Trading Day blog: live markets coverage; Oil hopes inflated: Citi; plus analysis and opinion
The ASX books a close over 6000 as investors await the outcome of a keenly watched OPEC summit overnight.
And that’s the Trading Day blog for Wednesday, November 29.
5.07pm: WATCH: Greens back bank inquiry
Greens leader @RichardDiNatale has told Sky News his party is on board with a banking inquiry. MORE: https://t.co/QBVdQkry78 pic.twitter.com/OnNSn04E9n
— Sky News Australia (@SkyNewsAust) November 29, 2017
Samantha Woodhill 4.51pm: Stocks lift on stimulus hope
The local sharemarket finished the session higher following strong leads from Wall Street as US tax reform moved a step closer to fruition.
At the close of trade, the benchmark S&P/ASX200 was up 26.85 points or 0.45 per cent at 6011.102 points. The broader All Ordinaries index was up 29.368 points or 0.48 per cent, at 6096.1 points.
Mining stocks drove the market higher while the major banks stopped weighing on the market, according to CommSec market analyst Tom Piotrowski.
“There were reasonable gains on Wall Street overnight off the fact that the latest hurdle in the conversation around US tax reform has pushed ahead,” he said.
“The process of the bill being debated continues to move ahead, that’s a positive.”
BHP gained 0.95 per cent to $27.64 while Rio Tinto put on 0.22 per cent to $71.70.
Lithium miner Galaxy Resources shot up 8.64 per cent to $3.90 after it announced it has reached binding agreements to sell 200,000 tonnes of lithium source mineral spodumene each year for 5 years from its Mt Cattlin asset in Western Australia.
In financials, NAB 0.68 per cent to $29.58. Commonwealth Bank edged up 0.76 per cent to $80.98. Westpac made 0.74 per cent to $31.78 and ANZ strengthened 0.49 per cent to $28.77.
James Kirby 4.46pm: Bitcoin hype turns to hysteria
Interest in bitcoin, the alternative global currency, moved from hype to hysteria today as traders pushed the price above the key $US10,000 mark.
An estimated half a million new account holders are joining the bitcoin craze each day, signing on with a variety of exchanges and related markets around the world. One US exchange, Coinbase, has reported 300,000 new bitcoin accounts in the last week alone.
At IG markets, which offers a bitcoin-related product for Australian traders, head of research Chris Weston says: “We have had a fivefold increase in the number of clients in bitcoin since the start of the year … it is so busy we are regularly testing our internal limits. These last few days all anybody wants to do is buy.”
John Durie 4.42pm: Woolies, BP stall ACCC verdict
The $1.8 billion BP deal to buy 531 petrol stations from Woolworths has hit a last minute hurdle with the participants seeking a delay in the decision.
The watchdog’s verdict was due tomorrow and the deal expected to be cleared subject to the forced divestments of some stations.
The issue remains exactly how many stations and whether this would impact the economics of the deal.
Some competitors suggested as many as 100 stations would need to be divested.
“At the request of BP and Woolworths (WOW), the ACCC has delayed its consideration of BP’s proposed acquisition of the Woolworths’ retail service station sites so that the ACCC can consider further information from the parties,” the ACCC said in a statement today.
The decision is now expected December 14.
More to come.
4.25pm: ACCC delays BP-Woolies verdict
The ACCC has delayed its decision over BP’s proposed acquisition of Woolworths gas stations until December 14.
3.58pm: Bitcoin taps $US10,000
Paul Vigna and Steven Russolillio write:
Bitcoin crossed the $10,000 mark for the first time in its nine-year history, the latest burst in a rally that has transformed the virtual currency from a curiosity to a hot topic for mainstream investors.
The digital currency on Tuesday traded as high as $US10,025.96 and is up 21pc just since Friday, according to research site CoinDesk. For the year, it is up 933pc, having started the year at $US968.23.
It is one of most notable surges in a positive year for asset prices, generally. Through trading Tuesday, the S&P 500 is up 17pc in 2017, and the Dow Jones Industrial Average has jumped 21pc. The Nikkei 225 is up 18pc. Gold has added about 13pc, and copper 23pc.
