Morning traders. Thanks Trees and after-market regulars.
Market wrap:
Shares face a flat open as tonight's US public holiday and a weekend of sabre-rattling in Europe dampen risk enthusiasm after US stocks edged to a record close on Friday and iron ore bounced.
The September SPI 200 futures contract slipped two points or less than 0.1% to 5613 on Saturday morning despite modest gains in BHP and Rio Tinto as iron ore rose for the first time in ten sessions.
US stocks capped their best month since February with a rally on Friday as most economic reports topped expectations. The S&P 500 advanced six points or 0.31% during a shortened session leading into tonight's Labor Day holiday. The Dow added 18 points or 0.11% and the Nasdaq 22 points or 0.49%.
“We had a great August,” Brian Peery of Hennessy Funds in the US, told
Bloomberg. Everybody has been waiting for a pullback and that really hasn’t happened... There are some great opportunities if you can fade the noise of the geopolitical uncertainties.”
The S&P 500 wrapped up a monthly rise of 3.8% at a record close of 2,003.36 as strong reports on consumer sentiment and business conditions in the greater Chicago region offset a fall in consumer spending. The final version of the UMich/Reuters consumer-sentiment reading for August showed a rise to 82.5 from a July measure of 81.8, ahead of expectations for a figure of 80.1. Increases in production and new orders helped the Chicago PMI surge to 64.3 this month from 52.6 in July, also ahead of expectations. Personal spending fell 0.1% in July, the first decline in six months.
Stocks fell in early trade amid escalating tensions in Ukraine. Over the weekend, the European Union threatened Russia with fresh sanctions if it did not change course after Ukrainian President Petro Poroshenko declared the two countries were close to full-scale war. NATO said there were 20,000 Russian troops near the east Ukraine border and up to 1,000 fighting with pro-Russian rebels inside Ukraine's border. Russian President Vladimir Putin appeared to raise the stakes by demanding talks on statehood for eastern Ukraine and raising the threat of nuclear war.
Australia's largest miners crept higher in US trade after iron ore reversed from the brink of a five-year low. BHP put on 0.59% and Rio Tinto 0.09% in US trade. Spot iron ore for import to China on Friday rose 60 cents to US$87.90 a dry tonne.
Oil ended a losing month with solid gains on Friday as the threat of sanctions against Russian energy suppliers supported demand. West Texas Intermediate crude oil for delivery in October rallied $1.41 or 1.5% to settle at $US95.96 a barrel and a monthly deficit of 2.3%.
Aluminium pushed to an 18-month high and copper trimmed a negative month. In London, aluminium gained 0.7%, copper 0.7%, nickel 0.8%, tin 0.3% and zinc 0.8%. Lead lost 0.3%. US copper for September delivery edged up almost a cent or 0.3% to US$3.14 a pound.
European stocks rode the rebound in US stocks despite speculation that the European Central Bank may not move as aggressively as many analysts expected after inflation fell less than anticipated last month. Inflation in the euro-zone fell from 0.4% in July to 0.3%. The Stoxx Europe 600 index put on 0.28% as Germany's DAX added 0.08%, France's CAC 0.34% and Britain's FTSE 0.21%.
The dollar was this morning buying 93.27 US cents.
TRADING THEMES THIS WEEK
LABOR DAY IN THE US: The outlook for today would likely be brighter if not for tonight's public holiday in the US. US stocks closed at record levels, iron ore bounced where it "should" and most commodity prices improved on Friday. However, we are likely in for a cautious start to trade ahead of twin Chinese factory updates at 11am EST and 11.45am. The 'official' manufacturing PMI at 11am is expected to deteriorate to 51.2 from 51.7, according to Forex Factory. The final version of HSBC's private measure at 11.45am is expected to confirm a significant softening in growth flagged by a preliminary reading of 50.3. However those reports play out, risk appetite is likely to be limited until we see how Wall Street reacts to troubling developments in the Russia-Ukraine conflict over the weekend.
DELUGE OF DOMESTIC DATA: A big week of domestic data includes quarterly GDP data, trade figures and an RBA rate decision/statement. Wednesday's GDP report is the big one and is expected to confirm ongoing weakness in the economy as the mining boom unwinds. The consensus is for Q2 growth of 0.4%, down from a robust 1.1% over the first three months of the year.
Read more here. The calendar looks like this: inflation gauge at 10.30am, quarterly company operating profits at 11.30am (both today); cash rate and RBA policy statement, building approvals and current account (tomorrow); quarterly GDP, AIG Services Index (Wed); retail sales, trade balance (Thu); and AIG Construction Index (Fri).
WALL STREET CALENDAR: The highlights of the week ahead in the US look like this: Labor Day holiday (tonight); ISM Manufacturing PMI (tomorrow night); factory orders, Federal Reserve beige book (Wed); trade balance, weekly jobless claims, ISM services PMI (Thu); and non-farm employment change and unemployment rate (Fri).
Good luck to all.
