Morning traders. Thanks @ttward and lounge lizards.
Overnight round-up and day ahead:
Aussie stocks look set to open higher this morning but a steep dive in iron ore may limit gains.
The SPI 200 index futures contract advanced 34 points or 0.5 per cent to 6473, but trailled Wall Street as a six per cent slump in Australia's most important export weighed on mining stocks. The benchmark local index, the ASX 200, yesterday fell 62 points or 0.9 per cent after a three-day relief rally in global stocks stalled.
US stocks rose overnight as strong profit reports from main street retailers helped soothe recession concerns. The S&P 500 put on 24 points or 0.82 per cent, rising for the fourth time in five sessions after Target and home-improvement chain Lowe's both beat earnings expectations. A separate report showed home sales increased more than expected last month. The Dow added 240 points or 0.93 per cent. The Nasdaq gained 72 points or 0.9 per cent.
The major indices held onto their gains after the minutes from the last Federal Reserve meeting showed central bankers were divided on cutting rates, with some wanting a drop of 50 basis points and others disputing the need to cut at all. Committee members eventually voted 8:2 to cut the target rate by 25 basis points. Money markets this morning showed traders still expect the central bank to reduce rates by another 25 basis points next month.
The yield curve on US treasuries briefly inverted again overnight. The yield on the ten-year treasury note dropped below that of two-year note for the second time in a week, an event some analysts believe is a harbinger of recession. Last week's event triggered a major meltdown on global stock markets, however, the reaction this time was muted.
Australia's biggest miners could be a drag on the local index after the price of iron ore tumbled to six-month lows in Chinese trade. The benchmark spot price for Australian ore landed in China fell $5.45 or 6.2 per cent to $US83 a tonne. Prices have collapsed by almost a third since peaking at a five-year high above $US120 in July. BHP's US-listed stock slipped 1.71 per cent and its UK stock 1.21 per cent. Rio Tinto lost 0.51 per cent in the US and 0.49 per cent in the UK.
Oil was mixed in overnight action as a smaller-than-expected drawdown on US stockpiles weighed on the US benchmark, while the international benchmark kicked higher. Texas crude settled 45 cents or 0.8 per cent lower at $US55.68 a barrel on the New York Mercantile Exchange. Global benchmark Brent crude settled 27 cents or 0.5 per cent ahead at $US60.30 a barrel.
Gold settled flat before losing a little ground following the release of the Fed minutes. Gold for December delivery was lately down $3.10 or 0.2 per cent at $US1,512.60 an ounce after settling at $US1,515.70.
Copper edged off Tuesday's two-week low but gains were capped by concerns over global demand. London copper added 0.2 per cent in official trading rings, lead 1.3 per cent and zinc 1.3 per cent. Aluminium shed 0.1 per cent, nickel 0.8 percent and tin 1.9 per cent.
On currency markets, the dollar was flat at 67.8 US cents.
The day ahead brings the start of the much-anticipated gathering of central bankers at Jackson Hole in the US, plus a slew of manufacturing and services reports that should shed light on the health of the global economy. The Australian reports are due at 9.30am Eastern Standard Time, but reports from Europe, Japan and the US will have greater impact on market sentiment. A busy week for domestic earnings continues today with reports due from Coles, Coca-Cola Amatil, Origin Energy, Perpetual, Santos and Webjet.
Breakfast
Today is National Bao Day, so we're off to Yum Cha. Save me a spring roll.