In recent months, investors have set aside doubts about bitcoin’s use by criminal elements and focused instead on the potentially transformative technology behind it and the prospect that bitcoin could replace gold as an investment to hold when faith ebbs in fiat currencies — read more
The Wall Street Journal
3.34pm: The Trading Day ahead
Join the conversation with our Trading Day experts for breaking news and analysis in financial markets here and on Sky News Business (Ch: 602)
1.50pm: Jo Horton — Senior Economist, St George
3.50pm: Ben Le Brun — Charles Schwab
4.00pm: John Noonan from Thomson Reuters and TMS Capital guest host
4.05pm: Chris Weston — Chief Market Strategist, IG
4.30pm: Julia Lee — Equities Strategist, Bell Direct
(All times in AEST)
3.21pm: Collins leaves investors snagless
Australian KFC and Sizzler operator Collins Food has put a knife through its “fast-casual” push of the humble Aussie snag, revealing its Snag Stand chain is shutting up shop after a strategic review.
Dipping its toe into the ‘fast-casual’market, counting the likes of Nandos, Guzman Y Gomez and Grill’d Burgers, Collins has swiftly ended its appeal to our inner-sausage just a year after acquiring Snag Stand in its entirety, initially grabbing a 50 per cent stake in 2013.
“Snag Stand is undergoing strategic review as it was unable to achieve an overall improvement in trading despite refining the menu and brand,” said the company earlier this year.
Collins earlier today revealed first-half FY18 net profit fell 17.5 per to $12.7 million weighed down by $4.7 million in one-off costs including those from of the Snag Stand closure.
Elsewhere, revenue from its KFC Australia restaurants rose 8.5 per cent to $270.8 million on the same basis, while that from its Sizzler chain fell 23 per cent fall to $24 million.
CKF last down 4.8pc on $5.94
Elizabeth Redman 3.19pm: Tide turns on Sydney property
The slowdown in the Sydney housing market has intensified, with prices falling at a faster clip during November than in recent months, as the effect of lending clamps becomes clearer.
Sydney dwelling values have fallen 0.7 per cent over the month so far, according to property researcher CoreLogic.
The drop is faster than a 0.5 per cent fall in October, a 0.1 per cent fall in September and a flat result in August.
Dana McCauley 3.09pm: HuffPost’s Oz venture ends
Fairfax Media has terminated its joint venture agreement with HuffPost Australia, ending weeks of speculation about the online publisher’s future.
Two years after editor Tory Maguire launched the local arm of the global Huffington Post brand, the news and commentary website has been cast adrift after a review of its funding by the media company’s global arm.
HuffPost Australia’s staff of about 30 have been briefed this afternoon after anxiously awaiting details of the site’s future as rumours circulated throughout Australia’s media industry.
A spokesman for HuffPost Australia said: “Employees were briefed today on the decision of HuffPost and Fairfax to bring the Australian joint venture to an end. HuffPost will operate a stand-alone Australian edition from December 1 with a smaller local team. If redeployment is not possible, regrettably redundancies will occur.”
More to come.
2.52pm: Domino’s narrative takes left turn
Katherine Bindley writes:
For a while, Brent Gardiner felt he had a personal connection with the Domino’s employees making his pizzas — until a man named Melinda delivered him one.
Mr Gardiner, 24, of Moosup, Connecticut, was once a devoted fan of a popular tracking feature on Domino’s Pizza smartphone app. It gives customers a real-time play-by-play of their pizza’s production, complete with the name of each employee handling the pie.
