Stocks face another lacklustre start after disappointment with the minutes from the last Federal Reserve meeting helped push most US equities lower for a fifth night.
The September SPI 200 futures contract ended the night session one point or less than 0.1% stronger at 4065 as traders reacted to a lack of enthusiasm within the Fed for further stimulus measures.
The Dow fell more than 100 points before a late rebound cut its loss to 49 points or 0.38%. The S&P 500 finished less than 0.1% in the red and the Nasdaq lost 0.49% as technology stocks retreated following earnings disappointments on Tuesday.
Stocks sagged after the minutes of the last Fed meeting offered few signs that a third round of quantitative easing is looming. The minutes said, "A few members expressed the view that further policy stimulus likely would be necessary to promote satisfactory growth in employment and to ensure that the inflation rate would be at the Committee's goal."
"The equity market was definitely hoping for additional quantitative easing," the director of research at Haverford Trust in the US told Bloomberg. "There doesn't look to be any incremental news on any QE3."
The night's other US economic news underlined weakness in consumption. The trade deficit narrowed in line with expectations in May as exports increased and soft consumer demand impacted imports. Wholesale inventories increased 0.3% in May following a 0.8% drop in sales, the biggest in three years.
The major European markets finished mixed after a choppy session on thin trade. Germany's DAX put on 0.24%, France's CAC lost 0.57% and Britain's FTSE edged up 0.01%.
Oil reversed Tuesday's losses after the weekly US supplies report showed a larger decline in inventories than anticipated. The Energy Information Administration said inventories dropped by 4.7 million barrels last week, more than three times the consensus expectation of analysts polled by Platts. West Texas crude for August delivery was lately up $2.24 or 2.7% at US$86.15 a barrel.
Gold retreated from its highs after the Fed minutes reduced the prospects for imminent quantitative easing. Gold for August delivery was recently down $4.10 or 0.3% at US$1,575.70 an ounce.
Industrial metals were mixed amid apprehension ahead of tomorrow's Chinese GDP data. In London, copper rallied 0.65%, nickel 0.3%, tin 0.4% and zinc 1.1%. Aluminium dropped 0.6% and lead 0.4%. US copper for July delivery was recently up four cents or 1.1% at US$3.43 a pound.
"The [Chinese GDP] numbers are likely to be gloomy," and economist at Capital Economist told Reuters. "Recent action from the Chinese has indicated that data has been softer than they anticipated, causing the interest rate cut we saw last week. It's not surprising in that light that industrial metals prices have been soft."
TRADING THEMES TODAY
WAITING FOR THE REBOUND: Another ho-hum session on world markets offers no clear direction for our market today. US traders had a bit of a huff about the Fed's failure to flag QE3, then decided they hadn't really expected it this month anyway. The ASX will likely take its lead from Shanghai, which closed 0.5% higher yesterday, and the 11.30am EST employment report (see below). Banks were strong in the US and some of the oilers pushed higher. Precious metals miners remained under pressure.
EMPLOYMENT REPORT: Expectations are low for this morning's June jobs update, offering the possibility of an upside surprise. Economists polled by Bloomberg expect the unemployment rate increased 0.1% last month to 5.2% as the economy created just 200 jobs. The Australian Bureau of Statistics releases its report at 11.30am EST.
ECONOMIC NEWS: Inflation expectations are due at 11am EST, followed half an hour later by the employment change and unemployment rate. The European Central Bank releases its monthly bulletin tonight and President Mario Draghi is due to address a seminar in Casablanca. Highlights tonight in the US include weekly jobless claims, import prices, Federal Budget Balance and natural gas storage.
