Morning traders. Thanks Trees.
Market wrap:
Australian stocks are likely to open flat as gains in the big two miners cushion the market from a late slide on Wall Street after the announcement of fresh sanctions against Russia.
The September SPI 200 futures contract eased a point or less than 0.1% to 5538 as US stocks closed at their session lows despite upbeat consumer confidence data.
The S&P 500 gave up early gains to end the session nine points or 0.45% lower as a soft outlook from global economic bellwether UPS compounded pressure from news of increased sanctions against Russia from the European Union and the US. The Dow lost 71 points or 0.42%. The Nasdaq fared best, falling two points or 0.04% as tech stocks escaped the worst of the selling.
“Geopolitical risk remains a risk,” Dan Veru, chief investment officer at Palisade Capital Management in the US, told
Bloomberg. “What ultimately makes stocks go higher is earning and earnings are supporting higher valuations in the market.”
A choppy session saw shares fall away after the European Union announced the toughest sanctions yet against Russia for its role in fomenting civil war in Ukraine. Russian state-owned banks will be barred from selling shares or bonds in the euro-zone and Russian oil companies will be denied access to European equipment. Separately, the US announced sanctions against three Russian banks and a supplier to the Russian navy and the oil and gas industry.
Also affecting risk appetite was a lowered outlook from UPS. Shares in the international courier service fell 3.7% after it cut its guidance amid increased costs. The Dow Jones Transportation Average tanked 1.38% following the announcement.
Stocks rallied in early trade following news that consumer confidence hit its highest level this month since 2007. The Conference Board index rose to 90.9 from 86.4 in June. A separate report showed house prices rose 1.1% in May but fell 0.3% on a seasonally-adjusted basis. Annual price growth also decelerated in another sign that the housing market is losing momentum.
Telecoms was the only one of ten S&P 500 industry sectors to advance, but Australia's biggest iron ore miners resisted the headwinds. BHP rallied 0.48% and Rio Tinto 0.58% in US trade. Spot iron ore for import to China yesterday improved $1 to US$95.30 a dry tonne.
Oil futures were mixed, with Europe’s Brent crude rising on increased geopolitical risk and the US's main contract falling on domestic supply concerns. West Texas Intermediate crude oil for September delivery dropped 70 cents or 0.7%to settle at US$100.97 a barrel and was last trading at US$100.99. September Brent crude edged up 15 cents or 0.1% to settle at US$107.72 a barrel.
Gold declined as upbeat US consumer confidence data offset heightened geopolitical tensions. Gold for August delivery slid $5 or 0.4% to settle at US$1,298.30 an ounce and was recently trading at US$1,298.60.
Base metals pared recent gains as most risk assets came under pressure. In London, copper gave up 0.56%, nickel 0.8%, aluminium 1.59%, lead 1.5% and zinc 2%. Tin rallied 1.1%. US copper for September delivery was recently off 0.7% or two cents at US$3.22 a pound.
European markets took their cues from Wall Street, which initially seemed to take the Russian sanctions in its stride. The Stoxx Europe 600 index gained 0.27% as Germany's DAX advanced 0.58%, France's CAC 0.49% and Britain's FTSE 0.29%.
The dollar was this morning buying 93.85 US cents.
TRADING THEMES TODAY
CAUTION AHEAD OF BIG-TICKET ECONOMIC NEWS: A fresh round of sanctions against Russia gave the more cautious investors an excuse to take some money off the table ahead of a big end to the week in the US. Tonight brings the quarterly GDP update, ADP's monthly private-sector employment report and a policy statement from the Fed. Much of the trading action over the last few months amounts to a massive bet that the US economy bounced back hard from an unexpected contraction over the first quarter, so it's no surprise to see some nerves last night. BHP and Rio held up well and should shield our market today. Biotechs and small caps fared comparatively well in the US. Back home, leading graphite stocks endured another grim session yesterday, but may find some support on Day Three of the sell-off.
ECONOMIC NEWS: No significant domestic news scheduled today, but there is a welter of potential market-moving releases scheduled in the US tonight, including advance quarterly GDP, ADP non-farm employment change and a Federal Reserve rate decision and policy statement. Also due: crude oil inventories and advance GDP Price Index.
Good luck to all.