If the app told him that an employee named “John” was making his pizza, Mr Gardiner used its feedback feature to send encouragement. “I’d be like, ‘you go, John!’ ‘Hope the pizza’s good, John!’” — read more
DMP last down 0.1pc on $46.90
1.49pm: The Trading Day ahead
Join the conversation with our Trading Day experts for breaking news and analysis in financial markets here and on Sky News Business (Ch: 602)
1.50pm: Live cross — Bloomberg Asia
2.05pm: David Ellis — Morningstar
2.15pm: Wai-Yee Chen — Investment Adviser, ASX
2.20pm: Tim Larkworthy — Fixed Income Sales Director, FIIG Securities
2.45pm: Diana Mousina — Senior Economist, AMP Capital
3.00pm: Craig Sydney — Investment Adviser, Shaw and Partners
3.05pm: Jack Lowenstien — Morphic Asset Management
(All times in AEST)
1.38pm: Wall St signals investor ‘heartburn’
The S&P 500 will be more volatile and rise much less in 2018 than it has done so far in 2017, according to Morgan Stanley.
Performance will also be much narrower as markets start to think about a peak rate of growth and deteriorating financial conditions, Morgan Stanley strategists say in their 2018 US Equity Outlook.
They note that 2017 was devoid of any meaningful drawdowns, with a 3pc fall equalling the smallest in the past 38 years, and the rally has had strong participation from global markets.
But whereas the S&P 500 is up more than 17 per cent year to date, Morgan Stanley strategists don’t expect it to breach 2750 next year, less than 5 per cent above the current level of 2627.04.
“We think the breadth and stability of equity markets reflect the synchronous economic recovery and very low dispersion in earnings estimates, not complacency by investors,” they say.
“However, such calm is likely to wane in 2018 as the recovery becomes less synchronous and decelerates at some point as the data begin to roll over from unsustainably high surprise ratios.”
They also expect US corporate earnings growth to peak in the first half of 2018 “which inevitably will bring some heartburn for investors”.
In their view the US economy and equity markets remain “firmly in a late cycle environment”, a view they have held for over a year.
“Late cycle is not bearish for equities but it does eventually turn into a recession, in our view,” they say.
Cautioning it’s way too early to call a recession, the strategists suspect the equity market may start to discount it’s arrival in 2019.
“That typically means narrower breadth and bigger drawdowns” and “on that note, credit markets may be topping now which tends to be a good 6-12 month leading indicator for stocks”.
While they’re yet to see the full blown euphoria they called for at the beginning of the year, “we have definitely seen a significant improvement in sentiment, especially from institutional investors and our sell side strategist peers.”
“The absence of strong and persistent equity flows from retail investors may be the final missing ingredient to conclude this cyclical bull market. We suspect that could happen in early 2018 with the signing of a tax bill.”
Their model is overweight pro-cyclical late cycle sectors — energy, tech, industrials — and financials, and underweight defensive bond proxies — staples, telco, and REITs — and consumer discretionary.
They still prefer small and mid caps to large caps, and recommend exposure to value or growth stocks.
1.12pm: ASX holds solid opening gains
Local shares track sideways after strong opening gains, the ASX200 up 0.7 per cent on 6024.6 in afternoon trade as heavyweight miners continue to fend off concerns around the commodity market.
Gains are broadbased, CSL remains the only top 10 ASX stock threatening to pull back into the red.
Renewed risk appetite down under came after new records in the US, Wall Street quickly recovering from selling in the wake of fresh North Korean missile activity as the Republican tax plan advanced further.
SWING STOCKS
+ Bega Cheese (4.2pc) Galaxy Resources (3.6pc), AGL Energy (3.3pc), Alumina (2.9pc), JB Hi-Fi (2.9pc)
— Spark Infrastructure (1.1pc), Aurizon (1pc), Trade Me (0.9pc)
12.58pm: OPEC resolve doubts surface
The consensus is too optimistic about a potential extension of oil production cuts to year end, according to Citi.
Ahead of OPEC’s 173rd and 3rd meeting with non-OPEC producers on Thursday, “most reports seem overly optimistic that a done deal is already in place”, say Citi strategists led by Christopher Main.
They point to a Bloomberg survey last Friday showing saying every participant expects an extension in one form or another, with a large majority expecting a nine-month extension to the current 1.8m b/d supply cut deal.
However, in their view Saudi Arabia and Russia are not yet aligned in their desire to extend the current OPEC/non-OPEC output cut through 2018.
