Morning traders.
Overnight round-up and day ahead:
Declines in US stocks and a sharp fall in the price of iron ore point to a soft start to the Australian trading week.
The SPI 200 index futures contract retreated 12 points or 0.2 per cent to 6678 on Saturday morning after strong jobs data dampened the outlook for rate cuts in the US. Up went the American dollar and bond yields. Down went US stocks and commodities such as iron ore, copper and gold.
US investors who had pencilled in a rate cut this month were forced to reconsider after Friday's report showed the economy added 224,000 jobs last month, well ahead of the 165,000 new positions expected by economists. The S&P 500 eased 0.18 per cent to end a five-session winning run. The Dow shed 0.16 percent and the Nasdaq 0.1 per cent.
However,while the odds on a rate cut this month declined, they remained very high, according to the CME Group's FedWatch tool. Expectations of a cut eased from100per cent before the jobs report to 94 per cent afterwards.
The US dollar bounced 0.6 per cent against a basket of other currencies, pressuring commodity prices. The Australian dollar dropped more than half a cent to 69.79 US cents.
Australian stocks enjoyed a stellar run last week, the S&P 200 rising 133 points or 2 per cent to within 77 points of the 2007 all-time high close. But the market will have to overcome downward pressure from resource stocks after news of a Chinese investigation into the soaring ore price triggered a sharp drop on Friday.
Th espot ore price dived 5.9 per cent to $US114.81 a dry ton after an official from China's Iron and Steel Association told a conference the government was looking into "abnormal behaviour" in the market for iron ore. Prices have soared to five-year highs this year, peaking above $US126 a tonne last week.
News of the investigation drove Australia's big two miners lower in overseas trade.BHP's US listing shed 3.94 per cent and its UK listing 2.75 per cent. Rio Tinto lost 5.15 per cent in the US and 3.83 per cent in the UK.
Goldminers are likely to be another drag on the index. August gold tumbled $20.80or 1.5 per cent to $US1,400.10 an ounce as the US dollar reached a two-week high.
Most industrial metals logged declines. London copper dropped 0.3 per cent,aluminium 0.2 per cent, lead 0.5 per cent and zinc 0.7 per cent. Nickel gained1.1 per cent and tin closed flat.
Oil remained well supported as Iran ramped up the pressure on Britain after British troops seized an Iranian supertanker at Gibraltar. An Iranian military official threatened to capture a British ship in retaliation. Brent crude rose 93 cents or 1.5 per cent to $US64.23 a barrel.
The week ahead is likely to be dominated by the outlook for US interest rates, but inflation reports from China and the US will also have an impact. Federal Reserve Chair Jerome Powell is due to testify in Congress and the minutes from the last Fed meeting are scheduled for release. Back home, the domestic calendar includes job ads today, business confidence tomorrow and consumer confidence and home loans later in the week.
Breakfast
Today is National Chocolate With Almond Days. (Did you get that? It's not Chocolate Day or Almond Day but Chocolate With Almonds Day. Gotta love those Marketers.) I'll have the eggs.
