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Overseas Market Report - U.S. Markets Finish Lower Ahead of Inauguration

Thursday 19 January 2017 | Close

U.S. markets closed lower on Thursday with investor caution at the forefront ahead of Donald Trump's inauguration.

Thursday 19 January 2017 | Close

Foreign Equities Close Change %Change
Dow Jones (US) 19732 -73 -0.37
S&P 500 2263 -8 -0.37
NASDAQ 5540 -16 -0.29
FTSE 100 Index 7208 -39 -0.54
DAX 30 11597 -2 -0.02
CAC 40 4841 -12 -0.25
Nikkei 225 (Japan) 19072 178 0.94
HKSE 23050 -48 -0.21
SSE Composite Index 3101 -12 -0.38
NZ 50 7062 3 0.04

Thursday 19 January 2017 | Close

Commodities US$ Close Change %Change
Aluminium /t 1834 -5 -0.27
Copper /t 5714 -27 -0.47
Nickel /t 9874 -249 -2.46
Gold /oz 1205 1 0.08
Silver /oz 17.0 -0.0 -0.18
Oil - West Texas crude /bbl 51.4 0.3 0.61
Lead /t 2297 -10 -0.44
Zinc /t 2753 -5 -0.20

Thursday 19 January 2017 | Close

Currency Close Pts Change % Change
$A vs $US 0.7560 0.0054 0.71
$A vs GBP 0.6129 0.0006 0.10
$A vs YEN 86.81 0.66 0.77
$A vs EUR 0.7092 0.0029 0.41
$A vs $NZ 1.0517 -0.0015 -0.14
$US vs Euro 0.9381 -0.0028 -0.30
$US vs UK 0.8107 -0.0049 -0.59
$US vs CHF 1.0064 -0.0013 -0.12

U.S. markets closed lower on Thursday with investor caution at the forefront ahead of Donald Trump's inauguration.

The Dow fell for the fifth straight session, with shares of Exxon Mobil and Merck & Co. leading the decliners, media reports said.

At the closing bell, the Dow Jones and S&P 500 were both down 0.4%, while the Nasdaq was 0.3% lower.

In economic news, weekly jobless claims dropped by 15,000, which provided further evidence of the strengthening in the labour market.

Housing starts were reported at a seasonally adjusted annual pace of 1.23 million in December, 11.3% higher than in November, as demand continued to stay strong.

Netflix (NFLX) ended 2016 on a high note with stronger international subscriber growth (5.12 million net adds, versus guidance of 3.75 million) and U.S. growth (1.93 million net adds, versus guidance of 1.45 million). Despite the impressive fourth quarter and better-than-expected guidance for next quarter, the most important information from the conference call may have been management's admission that the operating margin will improve modestly on a yearly basis, as opposed to a "hockey stick manner".

For Australian ADRs listed on the NYSE, BHP Billiton slipped 11 cents (-0.27%) to $40.05, ResMed fell 39 cents (-0.62%) to $62.90, Telstra Corporation lost 6 cents (-0.31%) to $19.44, Spark New Zealand gained 2 cents (0.16%) to $12.57 and Westpac declined 21 cents (-0.86%) to $24.28.

At 7:45 AM (AEDT), the 10-year Treasury note yield was 2.46% and the 5-year yield was 1.96%.

European markets ended mostly lower on Thursday.

The FTSE 100 was down 0.5%, the French CAC 40 was 0.3% lower, while Germany's DAX ended flat.

Asian markets finished mixed.

The Hang Seng was down 0.2%, the Nikkei 225 rose 0.9%, while the Shanghai Composite fell 0.4%. India's Sensex finished 0.2% higher.

Australian Market

Local Markets Expected to Open Lower

Ahead of the local open, SPI futures were 10 points lower at 5,627.

Thursday 19 January - close. The local market opened higher on the back of gains on Wall Street overnight. Despite a fall below the flat-line shortly after 2:30pm, stocks recovered to close slightly higher, buoyed by gains in CSL. There were mixed results from the sectors: utilities and healthcare gained most significantly while energy was the biggest laggard. The Australian dollar gained against most major currencies.

The All Ordinaries rose 11.70 points to 5,745.40 while the S&P/ASX 200 lifted 13.40 points to 5,692.20.

BHP Billiton (BHP)

BHP Billiton announced that Samarco Minercao S.A. (Samarco) and its shareholders, Vale S.A. (Vale) and BHP Billiton Brasil Ltda (BHP Billiton Brasil) have entered a preliminary agreement with the Federal Prosecutors Office in Brazil (Federal Prosecutors) in relation to the Fundao tailings dam failure on 5 November 2015 (Preliminary Agreement). On 2 March 2016, Samarco, Vale, BHP Billiton Brasil and the Brazilian Authorities entered a Framework Agreement for the remediation and compensation of the impacts of the dam failure. The expert advisor's conclusions will be considered in the negotiations of a final settlement arrangement with the Federal Prosecutors, which is expected to occur by 30 June 2017 under the timeframe established in the Preliminary Agreement. BHP added 17 cents to $26.69.

Fortescue Metals Group (FMG)

Fortescue Metals Group announced that Moody's Investor Service upgraded credit ratings of the Company as follows: the company's corporate family rating to Ba1 from Ba2; Senior secured rating to Baa3 from Ba1, Senior unsecured rating to Ba2 from B1; and confirmed the stable outlook on all ratings. Moody's noted that "the company has been able to capitalise on higher iron ore prices and utilise the incremental cash flow generated to make sustainable improvements to its balance sheet and debt levels," and that "the upgrade also reflects Moody's expectation that the company's ongoing cost and debt reduction will allow it to maintain conservative financial metrics for the rating, even in a weaker iron ore price environment. This rating update has no impact on the company's debt capital structure. FMG added 15 cents to $6.25.

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