“Our expectation is that something short of a nine-month extension is delivered, likely either a shorter extension or a deferral of the decision until 1Q18,” Mr Main says.
“OPEC has explicitly targeted an oil price of $60/bbl and no stock surplus, so with oil already above $60/bbl and with their own expectations that the current 140-m bbl stock surplus will be drawn down by 3Q18, then the case for an extension through 4Q18 is severely diminished by their own metrics.
“This means that significant Saudi corralling is likely to be needed in order to get a full nine-month extension done.”
WTI crude oil futures last down 0.5pc at $US57.69 after hitting a 2.5 year high of $US59.05 last Friday.
Sarah-Jane Tasker 12.28pm: Ex-banker in charity model rewrite
John Corry, a former senior adviser at Macquarie Bank, is about to disrupt the charitable raffle market, with a model he says is a world first.
Coming up against commission-based intermediaries running raffles, Mr Corry will this week launch Play For Purpose. It is an online not-for-profit model — supported by Tatts Group (TTS) — that is no cost, or risk, to the charity that participates.
One raffle ticket is $25 and a minimum of $15 from every $25 ticket a person buys is guaranteed to go directly to their charity of choice. The bulk of the remaining funds go into a prize pool.
11.48am: Seek upgrades earnings guidance
ASX-listed job ad platform Seek expects 13 per cent earnings (EBITDA) growth in FY18, up from 10 per cent previously forecast.
SEK last up 0.5 per cent on $19.50
Sarah-Jane Tasker 11.29am: Capitol makes move on Integral
Capitol Health has moved on Integral Diagnostics, in a deal valued at around $356 million, after previous merger talks between the two failed.
Capitol Health announced to the market today that the deal would create one of Australia’s leading providers of diagnostic imaging services through a combined network of clinics and hospital practices — read more
CAJ last 30 cents, IDX last $2.40
10.48am: Stocks defy base metal doubts
Australia’s S&P/ASX 200 share index has jumped 0.8pc to a 2.5 week high of 6031.4 after strong gains on Wall Street.
Financials have lead broadbased gains after US peers surged as incoming Fed chair Jerome Powell signalled a slant toward a less restrictive regulatory environment for US banks.
The Energy and Materials sectors are also positive despite falls in base metals and crude oil prices yesterday and a further 0.6pc cent fall in WTI crude futures to $US57.64 in early Asian trading.
A potential “sell on fact” reaction from oil prices to an expected extension of cutbacks by OPEC and Russia at the meeting this Thursday is a risk for the energy sector and the broader share market after strong gains in recent weeks.
Industrials are slightly weaker as Transurban and Sydney Airports turn down.
Recent weakness in base metals is the latest warning sign that the current euphoria over the global growth outlook may be over done.
Index last up 0.7pc at 6027.1
10.26am: ASX200 breaks past 6000
Updated:
The S&P/ASX200 posts its latest break above 6000 after falling below the psychologically significant level in the weeks since it hit the mark for the first time in a decade on Melbourne Cup Day earlier this month.
Renewed risk appetite makes landing on the local bourse after US stocks recovered from a momentary hit on fresh North Korean missile activity, the news appearing only to anger Wall St bulls and pave the way for confident early trades Down Under.
“Last night’s risk on move, together with a complete lack of reaction by gold or the Yen is confirmation that markets will now ignore Korean missile tests unless there is evidence that the risk of actual conflict is escalating,” says CMC chief market analyst Ric Spooner.
CSL remains the only top 10 ASX stock in the red after its run of successive record highs in recent days.
Index last up 0.7pc on 6026.7
SWING STOCKS
+ Galaxy Resources (2.8pc), Alumina (2.7pc), Aconex (2.5pc), Newscorp (2.3pc), Webjet (2.3pc)
— Spark Infrastructure (1.1pc), Aurizon (1pc), Trade Me (0.9pc)
9.52am: ASX eyes Wall St resolve
Australia’s S&P/ASX 200 share index is expected to open up 0.7pc after strong gains on Wall Street.
All the major US share indexes set record highs with the S&P 500 up 1pc to 2627.04 points. An ICBM test by North Korea caused a 0.4pc intraday pullback in the S&P 500 before gains resumed.
