australian stocks expected to open with marginal gains today 929932015

Iron ore for spot delivery at the Chinese port of Tianjin slumped to US$63.30 per tonne in the latest offshore session according to The Australian. The price crashed below the psychological US$65 per tonne level for the first time since 2009, as a consequence of oversupply conditions, a slowing Chinese economy and a spate of analyst reports that downgraded price forecasts of the steelmaking ingredient.

According to the Business Recorder, a slowdown in Chinese steel demand has forced some steel mills to bring forward plant maintenance normally scheduled for the Chinese New Year on February 19.

Economy

Data on the Consumer Prices Index for the fourth quarter of 2014 will be published tomorrow. Westpac Banking Corp (ASX:WBC) expects that year-on-year inflation will fall to 1.6 per cent from 2.3 per cent in September, and could provide the Reserve Bank of Australia with an appropriate trigger to cut rates next week, according to mortgagebusiness.com. The bank’s chief economist, Bill Evans, said “surprise decisions” in recent days by Canada, India and Denmark have triggered market speculation on an RBA rate cut.

The Westpac inflation estimate means that headline inflation in the fourth quarter would have slipped below the RBA’s 2 to 3 per cent target band. According to the National Australia Bank Ltd (ASX:NAB), the markets have already discounted a cumulative rate cut of nearly 0.5 per cent during 2015.

Currency

On Monday the Australian dollar declined below 79.00 US cents level for the first time in over five-and-half years, pressured by a host of factors such as falling commodity prices, the eurozone stimulus, the Greek election result in favour of anti-austerity measures, and falling inflation in the Australian economy that could lead to a rate cut by the RBA, according to The Sydney Morning Herald. By 08:53 today (AEDT), however, it had bounced back to 79.25 US cents.

The European Union has, however, warned Greece that it must stick to its existing agreements with international creditors if it wanted to retain a place in the eurozone. "Membership of the eurozone means that you comply with everything you have agreed with," said Eurogroup head Jeroen Dijsselbloem, adding that "on that basis, we`re ready to work with them," according to AFP.

“Considering that Troika is willing to grant another extension to Greece’s bailout plan, and that even Alex Tsipras’ fervent supporters are aware that Greece must repay €4.3 billion in March, Syriza will have to play ball and “compromise” shall remain the name of the game,” said Ashraf Laidi, Chief Global Strategist at City Index.

Stocks

Overnight on Wall Street, stocks were mostly flat but eked out small gains by the close. The Dow Jones Industrial Average rose 6.1 points, or 0.03 percent, to 17,678.7, the S&P 500 gained 5.27 points, or 0.26 percent, to 2,057.09 and the Nasdaq Composite added 13.88 points, or 0.29 percent, to 4,771.76, according to Reuters. Investors appeared to be less worried about a possible crisis in the eurozone due to the leftist party Syriza’s win in Greek elections, and were encouraged by advances in energy stocks following remarks by Abdulla al-Badri, OPEC's secretary-general, that oil prices had likely bottomed out and could start moving higher very soon.

The Australian stock market was closed Monday for a public holiday. Markets may open today with a small gain considering the March 2015 ASX SPI200 Index (AP) Futures were trading higher by 13 points at 07:59 today (AEDT).

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