Morning traders. Thanks Trees and after-market regulars.
Market wrap:
A push in the US towards record levels on Friday points to a positive open to Australian trade this morning.
The June SPI 200 futures contract rallied 22 points or 0.4% to 5975 as Wall Street sealed back-to-back weekly rises for the first time in two months of choppy, directionless trade.
The S&P 500 rallied 11 points or 0.52% to close within 1% of an all-time high as market heavyweight General Electric staged its strongest advance in six years. The index gained 1.7% last week. The Dow was another beneficiary of the "GE effect", jumping 99 points or 0.55% to close above 18,000 for the first time in three weeks and match the S&P 500's rise for the week. The Nasdaq was the best of the major indexes last week, gaining 2.2% with a Friday lift of 21 points or 0.43%.
Trading volumes and ranges have fallen off in the US this month ahead of a new quarterly earnings season, which gets underway in earnest this week. Intraday movements on the S&P 500 and Dow have been less than 1% during April. Friday's trading volume was the second lowest of the year.
“The past couple of weeks, it’s like we’re in a washing machine," Anwiti Bahuguna, senior portfolio manager at Columbia Threadneedle Investments in the US, told the Wall Street Journal. "There’s a lot of agitation but we’re not going anywhere."
General Electric fuelled Friday's rally, rising 11% after announcing a US$50 billion share buyback and plans to sell most of its finance operations. The industrial conglomerate accounted for a fifth of the Dow's gains and helped distinguish the industrial sector as the best of the US sectors last week, up 3.3%.
Also helping sentiment in the US was another record close in Europe to wrap up the Stoxx Europe 600's best week in two months. The benchmark index rallied 0.92% as Germany's DAX put on 1.71%, France's CAC 0.6% and Britain's FTSE 1.06%.
The Q1 earnings season in the US get serious this week with results from JP MorganChase, Intel, Wells Fargo and Johnson & Johnson tomorrow night, Bank of America and Bancorp on Wednesday night, Goldman Sachs, Amex, BlackRock and Citigroup on Thursday and GE on Friday. Analysts expect this profit season to be the worst since the third quarter of 2009, with earnings expected to drop by 4.8%.
Members of the Federal Reserve continued to send mixed signals about the timing of the first rate rise in the US, likely later this year. Richmond Fed President Jeffrey Lacker, a long-term policy hawk, on Friday reiterated his belief that the Fed should tighten in June to reflect improvements in the jobs market and consumer spending. Meanwhile, Minneapolis Fed President Narayana Kocherlakota, who sits at the other end of the policy spectrum,warned that a rate rise this year could crush consumer spending and borrowing.
BHP and Rio Tinto missed the rally in the US after iron ore eased for a second night. BHP was little changed at -0.04% in US trade, while Rio Tinto dropped 1.61%. Spot iron ore for import to China on Friday retraced 50 cents to US$47.30 a dry tonne.
Gold stocks saw solid gains after the precious metal broke a three-session losing run to reclaim the US$1,200 an ounce level. The NYSE Arca Gold Bugs index added 2.92%. Gold for June delivery settled $11 or 0.9% ahead at US$1,204.60 an ounce for a weekly gain of 0.3%.
Oil ended a choppy week with its fourth straight weekly gain. West Texas Intermediate crude oil for delivery in May advanced 85 cents or 1.7% to US$51.64 a barrel on Friday for a weekly tally of 5.1%.
Zinc and lead continued to outperform on the London Metal Exchange, hitting multi-week highs on inventory news. In London, copper added 0.7%, aluminium less than 0.1%, lead 1.8%, nickel 0.8%, tin 0.6% and zinc 1.5%. US copper for May delivery rose 0.2% to US$2.73 a pound.
The dollar was this morning buying 76.7 US cents.
TRADING THEMES TODAY
EYES ON 6000: The ASX has spun its wheels for a few weeks in mimicry of its big brother across the Pacific, but on Friday looked like it was building for a third run at the 6000 level on the XJO. Today may be too soon, given the failure of BHP and Rio to gain traction in the US on Friday, but tomorrow could be a chance if Wall Street plays nice tonight. Expectations for this US earnings season are the lowest in six years, but some analysts speculate that the worst is factored in and companies should be able to clear lower revenue and profit targets. Profit seasons have been market-positive for several years since the GFC, although the road higher is always jerky, with sharp swings in both directions as optimism ebbs and flows. A heavy slew of Chinese economic data this week starts today with trade figures.
ECONOMIC NEWS: No significant domestic news scheduled today. China is expected to release trade data, exact time uncertain but usually around lunchtime AEST. A big week in the US starts with a whimper tonight with no major earnings scheduled and the Federal Budget Balance the only data of any note.