Banks were strongest with the KBW Bank index up 2.9pc after Fed chair elect Powell supported a “rewrite” of Dodd-Frank’s Volcker rule. Energy and Materials rose despite a further pullback in crude oil and base metal prices.
WTI crude fell 1.4pc to $US58.1, LME copper fell 1.9pc and nickel dived 3.9pc. Spot iron ore rose 0.7pc to $US67.76 and coking coal rose 0.5pc.
A 0.7pc rise in the S&P/ASX 200 today would put it within 0.5pc of the decade high of 6052.1 it hit earlier this month.
Index last 5984.3
9.50am: Bitcoin strokes the belly of $US10k
Bitcoin held form overnight, delivering a 50 per cent over the last twelve days as investors remain on watch for a potential game of cat and mouse as it nears $US10 000.
“It feels as though there is a fairly good chance we will either see the big 10,000 mark being breached either in the next 24 hours, or at least at some stage this week,” says IG chief market strategist Chris Weston.
“This [remains] a space for the brave and one in which you need to fully respect volatility and have huge consideration to one’s risk and money management.
“As the saying goes, ‘keep your friends close and your stops closer’.”
Bitcoin remains buoyant — last $US9935.5 — flanked by fresh record highs on Wall St and healthy risk appetite across markets with local SPI futures tip a 0.7 per cent rise on the ASX200 to 6029.
9.48am: The Trading Day ahead
Join the conversation with our Trading Day experts for breaking news and analysis in financial markets here and on Sky News Business (Ch: 602)
NOW: Kaz Sangha — CMC Markets
10.00am: Evan Lucas — The Lucas Review
10.40pm: Sally Auld — Chief Economist, JPMorgan
11.00am: Tim Evans — Morgans
11.15am: Ric Spooner — Chief Markets Analyst, CMC Markets
(All times in AEST)
Paul Garvey 9.38am: BHP in $4bn Olympic Dam splurge
BHP will pump almost $US3 billion ($3.9bn) into an overhaul and expansion of its Olympic Dam mine in South Australia as it looks to shrug off the underperformance that has dogged the operation in recent years.
The mining giant used its investor day yesterday to detail new plans for an immediate $US800 million injection to “stabilise” Olympic Dam over the next few years, to be potentially followed in 2020 by a $US2.1bn “brownfields expansion” — or BFX — that would double the mine’s output — read more
BHP last $27.38
9.18am: Appen halts trade for acquisition update
Software company Appen has entered into a trading halt pending an announcement in relation to a proposed acquisition and capital raising.
APX last $5.83
9.11am: Analyst rating changes
Monash IVF raised to Add — Morgans
Huon Aquaculture cut to Hold — Bell Potter
Dreamscape Networks initiated at Buy; $0.31 target — Bell Potter
Flexigroup cut to Hold — Morningstar
Ainsworth Game Technology cut to Hold — Canaccord
RXP Services cut to Hold — Canaccord
Bridget Carter 8.52am: Reliance Rail seals $2bn funding
Reliance Rail has confirmed that it has finalised its $2 billion refinancing and recapitalisation.
In a statement, Reliance said it had refinanced $2bn with existing bank debt, bonds and an injection from shareholders AMP Capital and International Public Partnerships.
The transaction involves a reduction in loans and new hedging that comprises both CPI and interest rate swaps.
Reliance Rail was advised by RBC Capital Markets and Gilbert + Tobin while AquAsia worked for the state government and Fort Street worked for Downer EDI which had an initial interest.
More to come from DataRoom
8.32am: Wall St seals fresh records
Wall Street stocks surged to fresh records Tuesday after a key Senate committee advanced the Republican tax cut plan, moving the long-awaited measure closer to the finish line.
All three major US indices set new records by the closing bell, with the Dow Jones Industrial Average up 1.1 per cent to 23,839.26.
The broadbased S&P 500 gained 1.0 per cent to end the day at 2,627.20, while the tech-rich Nasdaq Composite Index advanced 0.5 per cent to 6,911.07.
