The share market is primed to open higher after US stocks rebounded from a three-day sell-off and Alcoa got the earnings season off to a positive start.
The June SPI 200 futures contract rallied 25 points or 0.5% to 5429 as BHP and Rio Tinto hit their highest levels this month in US action and commodities from gold to copper benefitted from a falling US dollar.
The Nasdaq recovered from its worst three-day dive in two and a half years with a gain of 33 points or 0.81% as tech stocks led the turnaround. The S&P 500 put on seven points or 0.38% and the Dow, the least affected of the major indexes over the last two weeks, rose 10 points o 0.06%.
"Biotech and tech companies were trading at lofty valuations and they finally succumbed to the gravitational pull," Mark Luschini, chief investment strategist at Janney Montgomery Scott in the US, told Bloomberg. "A lot of these growth stocks had been taken down 10 to 20 percent, but usually that loss finds a bottom."
The biggest losers over the last two weeks snapped back overnight, including Facebook, Yahoo!, EBay and Google. The Russell 2000 index of small caps gained 0.75% after hitting an eight-week low yesterday. The Nasdaq Biotechnology Index slid 0.4% but remained above Monday's 13-week low. The VIX was lately down 4.4%, its first retreat in four sessions.
Shares in industrial bellwether Alcoa were up 2.2% in after-market trade after the aluminium producer's first-quarter earnings exceeded analysts' expectations. The former Dow component marked the unofficial start of a new quarterly earnings season with the release of its report following the close of regular trade this morning.
Resource stocks saw solid gains after the US dollar slumped against the yen as the Bank of Japan dashed hopes for further stimulus measures. A lower greenback makes dollar-denominated raw materials more attractive for holders of other currencies. BHP rallied 2.03% and Rio Tinto 3.02% in the US. Spot iron ore for import to China yesterday improved $1 to US$118.20 a dry tonne.
Gold benefitted from a falling greenback and haven-buying as tensions in Ukraine increased. Gold for June delivery was recently ahead $10.40 or 0.8% at US$1,308.70 an ounce after settling at US$1,309.10. Pro-Russian separatists seized Donetsk this week and demanded an independence referendum, heightening the possibility of civil war in Ukraine.
Oil reached its highest level in a month after the Energy Information Administration cut its US production estimates for the year. West Texas Intermediate crude oil for May delivery was up $1.91 or 1.9% at US$102.36 a barrel after settling at US$102.56.
Copper turned higher in US action following a mild retreat on the London Metal Exchange. US copper for May delivery was recently up 0.6% or nearly two cents at US$3.06 a pound. In London, copper and tin slipped 0.1%, while aluminium rose 0.1%, lead 0.4%, nickel 0.3% and zinc 1.2%.
European stocks retreated for a second day as Russia-Ukraine tensions dampened risk appetite. The Stoxx Europe 600 index fell 0.32% as Germany's DAX lost 0.21%, France's CAC 0.25% and Britain's FTSE 0.48%.
TRADING THEMES TODAY
MINERS TO LEAD: Wall Street found a floor overnight, however temporarily, and barring surprises that should be enough for a positive Australian session. BHP and Rio are likely to lead the rally after their share prices moved to their highest level in several weeks in the US. Gains in oil, gold and most base metals ought to help the rest of the resource sector. Gold stocks in the US rallied 2.35%. Alcoa's significance as a bellwether for the broader market is often overstated, but it's still good to see the first major earnings report of the season get a positive reception.
ECONOMIC NEWS: Monthly consumer sentiment figures are due at 10.30am EST, followed by home loans at 11.30am. US highlights tonight include the minutes from the last Federal Reserve board meeting, crude oil inventories and wholesale inventories.
