local close, the $A was trading at US78.75¢.

Ahead of the overnight swoon, Bank of America Merrill Lynch said: “We continue to expect further declines in the A$, partly because the ‘carry trade’ looks less attractive, and also because the capital inflows into the mining sector which have been holding it above ‘fair value’ are set to fall away sharply.”

The Danish central bank cut interest rates for the third time in 10 days to defend the krone’s peg to the euro.

ABN forecasts the euro will fall to $US1.10 by the end of this year and decline to parity with the dollar by the end of 2016. The median estimates in Bloomberg surveys are for $US1.12 at the end of this year and next.

Commodities

LME copper and nickel inventories climbed again on Thursday, adding 2775 tonnes and 1836 tonnes respectively. Copper stocks are up more than a third so far this month and nickel touched a record at 425,562 tonnes.

Ore with 62 per cent content delivered to Qingdao, China, rose 0.3 per cent to $US63.27 a dry metric ton on Thursday, paring this month’s drop to 11 percent, according to data from Metal Bulletin Ltd.

United States

US stocks advanced as buying accelerated in afternoon trading. At about 6am AEDT, the Dow is up 0.73pc, the S&P 500 has risen 0.555pc and the Nasdaq is up 0.45pc. The Dow is being powered higher by Boeing, up 5.1pc, and McDonald’s, up 5.1pc. Also posting more than 1pc gains: Home Depot, JPMorgan, Goldman Sachs, Nike, IBM. Apple is up 2.4pc.

Google, Visa and Amazon江苏夜网 are among 52 S&P 500 companies scheduled to post results on Thursday. Of those that have reported profit so far, 76 per cent have exceeded estimates, while 57 per cent topped sales projections, according to data compiled by Bloomberg.

Initial claims for state unemployment benefits dropped 43,000 to a seasonally adjusted 265,000 for the week ended January 24, the lowest since April 2000, the Labor Department said on Thursday. It was the biggest weekly decline since November 2012.

Europe

Weak corporate updates pegged back European shares on Thursday, as the effects of a rout in oil prices knocked back heavyweight energy firms.

Royal Dutch Shell dropped 4.4 per cent after the oil major said it will cut spending by $US15 billion over the next three years. Oil and gas stocks fell 2.9 per cent, and are down over 20 per cent since June, with the price of a barrel of Brent crude falling nearly 60 per cent in the same period.

Airbus extended losses, down 2.1 per cent and the top faller on France’s CAC after telling staff in a letter that its A400M programme is in a “critical” situation and will be kept under close review.

What happened yesterday

Another rally in CBA shares coupled with a strong day for Fortescue Metals sparked an intraday turnaround in the Australian sharemarket, which ended higher for a sixth straight session.

The S&P/ASX 200 Index gained 16.7 points, or 0.3pc, to 5569.5.

Wires

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