Morning traders. Thanks Shelby and after-market regulars.
Market wrap:
Australian stocks look set for a flat open after an attempted rebound in the US floundered as Saudi air strikes in Yemen stoked rallies in oil and the US dollar.
The June SPI 200 futures contract closed unchanged at 5885 following yesterday's 1.6% plunge, the heaviest this year.
The S&P 500 bounced off its 100-day moving average but closed five points or 0.24% underwater for a fourth straight loss for only the second time this year after a mid-session recovery waned. The Dow ended 41 points or 0.23% lower after earlier falling as much as 100 points. The Nasdaq pared an intraday 1% fall to a final loss of 13 points or 0.27% as tech stocks rebounded from Wednesday night's dive, the index's largest in 11 months.
“The market moved down through the 100-day moving average earlier, but then the market decided to retake it,” Robert Pavlik, chief investment strategist at Boston Private Wealth in the US, told Bloomberg. “People are looking at the technology space as an opportunity because it got hit so hard yesterday. That’s what they’ve been flowing into.”
Tech giants Apple, IBM, Micron and Intel led a partial recovery as traders decided that this week's 3% retreat on the Nasdaq was sufficient reason to go bargain hunting. The tech-heavy index ended last week within 23 points of its all-time high, set 15 years ago at the height of the dot-com bubble.
The Dow Jones Transportation Average, viewed by some analysts as a leading indicator for the US economy, fell 0.57% to extend its fall for the week to 5% as oil rallied for a fifth session. West Texas Intermediate crude oil for May delivery settled $2.22 or 4.5% higher at US$51.43 a barrel after a Saudi-led coalition of Arab states launched strikes against Houthi militants in neighbouring Yemen. Yemen's Saudi-backed President Abed Rabbo Mansour Hadi fled the country on Wednesday as the Iran-backed militants closed in on Aden. Although Yemen is not a major oil producer, it is considered strategically significant because of its location at the Bab el-Mandeb Strait, a major thoroughfare for oil tankers.
Yemen “not only has the potential [to threaten the flow of] 3.8 million barrels a day of crude and products through Bab el-Mandeb, but its long border with Saudi Arabia and the Iranian support of the Houthis combined with the presence of al Qaeda in Yemen create a longer-term threat for the Saudis,” James Williams, an energy economist at WTRG Economics, told MarketWatch.
Assets seen as traditional havens in times of geopolitical turmoil rallied. The US dollar index was lately up 0.42%, pushing the Australian dollar down a fifth of a cent to 78.32 US cents. Gold for April delivery settled $7.80 or 0.7% ahead at US$1,204.80 an ounce for a seventh straight positive close. However, the NYSE Arca Gold Bugs index fell 1.79% to a one-week low.
BHP and Rio Tinto were left behind by a recovery in materials stocks in the US. BHP fell 1.03% and Rio 1.34% in US trade. Spot iron ore for import to China yesterday dropped 70 cents to US$54.80 a dry tonne.
The market paid little heed to a second night of upbeat economic data. Initial claims for unemployment benefits decreased by 9,000 last week to a seasonally-adjusted 282,000, pulling the four-week average back below 300,000 at 297,000. Services activity this month hit its fastest pace since September, according to Markit's preliminary purchasing managers index. The services PMI rose to 58.6 from a final reading of 57.1 in February.
Copper marked a three-week high as flooding in Chile forced several major mines to suspend production. London copper and aluminium rallied 0.8%, lead 0.4% and zinc 0.4%. Nickel fell 0.2% and tin 1.4%. US copper for May delivery was recently up 0.6% at US$2.81 a pound.
European stocks played catch-up with Wednesday's sharp sell-off in the US, but closed off their lows as investors bought the dip. The Stoxx Europe 600 lost 0.86% as Germany's DAX dropped 0.18%, France's CAC 0.3% and Britain's FTSE 1.37%.
TRADING THEMES TODAY
WAITING FOR DIRECTION: Buyers stepped in once the S&P 500 hit the 100-day moving average last night, but they did not have the fire power or commitment to keep the index in positive territory. Investors are pruning bets before a new corporate earnings season starts on April 8 on the expectation that a strong dollar and weak economy will have impacted profits. The S&P 500 has not fallen for five straight nights in 2015, which makes tonight's session of greater interest than usual, especially with GDP data on tap and Fed chair Yellen scheduled to make a speech. The downbeat mood in the US extended to oil and gold stocks last night, two obvious beneficiaries of the turmoil in Yemen. The speculative end of the ASX has been largely immune to this downturn so far, but increased volatility is likely if this retreat continues.
ECONOMIC NEWS: No significant domestic news scheduled today. Tonight's US highlights include the final Q4 GDP report, final GDP Price Index, revised consumer sentiment and inflation expectations and a speech by Fed chair Janet Yellen.
