Resilience in resource stocks is again set to shield the Australian share market from the worst of a negative session on Wall Street after economic data disappointed and European markets slumped.
The June SPI 200 futures contract ended the night session just three points or less than 0.1% weaker at 4369 as BHP and Alumina rallied in the US despite a second losing session for most US-listed stocks.
The S&P 500 lost 0.59% as solid earnings results were overshadowed by weak employment, manufacturing and housing news. The Dow fell 69 points or 0.53% and the Nasdaq lost 0.79% as Apple resumed its decline.
Weekly jobless claims neared a four-month high last week, thwarting economists' predictions that recent rises were mostly due to seasonal factors. Manufacturing activity in the Philadelphia region was weaker than expected last month and housing sales dropped for the third month in four. Concerns over the economic outlook were partly allayed by a leading index of economic indicators, which pointed to a steady if modest improvement this year.
"The market is in a data-driven holding pattern," the chief equity strategist at Federated Investors in the US told Bloomberg. "You've got a lot of counter-balancing points. We got some soft economic data, while earnings are beating expectations. Investors are looking at each incremental data point trying to draw conclusions."
Australia's big miners avoided the worst of a sell-off in cyclical stocks in the US. BHP rallied 0.23% and Alumina put on 0.41%. Rio Tinto lost 0.88%.
European markets sagged after rumours of a French debt downgrade (later denied) offset a solid Spanish bond auction. Spain sold more bonds than expected but at a higher yield. Meanwhile, worries over bad bank loans pushed its share market to a new three-year low. Spain's IBEX 35 lost 2.42%, Italy's FTSE MIB 2.01%, Germany's DAX 0.9%, France's CAC 2.05% and Britain's FTSE 0.01%.
"The fact that the French rumour is now only a rumour and the subsequent jitters in Spain just show you how markets feel about us: sell at any opportunity," a senior equity sales trader at CM Capital Markets in Madrid told MarketWatch.
A lacklustre session on commodity markets saw little change in oil and metals. West Texas crude weathered the drip-feed of glum US economic news to trade virtually unmoved. Crude for May delivery was recently down five cents or 0.05% at US$102.62 a barrel.
Industrial metals were mixed but there were no major moves as copper continued to consolidate above US$8,000 a ton for a third night. In London, copper and nickel fell 0.1%. Aluminium rallied 0.7%, lead 1.5%, tin 1.3% and zinc 0.4%. US copper was recently down less than 0.1%.
Gold benefitted from rumours of a French debt downgrade but pared gains after ratings agency Fitch denied the reports. Gold for June delivery was lately up $3.60 or 0.2% at US$1,643.20 an ounce after earlier running as high as $1,654.90.
TRADING THEMES TODAY
OUT-PERFORMING FOR ONCE: It's been standard practice over the last few years to grumble about our market's under-performance relative to the rest of the world. Not so this week, with the XJO yesterday recording its highest close in eight months. The primary reason is renewed buying interest in BHP and Rio Tinto after their production updates painted a brighter outlook than the market expected. There were also reports of market rumours yesterday of more monetary easing to come in China. The big miners should cushion our market from too much downside today, but let's hope there's more movement elsewhere than we saw yesterday. With bio-techs running hot on the domestic market, it's worth noting that the New York Stock Exchange Biotechnology Index jumped 5.95% last night. Defensive sectors also advanced in the US.
ECONOMIC NEWS: Quarterly import prices are due at 11.30am EST. The IMF and G20 meet tonight, with Europe likely to be on the agenda. A busy week for US economic news ends quietly - no major releases scheduled tonight.
