It's a chilly morning Traders. Let's hope there are some stocks on fire today.
Shares started the week with a sell-off in banks and miners, as last week's brief spell of optimism faded and investors positioned themselves ahead of profits season next week.
The benchmark S&P/ASX 200 index dropped back below 5700 points as it ended Monday down 35 points, or 0.6 per cent, at 5688, as it came close to erasing the year's gains in the process.
The upcoming annual reporting season, which officially kicks off next week, is looming large on investors' radars, and fund managers will find it hard to justify initiating new positions in companies ahead of the upcoming flood of new information, DNR Capital chief investment officer Jamie Nicol said.
"We'll be interested to see the strength of the Aussie economy as there have been a few mixed signals there, with consumers a bit soft while business confidence has been strong," Mr Nicol said.
Stocks exposed to the domestic economic cycle "might be oversold and there could be some opportunities there".
"There is quite a rotation going on," Mr Nicol added.
"With the local dollar heading higher and bonds falling off a bit, there's a rotation out of US dollar plays and back to the bond proxies."
The Aussie currency nudged higher on Monday to fetch US79.3¢ in late trade and is up around 10 per cent against the greenback in 2017.
The Nasdaq hit a record high on Monday ahead of a big week of technology earnings reports, while the S&P 500 and the Dow industrials lagged behind as losses in healthcare heavyweight Johnson & Johnson took a toll.
The major U.S. indexes are trading around record-high levels with a huge batch of second-quarter corporate reports due this week.
"The tech sector is the leading sector so far this year,"said John Augustine, chief investment officer at Huntington Bank in Columbus, Ohio.
The Dow Jones Industrial Average .DJI fell 66.9 points, or 0.31 percent, to 21,513.17, the S&P 500 .SPX lost 2.63 points, or 0.11 percent, to 2,469.91 and the Nasdaq Composite .IXIC added 23.05 points, or 0.36 percent, to 6,410.81.
Tech and financials .SPSY were the only two of the 11 major S&P sectors to finish in positive territory.
The market's run to record highs, including a 10.4 percent rise for the S&P 500 in 2017, has left equities relatively expensive and investors counting on earnings to justify the valuations. The S&P 500 is trading at around 17.7 times earnings estimates for the next 12 months, well above their long-term average of 15 times.
With more than one-fifth of the S&P 500 having reported results, earnings are now expected to have climbed 8.8 percent in the second quarter, up from a projection of an 8-percent rise at the start of the month, according to Thomson Reuters I/B/E/S.
This week alone, 190 S&P 500 companies are expected to report quarterly results.
“There is a lot of earnings coming out this week, so some people may just be sitting on the sidelines with a wait-and-see approach," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma. “There’s a lot of anticipation about this earnings season.”
Investors are also looking ahead to the Federal Reserve's post-meeting statement due on Wednesday for clues about the future path of interest rate hikes.
Declining issues outnumbered advancing ones on the NYSE by a 1.27-to-1 ratio; on Nasdaq, a 1.17-to-1 ratio favored advancers.
About 5.5 billion shares changed hands in U.S. exchanges, below the 6.1 billion daily average over the last 20 sessions.
Source: Netwealth Morning Business Roundup
On the menu this morning are healthy brekkie wraps and berry smoothies.
