Some encouraging corporate news: Downer EDI shares have shot up in opening trade after the contractor raised its full year profits guidance.
Diversifying away from mining helped the contractor deliver a 8.5 per cent increase in interim net profit to $78.2 million. The rise was higher than some analysts expected. Citi had forecast net profit of $69.5 million.
Shares have jumped 17 per cent to $7.31.
Downer has also lifted its full year net profits guidance by 7 per cent to $175 million from $163 million after winning more than $20 billion in new contracts in the first half of 2017, including a $2 billion contract to deliver Victoria's high-capacity Metro trains project and a $1 billion suburban trains contract for Sydney's rail network.
Earnings rose in Downer's transport services, technology and communications, rail and engineering, construction and maintenance businesses compared with a year earlier. But earnings fell in its mining and utilities services divisions as contracts were completed.
Downer will pay an interim dividend of 12¢ per share, flat on a year earlier.
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There's lots of smoke, but stockmarkets are failing to fire, writes IG strategist Chris Weston:
As it stands today there seems little to necessarily inspire the buyers, although we are seeing signs that the oil market could be ready to make a push higher. The various ADR's suggest modest upside for BHP on open, while CBA looks set to drop a touch.
The FOMC meeting was a fairly uninspiring affair, as largely expected, with the CME Fedwatch pricing at just 4 per cent of a move today. After careful analysis of the statement market pricing around future rate hikes for 2017 has dropped a touch, but around two hikes are still expected, with the prospect of a move in March a lowly 17.7 per cent.
On the political front, the big development has been Theresa May's Brexit draft passing the first vote in parliament by 498 to 114 votes. A three-day discussion will commence on Monday, with a final vote in the Commons on Wednesday, with the House of Lords then set to pass shortly after. GBP/USD has rallied on the clarity to $US1.2274 (at the time of writing) and new highs for the year, with the focus now turning to tonight's Bank of England meeting and the market expecting slight revisions to the bank's inflation and growth targets for 2017.
We are calling the ASX 200 to open unchanged at 5652, with SPI futures up modestly in the overnight session. We continue to watch the 5555 area in the SPI futures and 5600 level in the cash market, as a break here sees price print a lower low and suggests a fairly quick response down to 5525 (in the cash).
The US dollar trimmed gains against a basket of major rivals on disappointment that the Federal Reserve did not take a more hawkish stance on interest rate increases, though stronger-than-expected US economic data buoyed the greenback.
The Fed kept interest rates unchanged, as expected, in its first meeting since President Donald Trump took office.
While the Fed painted a relatively upbeat picture of the US economy that suggested it was on track to tighten monetary policy this year, analysts said the central bank's reference to low inflation measures dampened optimism that it would take a more aggressive line on raising interest rates.
The US dollar index, which measures the greenback against a basket of six major currencies, trimmed about 0.3 per cent of its gains on the day after the Fed statement and was last up just 0.2 per cent at 99.669.
That level was near a more than seven-week low of 99.430 touched Tuesday after comments from President Donald Trump and a top economics adviser that Germany, Japan and China were engaged in devaluing their currencies to the detriment of American companies and consumers.
The Aussie dollar bumped up to US75.97¢ following the decision, once again not managing to break through the US76¢ hurdle below which its been stuck for the past two weeks. It's currently fetching US75.85¢.
"The market didn't get any new insights from the statement as far as a trigger for a more hawkish Fed, and that is prompting some minor profit-taking on the US dollar," said Shahab Jalinoos, global head of FX strategy at Credit Suisse.
The Fed said it still expected inflation to rise to its 2 per cent target in the medium term, although it noted that market-based measures of inflation compensation are still low and survey-based measures of long-term inflation expectations are little changed.
The central bank has forecast three rate increases in 2017, while financial markets are currently pricing in just two hikes, with the first seen as most likely in June.
the Fed's "path to normalization" pic.twitter.com/1dddHhMJm1
— StockCats (@StockCats) February 1, 2017
The greenback remained positive on the day in the wake of the ADP National Employment Report, which showed US private employers added 246,000 jobs in January, and the Institute for Supply Management's survey showing its index of national factory activity rose to 56 last month.
"ADP just served as a reminder of America's rosier fundamentals, something that has been pushed off to the side with Washington dominating the spotlight," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.
And here's the overnight data round-up:
- SPI futures up 9 points to 5608
- AUD at 75.84 US cents (overnight range 75.52-75.97)
- On Wall St, Dow +0.2%, S&P 500 flat, Nasdaq +0.4%
- In New York, BHP -0.5%, Rio +0.4%
- In Europe, Stoxx 50 +0.9%, FTSE +0.1%, CAC 1%, DAZ 1.1%
- Spot gold -0.1% to $US1209.01 an ounce
- Brent crude +1.4% to $US56.49 a barrel
- Iron ore flat at $US83.34 a tonne
- LME aluminium flat at $US1819 a tonne
- LME copper -0.7% to $US5947 a tonne
- Steaming coal -0.4% to $US82.70/t, met.coal -1.3% to $US168.00
- 10-year bond yield: US 2.50%, Germany 0.46%, Australia 2.73%
Today's economic figures:
- December trade balance and building approvals at 11:30am AEDT
- Tonight Bank of England's latest rates decision and governor Carney speaks, as does ECB president Draghi
Stocks to watch:
- Tabcorp and Downer EDI release first-half earnings
- Macquarie cut to hold at Morningstar
- GUD Holdings cut to neutral at JP Morgan
- Adelaide Brighton raised to neutral at JPM
- Sky Network TV cut to neutral at UBS
Stocks advanced around the globe and the US dollar edged higher overnight as strong data suggested the global economy was picking up steam and the Federal Reserve released an upbeat statement on the health of the US economy.
The Fed left rates unchanged in its first meeting since President Donald Trump took office, but its relatively upbeat outlook suggested it was on track to tighten monetary policy this year.
The dollar reduced its gains after the Fed's decision but remained 0.2 per cent higher, buoyed by strong readings on US employment and manufacturing data.
US factory activity hit a more than a two-year high in January and a private payrolls report shot past expectations.
"The market didn't get any new insights from the statement as far as a trigger for a more hawkish Fed, and that is prompting some minor profit-taking on the dollar, but there is nothing in this Fed statement to change the bigger picture, from our perspective, that underlying US growth remains robust and the Fed will hike 2-3 times over the next 12 months," said Shahab Jalinoos, global head of FX strategy at Credit Suisse.
Wall Street stocks turned positive after the Fed's decision on interest rates, but gains were limited in the S&P 500, which snapped a four-day fall.
The Nasdaq, which is more technology-heavy, was lifted by a 6.1 per cent rise in Apple after the company's strong earnings and iPhone sales.
Both the pan-European FTSE 300 and the STOXX 600 indexes ended up around 0.8 per cent.
Euro zone factories registered the fastest activity rate in nearly six years, China's activity expanded for the sixth month and Japanese manufacturing growth was the fastest in almost three years.
"So far, momentum is pretty strong heading into 2017," said Jacqui Douglas, chief European macro strategist at TD Securities. "But political risks are definitely one of the biggest this year and, given the surprises we had through 2016, it's really hard to tell what's in store."
Good morning and welcome to the Markets Live blog for Thursday.
Your editors today are Jens Meyer and Patrick Commins.
This blog is not intended as investment advice.
Fairfax Media with wires.
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