Shares have retreated from their 2016 highs in early trade as investors trim their holdings in the major banks and a host of listed trusts trade without the rights to their shareholder payouts, including big names such as Mirvac, Sydney Airport and Transurban.
The S&P;/ASX 200 index has retreated 15 points or 0.3 per cent to 5635 points on its second last trading day of the year, but is still on course to end 2016 up by a healthy 7 per cent - a result that looked unlikely 12 months ago. The benchmark measure hit a new high for the year on Wednesday amid thin holiday-season trading.
Weighing on the ASX this morning is an array of listed trusts trading without the rights to their distributions, including property names such as Mirvac, Stockland, Vicinity Centres, BWP Trust, Goodman Group, Charter Hall Group, Investa Office Fund, GPT, and Dexus. Listed utilities such as APA Group and Duet Group, as well as Sydney Airport and Transurban, also trade ex-distribution.
Wall Street provided a weak lead for the local open, as US stocks slipped to their weakest session since October, and the Dow Jones index retreated further from its aspirational milestone of 20,000 points.
But overnight London's FTSE 100 index broke new record ground on its return to trade following the Christmas break, climbing 0.5 per cent to 7106 points. The benchmark British index has a heavy weighting to mining and oil and gas names, which were buoyed by strong gains in commodity prices.
'U-turn' likely
Iron ore pushed higher on Wednesday night to $US80.68/tonne, up $US1.26 and back within striking distance of its recent high of $US83.58. Brent oil slipped overnight to just shy of $US56/barrel but remained near 17-month highs as traders remain confident that the first OPEC production cut since 2008 and the first collaboration with Russia and other non-members for 15 years will support crude prices into 2017.
Those moves have helped support the likes of BHP Billiton and Fortescue, which are 0.3 per cent up in early trade, while Woodside is up 0.1 per cent. Gold miners are the best performers on the ASX, as Newcrest climbs 1.9 per cent, while the likes of St Barbara, Evolution Mining and Northern Star Resources all making strong gains.
"There is potential for a fluky day's trade," CMC Markets chief market strategist Michael McCarthy said. "Year-end buying could see a u-turn after initial weakness, especially if investors focus on the further lift in iron ore prices overnight."
Despite support from robust commodity prices, the Aussie dollar remains under pressure at US71.8¢ as the greenback continues to strengthen, with the US Dollar Index, which measures the unit against a basket of major currencies, at 103.3 and near 14-year highs.
Looking beyond near-term ups and downs, the coming year "should still be a good one for the US dollar," BK Asset Management currency strategist Kathy Lien suggested.
Stronger $US
Ms Lien pointed to the Federal Reserve's flagged intention to raise rates three times in 2017 as just one factor set to underwrite greenback strength.
"Between Donald's Trump Presidential victory, the surge in US rates and record highs in US stocks, global investors have found plenty of reasons to want to own US assets and in turn the US dollar," she said.
"The moves that we have seen so far are in line with the market's reaction to Ronald Regan's election in 1980 and if Trump follows through we could see an even stronger rally for the dollar in 2017. Fiscal stimulus and rate hikes are a powerful combination but our positive dollar view is predicated on Mr Trump delivering.
"In other words 2017 should be a good year for the US dollar unless Donald Trump fails to deliver and the Fed resorts to raising interest rates only two instead of three times next year."
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