Stocks face a soft open this morning as a delay in a Greek debt deal compounds a mixed end to the trading week in the US and Europe.
The March SPI 200 futures contract closed six points or 0.1% lower on Saturday morning at 4213 as oil and copper retreated and the big miners finished fractionally weaker in US trade.
Solid profit results from the likes of Microsoft, IBM and Intel helped Wall Street's benchmark indexes complete a third week of gains on Friday. The S&P 500 turned positive in the final minutes of trade, adding 0.07%. The Dow rallied for a fourth day thanks in large part to Microsoft and IBM, gaining 97 points or 0.76%, while the Nasdaq lost 0.06%.
Google was the main drag on sentiment in the Nasdaq, falling 8.4% after missing earnings targets. American Express also lost ground.
"It's a mixed bag of earnings," the chief investment strategist at Robert W Baird in the US told Bloomberg. "Earnings growth is going to decline, but that's already built into the market to a certain extent. If earnings don't collapse, it won't be a problem."
European markets fell back as investors fretted over delays in Greek debt talks. Greece's government was aiming to secure a deal with private bond-holders before tonight's meeting of euro-zone finance ministers, but MarketWatch reports that the chief negotiator for private lenders left the talks on Saturday without a deal. Negotiations are said to have stalled over the size of the haircut that bond-holders are being asked to take. Britain's FTSE fell 0.22%, Germany's DAX 0.18% and France's CAC 0.22%.
Commodities had a mixed session as the US dollar pared solid early gains. Gold picked up as the greenback came off its intraday high, benefitting from ongoing uncertainty over Greece. Gold futures for February delivery ended the session $12.50 or 0.8% stronger at US$1,667 an ounce.
Oil pulled back as Friday's tepid manufacturing report reignited concerns about the slowing Chinese economy. Crude for February delivery fell $2.15 or 2.1% to US$98.39 a barrel.
The big Australian miners dipped into the red in US trade as industrial metals demand suffered after a third month of contraction in Chinese manufacturing and house prices. BHP fell 0.1% and Rio Tinto lost 0.2%. Alumina was near-flat at +0.03%. In London, copper dropped 1.45%, aluminium 0.6%, lead 0.3% and zinc 0.7%. Nickel rallied 1.4% and tin 0.3%. US copper eased 1.4%.
TRADING THEMES THIS WEEK
GREEK DEBT DEAL: Markets have been discounting a Greek default for weeks now, but a deal with private lenders remains elusive. Tonight brings another deadline, with euro-zone finance ministers due to discuss the delivery of more bailout funds to Greece that depend on a deal with private bond-holders. It's possible the market will shrug off the delay, but a pullback after three weeks of solid equity gains is possible.
US EARNINGS: This week is one of the busiest on the Q4 earnings calendar, bringing results from 100 of the largest companies in the US. This earnings season has been a little weaker than past quarters, but the market had modest expectations and is in a forgiving mood. Among those reporting this week are Apple, Yahoo, McDonald's, Ford, Boeing and Netflix.
HOLIDAYS: This week brings the Australia Day public holiday on Thursday and the extended Lunar New Year holiday in China that will deprive local traders of a major lead for the entire week. The Lunar New Year break is also associated with weakness in commodity markets as Chinese traders exit the market.
ECONOMIC NEWS: The local calendar includes: the quarterly producer price index (11.30am AEST today); Conference Board leading index (tomorrow); and Melbourne Institute leading index, consumer price index and trimmed mean CPI (Wed). A light week in the US is heavily loaded to the back end. Highlights include: weekly jobless claims, durable goods orders, leading indicators, new home sales (Thu); and GDP and consumer sentiment (Fri).