AFP
Richard Gluyas 8.26am: Bank tribunal to tackle disputes
A proposed tribunal to resolve politically sensitive past disputes between banks and their customers will hear cases that stretch back a decade and have been probed in a number of post-financial crisis parliamentary inquiries.
The industry-funded panel, which has been considered by the Ramsay inquiry into the financial system’s external dispute resolution framework, has assumed critical importance in efforts by the Turnbull government to convince Nationals MPs to dump their plan for a bank commission of inquiry.
8.21am: Powell tips December rate rise
President Donald Trump’s pick to lead the US Federal Reserve says there is a strong case for raising the benchmark interest rate at the central bank’s December policy meeting.
In an unusually direct comment for normally-reticent central bankers, Fed governor Jerome Powell told the Senate Banking Committee: “I think that the case for raising interest rates at our next meeting is coming together”.
Beyond that surprise, however, Mr Powell solidified his image as the centrist, continuity choice to take over the helm of the Fed from current chair Janet Yellen, repeating his commitment to ease some bank regulations, while keeping big institutions under scrutiny, and largely steering clear of high-stakes political issues like tax reform — read more
AFP
7.40am: US tax bill advances
The Republican plan for tax reform has cleared another hurdle, as the Senate budget committee approved the bill.
The party-line vote of 12-11 means that the tax plan can advance toward vote in the full Senate later this week. It remains to be seen if enough Republicans in the full chamber will support the bill, although two key legislators said they were more confident about the plan. Senate Republican leaders are hoping to pass the plan later this week.
In addition, leading Democrats pulled out of a meeting with the White House as a deal between the two to keep the government funded appears to be on shaky ground.
Investor hopes that tax reform will boost corporate profits has been behind some of the market’s optimism this year.
Dow Jones
7.35am: ASX set to open stronger
Australian shares look set to open comfortably stronger after Wall Street hit record highs as investors seized on strong consumer confidence data and comments from US Federal Reserve chair nominee, Jerome Powell.
At 7.35an (AEDT), the share price futures index was up 44 points.
In testimony before a US Senate committee Mr Powell, who is nominated to replace Janet Yellen as Fed chair, defended the need to potentially lighten regulation on the financial sector and more or less confirmed a December rate hike remains on the table.
That plus a surged in US consumer confidence data to a near 17-year-high in November, drove stocks to record highs, but major indexes briefly pulled back after news that North Korea had fired a missile.
In late afternoon trading, the Dow Jones Industrial Average rose 0.8 per cent, the S & P 500 gained 0.81 per cent, and the Nasdaq Composite added 0.36 per cent.
Locally, in equities news today, online job ads portal SEEK is due to hold its annual general meeting while KFC franchisee, Collins Food, will release its half-year results.
The Association of Superannuation Funds of Australia will also hold an annual conference in Sydney.
The Australian market yesterday closed slightly weaker, amid falls for the heavyweight banks, miners and telcos.
The benchmark S & P/ASX200 stock index dropped 4.5 points, or 0.1 per cent, to 5,984.3 points while the broader All Ordinaries index was down 3.7 points, or 0.06 per cent, at 6,066.7 points.
AAP
7.25am: US in China aluminium probe
The Trump administration has taken new action in its emerging strategy to ramp up trade pressure on Beijing, dusting off a little-used authority to combat imports of inexpensive Chinese aluminium.
Commerce Secretary Wilbur Ross told American industry executives that his department would “self-initiate” an investigation into whether their Chinese competitors were illegally selling certain products below cost. It is the first time in a quarter-century that the US government has initiated such a probe that wasn’t first initiated by the private sector.
The move is aimed at accelerating the process of imposing protective duties on “dumped” foreign goods, and saving industry costly legal fees. It also helps to overcome the hesitance of some firms to take the lead in challenging China, for fear of retribution.
This is just the beginning of a process that is expected to play out over months. A final decision on whether to impose fresh duties on Chinese aluminium is still months away, and would require sign-off from an independent trade panel before such penalties could be deployed. But administration officials emphasised the symbolic significance of the message they were intending to send.
