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Morning market movers: 12 shares to watch

The local market is expected to drop at the open following heavy selloffs in global markets on Friday.

Here’s a recap:

  • Dow Jones (USA) – down 1.76%
  • NASDAQ (USA): down 2.21%
  • FTSE 100 (UK): down 2.22%
  • DAX (Germany) – down 2.44%
  • EURO STOXX 50 (Europe) – down 2.04%

On Friday, US shares closed lower as fears of oversupply in global oil markets weighed on prices and investors grew nervous on expectations of an increase to interest rates this week. This Thursday at around 6am, the US Federal Reserve is expected to announce its first interest rate hike in almost a decade.

In Europe, it was much the same; markets were dragged lower by declines in commodities and uncertainty in the US and China. FTSE-listed shares of BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) saw heavy declines, falling 5.32% and 4.3%, respectively.

Closer to home, the Sydney Futures Exchange is predicting a 73-point drop – equivalent to a fall of 1.45% – in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) at the open.

Shares of iron ore producers will once again be in focus. Iron ore prices now sit firmly below $US39 per tonne, at $US38.30 per tonne according to The Metal Bulletin; placing significant margin pressure on smaller producers like Fortescue Metals Group Limited (ASX: FMG), Altas Iron Limited (ASX: AGO) and BC Iron Limited (ASX: BCI).

Oil prices are also placing pressure on margins. At the weekend, Brent crude slipped 5.3% to $US37.21 per barrel, according to the Fairfax press. Undoubtedly, that will be bad news for Santos Ltd (ASX: STO), Woodside Petroleum Limited (ASX: WPL) and Oil Search Limited (ASX: OSH) – three of Australia’s largest oil and gas producers.

In company-specific news, Suncorp Group (ASX: SUN) said that due to natural hazards, its insurance margins will be squeezed. FONTERRA ORD UNIT (ASX: FSF) released its Global Dairy Update for December showing New Zealand and Australian milk collection decreased 4% in November, while China’s import growth continued.

In broker news, UBS cut its James Hardie Industries Plc (ASX: FHX) price target 8.4% to $15.06; analysts at Macquarie Group Ltd (ASX: MQG) cut the BC Iron price target 69% to $0.15 and Fortescue by 3% to $2.90 a share, according to Dow Jones Newswires.

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Motley Fool writer/analyst Owen Raszkiewicz has no position in any stocks mentioned.

Owen welcomes your feedback on Google plus (see below), LinkedIn or you can follow him on Twitter @ASXinvest.

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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