Our market isn’t expected to follow Wall Street higher this morning as ongoing fears over the economic slowdown in China and the health of the local economy are keeping investors on the sideline.
Traders are betting that the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) will open flat even as the US S&P 500 Index jumped 1.8% and most commodities rallied.
Given the sharp rise in volatility, I don’t think we will end the day where we start, and while most look at our plunging dollar in a negative light, I am feeling more confident about this year’s “Santa Rally”.
A weaker Australian dollar will do more good than harm to corporate earnings and some experts are forecasting our currency to drop to US60 cents in 2016.
But treading water is not necessarily a bad outcome for our market this morning given that we avoided a big sell-off yesterday and ended just above breakeven despite a big sell off in the US and a big plunge in the oil price.
The West Texas Intermediate oil price bounced back to end 1.4% higher at $US46.05 a barrel as copper firmed 1.2% to $US2.33 a pound.
That should be enough to give mining majors like Rio Tinto Limited (ASX: RIO) a boost, although it will also be in focus after The Australian reported that private equity firm KKR is interested in Rio Tinto’s Hunter Valley coal assets.
Gold miner EVOLUTION FPO (ASX: EVN) is also under the corporate action spotlight after Newcrest Mining Limited (ASX: NCM) sold its 2.5% stake in Evolution Mining, according to the Australian Financial Review. There was a block trade of 16 million Evolution shares crossed at $1.125 after the market closed on Wednesday.
Shareholders in nickel miner Sirius Resources N.L. (ASX: SIR) will be meeting today to vote on the takeover bid by Independence Group NL (ASX: IGO). There’s little doubt that the deal will be approved and Independence Group looks cheap to me even with the uncertain outlook for base metals.
Keep an eye out too for retail-exposed stocks like Woolworths Limited (ASX:WOW) and JB Hi-Fi Limited (ASX: JBH) as July’s sales data will be released by the Australian Bureau of Statistics at 11.30am this morning. Economists are expecting to see a 0.4% month-on-month increase.
Meanwhile, news that New Zealand-based retailer Briscoe Group will not increase or extend its takeover offer for embattled adventure gear retailer Kathmandu Holdings Ltd (ASX: KMD) is likely to weigh on the latter’s share price today. Kathmandu is thinking “good riddance” as it says Briscoe’s offer undervalues the company.
Briscoe is offering to swap five of its shares for every nine Kathmandu shares and pay a NZ20 cent cash consideration for each Kathmandu share.
Over in the banking sector, we could see some switching from National Australia Bank Ltd. (ASX: NAB) to Westpac Banking Corp (ASX: WBC) after Credit Suisse downgraded the former to “neutral” from “outperform” and upgraded the latter to “outperform” from “neutral”.
But environmentalist will be happy with NAB as the AFR reported that it will not fund Adani’s controversial Carmichael Coal project.
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Motley Fool contributor Brendon Lau owns shares of Independence Group NL, National Australia Bank Limited, Rio Tinto Ltd., and Westpac Banking. Follow me on Twitter - https://twitter.com/brenlau
Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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