Dow Jones
6.55am: Aussie dollar down
The Australian dollar has fallen against its US counterpart which rebounded overnight following a mix of positive data and a confirmation hearing for US Federal Reserve chair nominee, Jerome Powell.
At 6.30am (AEDT), the Australian dollar was worth US76.06 cents, down from US76.13 cents yesterday.
The greenback strengthened overnight after the Conference Board index of consumer confidence rose to a 17-year high and as Federal Reserve governor Jerome Powell, in position to be the next Fed chair, was questioned by a Senate committee.
Mr Powell told the committee the US Federal Reserve is likely to raise interest rates again next month.
He said the Fed should “respond decisively” to any new economic crisis, positioning himself as an heir to the policies of current chair Janet Yellen and her predecessor Ben Bernanke.
Following his confirmation hearing, the US dollar index rose against a basket of six currencies, rebounding from a two-month low the previous day, as risk appetite returned and US equities hit new highs.
Meanwhile, the Aussie dollar is also weaker against the yen but stronger against the euro on Wednesday.
AAP
6.50am: Wall St heads for fresh records
Surging shares of financial companies helped put major US indexes on track to notch another series of record closes.
With just under two hours of trade to go, banks and insurance companies drove the financials sector of the S & P 500 nearly 2 per cent higher and was on pace for its best day since early June.
Shares of financial companies, which had been trading higher early in the session, got a boost after Jerome Powell indicated the Federal Reserve was likely to raise short-term interest rates next month.
Stocks pared gains slightly after South Korean officials said North Korea fired another missile, its first since September.
The Dow Jones Industrial Average gained 107 points, or 0.5 per cent, to 23688 in US afternoon trading, while the S & P 500 added 0.5 per cent. The Nasdaq Composite was up less than 0.1 per cent. Each major index traded above its previous closing high during the session.
Australian stocks are set to open firmly higher. At 7am (AEDT) the SPI futures index was up 36 points.
Dow Jones
6.45am: Oil prices dip
Oil prices slipped in nervousness ahead of a meeting of crude producers at OPEC headquarters in Vienna to discuss extending output cuts.
Brent Crude fell 43 cents to $US63.41 in London while in New York fellow benchmark West Texas Intermediate (WTI) fell 30 cents to $US57.81.
Until now market expectations have been for 24 oil producers to prolong their 2016 deal on Thursday reducing output by 1.8 million barrels per day until the end of 2018.
But reports said that non-OPEC member Russia has misgivings, fearing that oil prices above $US60 a barrel will allow rivals in the United States, who are outside the accord, to extract more oil and steal market share.
AFP
6.40am: European stocks finish higher
Europe’s stock markets took to higher ground, with London fuelled by the energy sector, as US markets rose to new highs.
“ ‘Turnaround Tuesday’ has seen the FTSE 100 and European markets move higher once again, while in the US the big three have all scored new record highs,” said Chris Beauchamp, chief market analyst at online trading firm IG.
Royal Dutch Shell rallied after the energy giant pledged to resume all-cash dividends to shareholders as profitability improves thanks to higher oil prices and deep cost-cutting.
“Traders are viewing the move as a sign the major oil company is returning to bullish days of before the downturn in the oil market,” said David Madden, market analyst at CMC Markets UK.
Shares in the Anglo-Dutch titan closed up nearly 4 per cent as investors welcomed the news, which also brought along rival BP which finished 1.05 per cent higher.
London’s financial sector was somewhat boosted after the Bank of England declared that Britain’s seven largest banks had passed its latest stress tests.
All seven — Barclays, HSBC, Royal Bank of Scotland, Lloyds, Nationwide, Santander and Standard Chartered — passed its assessments for the first time since the central band began testing in 2014, and are “resilient” to recession.
Barclays and RBS “failed to pass the BoE’s ‘systemic’ hurdle, but neither bank was required to raise additional capital,” said Madden.
London closed up 1.04 per cent, Paris rose 0.57 per cent and Frankfurt ended 0.46 per cent higher.
AFP
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