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Posted: 2017-06-21 23:16:31

Updated June 22, 2017 09:17:32

Australian shares are set to open higher today, recovering from yesterday's sell-off which saw the ASX shed 1.6 per cent in one day.

The local market seems to be defying weak leads from US and European stock markets — which finished mostly lower.

Markets at 8:15am (AEST):

  • ASX SPI 200 +0.3pc at 5,622
  • AUD: 75.5 US cents, 59.6 British pence, 84.12 Japanese yen, 67.63 euro cents, $NZ1.04
  • US: S&P 500 steady at 2,436, Dow Jones -0.3pc at 21,410, Nasdaq +0.74pc at 6,234.
  • Europe: Euro Stoxx 50 -0.2pc at 3,554, FTSE -0.3pc at 7,448, DAX -0.3pc at 12,774
  • Commodities: Gold steady at $US1,246/ounce, Brent crude oil -2.7 pc at $US44.78, iron ore +0.7pc at $U56.82/tonne

On Wall Street, it was a mixed day with the Dow Jones index weaker, the S&P 500 flat and the Nasdaq making solid gains.

Why the mixed performance?

Healthcare and technology were the best-performing US sectors, which carried the Nasdaq towards a positive finish.

The Dow and S&P 500 were weighed down by a share market sell-off, particularly energy stocks.

Once again, US oil and gas companies have felt the impact of oil prices falling sharply for the second straight day.

Banking stocks were the second-worst performers on the New York market.

Within the next day, the Federal Reserve is scheduled to begin releasing results from its two-part annual stress test.

This test was adopted in response to the Global Financial Crisis, to gauge banks' ability to weather an economic storm that could threaten the stability of the system.

The results will be the first since United States President Donald Trump took office.

How did oil prices affect the market again?

Oil prices plunged by another 2 per cent overnight after hitting a 10-month low in volatile trade.

"Because people are seeing oil lower as another harbinger of lower inflation, a lot of other cyclicals (besides energy stocks) aren't doing well," said Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners.

Energy was the weakest S&P sector with a 1.6 per cent decline, despite larger-than-expected declines in inventories.

The energy index has fallen 14.9 per cent so far this year, compared with an 8.9 per cent rise for the S&P 500.

Furthermore, an agreement late last year from the Organisation of the Petroleum Exporting Countries (OPEC) and other producers to cut output by 1.8 million barrels per day from January was supposed to reduce the global glut.

However, production has risen in Nigeria and Libya, countries exempt from the deal — which was the main reason why oil prices fell sharply, by more than 2 per cent, on Wednesday.

Oil has slid 20 per cent in the first half of 2017, a period when prices have tended to rise.

Local economic news

Today is a quiet day in Australian economic news, with no new data being released today.

As for our Kiwi neighbours, the Reserve Bank of New Zealand has decided to keep its benchmark interest rate at its record low 1.75 per cent.

"Numerous uncertainties remain and policy may need to adjust accordingly," RBNZ governor Graeme Wheeler said in a statement accompanying the rate decision.

The NZ central bank reiterated that it would keep them unchanged for a considerable period.

Topics: company-news, stockmarket, currency, australia, european-union, united-states

First posted June 22, 2017 09:16:31

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