need2know: Miners slide in London

“There’s jut too much copper in the world,” James Cordier, the founder of Optionsellers苏州美甲美睫培训学校 in Tampa, Florida, said in a telephone interview. Photo: Martin LeisslLocal shares are poised to fall, in line with overseas markets and commodities as investors consolidated recent gains.
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What you need2know

SPI futures down 23 points or 0.4% to 5339 at about 6.30am Sydney time

AUD at 74.35 US cents, 79.67 Japanese yen, 65.73 Euro cents and 51.41 British pence

On Wall S, Dow -0.1%, S&P 500 -0.2%, Nasdaq -0.3%

In Europe, Stoxx 50 -1%, FTSE -1.1%, CAC -1%, DAX -1.3%

In London, BHP -4.5%, Rio -3.6%

Spot gold +0.6% to $US1269.80 ounce at 2.50pm New York time

Brent crude -1.3% to $US51.85 barrel at 2.40pm New York time

What’s on today

China aggregate financing, new yuan loans, M2 money supply (May), Canada jobs report (May), US monthly budget statement (May), Mexico industrial production (April), Turkey current-account deficit (April) and GDP (1Q), Italy industrial production (April), France industrial production (April).

Currencies

The Bloomberg Dollar Spot Index, a gauge of the greenback against 10 major peers, gained 0.4 per cent, snapping a two-day drop. The US currency strengthened about 0.7 per cent to $US1.1317 per euro and was 0.2 per cent weaker against the yen.

As the Fed determines when to tighten monetary policy, HSBC Holdings said buying the greenback before an eventual rate increase may be a “self-defeating strategy”.

The yen gained versus the euro, reaching its strongest level in more than three years, amid increasing doubts that the Fed will tighten policy in coming months helped boost demand for the relative safety of the Japanese currency.

New Zealand’s dollar surged to the highest level in a year as the prospect of continued central bank inaction at home and in the US burnished the smaller nation’s interest-rate premium. The kiwi soared as much as 2 per cent to 71.48 US cents.

Commodities

Copper futures slumped to the lowest in almost four months as swelling stockpiles added to evidence that demand isn’t strong enough to ease a global glut. Inventories at warehouses tracked by the London Metal Exchange expanded 39 percent in the past five sessions, the most since August 2005, data compiled by Bloomberg show. Copper imports fell for a second straight month in May in China, the world’s largest user, customs data released Wednesday showed.

“There’s jut too much copper in the world,” James Cordier, the founder of Optionsellers苏州美甲美睫培训学校 in Tampa, Florida, said in a telephone interview. “All the stimulus in China hasn’t helped. Expectations of stronger Chinese demand are just not taking place.”

Antofagasta, the miner controlled by Chile’s richest family, dropped as much as 7.8 per cent in London after Canaccord Genuity cut its recommendation to hold on concern that changes in Chile’s tax system could pressure margins and the dividend.

Oil prices fell, snapping a three-day rally after notching another 2016 high, as a strong dollar sparked profit-taking in crude futures by investors. Continuous threats by militants against Nigeria’s oil industry and fear of more security incidents that could hit supplies worldwide, however, limited losses in crude. Brent crude oil futures were down 51 cents at $US52 a barrel near midday in New York, after setting a 2016 high of $US52.86.

United States

Billionaire investor George Soros has become more involved in trading at his family office, concerned about the outlook for the global economy and the risk that large market shifts may be at hand, according to a person familiar with the matter. Soros, 85, has been spending more time in the office directing trades and recently oversaw a series of big, bearish investments, said the person, who asked not to be identified discussing private information.

Bill Gross, the manager of the $US1.4 billion Janus Global Unconstrained Bond Fund, warned central bank policies that pushed trillions of dollars into bonds with negative interest rates will eventually backfire violently. “Global yields lowest in 500 years of recorded history,” Gross, 72, wrote Thursday on the Janus Capital Group Twitter site. “$10 trillion of neg. rate bonds. This is a supernova that will explode one day.”

The most determined seller of US stocks may not be in the US at all. Investors outside the country dumped $US128 billion in American shares over the past year, data from the US Treasury International Capital System show. Despite the higher quality of companies in the US, long-term investors may be drawn to the faster pace of growth in other economies, said Stewart Warther, an equity strategist at BNP Paribas.

Europe

The European Central Bank bought corporate bonds in euros for a second day as it expanded its stimulus program for the region’s flagging economy. Purchases included securities issued by troubled German carmaker Volkswagen AG due in 2019, those of tiremaker Continental AG and of French mobile company Orange SA, according to a person familiar with the matter.

Scepticism over the European Central Bank’s stimulus program weighed on the region’s shares for a second day, taking their valuations to the lowest levels since July 2015 relative to global stocks.

The Stoxx Europe 600 Index fell 1 per cent at the close, with more than 500 of its members down. Companies in the benchmark gauge trade at 14.9 times estimated earnings, 4.3 per cent lower than the MSCI All-Country World Index and 12 per cent below the multiple for the S&P 500.

While a Citigroup index tracking the number of corporate profit upgrades versus downgrades turned positive for the first time since last year, analysts are still projecting Stoxx 600 members will post a 3.2 per cent decline in net income in 2016.

What happened yesterday

Australian shares dipped slightly on Thursday, with miners trimming strong gains following more rises in commodity prices, while the banks continued to sink and packaging giant Amcor issued a profit warning. The benchmark S&P/ASX 200 index dropped 0.1 per cent to 5361.9, while the broader All Ordinaries dropped 0.1 per cent to 5437.4.

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