Outlook for the day: Negative as financial markets respond to a weekend attack on Iran by the US and a mixed close to the week on Wall Street. Australia will be among the first markets to react to the latest developments when oil, gold and US stock futures resume trade this morning.
ASX futures: down 20 points or 0.24% before a US attack on Iran
Friday/weekend themes:
US stocks closed mixed on Friday before weekend news that US stealth bombers have struck three nuclear sites in Iran.
The S&P 500 eased 0.22% on Friday as fears of an escalation in the Israel-Iran conflict fuelled risk aversion. A retreat in chip stocks helped drag the Nasdaq down 0.51%. The Dow edged up 35 points or 0.08%.
Friday's moves on financial market were rendered largely irrelevant by news that the US carried out a "successful" bombing raid on three sites inside Iran to destroy Tehran's nuclear infrastructure. The US said it was not interested in regime change and had no plans to "put boots on the ground". The aim was purely to deny Tehran the opportunity to create nuclear weaponry. Iran vowed to retaliate. Reports said the Iranian parliament had approved plans to close the Strait of Hormuz, a choke-point for the shipping that carried roughly 20% of the world's crude oil and gas. A final decision would be made by the nation's Supreme National Security Council.
The United Nation's Secretary General said the US attack marked a "perilous turn in a region that is already reeling" and risked dragging the US into "a rathole of retaliation after retaliation".
Friday's mixed close to the week on Wall Street came as investors reduced risk as Middle East tensions added to long-simmering uncertainties over tariffs and the Ukraine-Russia war. "Investors are a little bit nervous about buying stocks right in front of this situation and, more specifically, right in front of this weekend," Rick Meckler, partner at Cherry Lane Investments, told Reuters.
Chip stocks dragged following a Wall Street Journal report that the White House might cancel waivers that allow some companies to access US tech in China. Nvidia dropped 1.12%.
Energy was the pick of the sectors, advancing 1.05%. Consumer staples and financials were next best. Drags included materials -0.65%, health -0.46% and tech -0.26%.
Friday's action closed the door on a directionless week for stocks. The S&P 500 eased around 0.2% for the week. The Dow edged up 0.02%. The Nasdaq added around 0.2%.
Oil retreated into the weekend after US President Trump aid he would delay any US involvement in the conflict to allow for diplomatic negotiations over Iran's nuclear ambitions to continue. Brent crude settled US$1.85 or 2.3% lower at US$77 a barrel.
Spot gold was little changed heading into the weekend after Trump initially said he would take two weeks to decide whether or not to join Israel's attack on Iran. The spot price eased US$1.72 or 0.05% to US$3,367.91 an ounce on Friday. Earlier, gold futures settled US$22.30 or 0.7% lower at US$3,385.80 an ounce.
Iron ore recouped most of its losses for the week on Friday after a report implied Chinese demand continued to improve last week. The operating rate of blast furnaces in China lifted 0.4% last week to 83.82% last from the week before, according to consultancy Mysteel. Hot metal output improved 0.24% week-on-week. Benchmark ore on the Dalian Commodity Exchange rose 0.93% to US$97.85 a metric ton, trimming its loss for the week to less than 0.1%.
A dip in the greenback helped copper overcome initial weakness. Benchmark copper on the London Metal Exchange firmed 0.28% to US$9,660.50 a metric ton.
Key events this week:
Flash manufacturing, services PMIs - 9 am AEST
US flash manufacturing, services PMIs - tonight
Congressional testimony by US Federal Reserve Chair Powell - Tuesday
US consumer confidence - Tuesday
May consumer inflation (CPI) - Wednesday
Congressional testimony by US Federal Reserve Chair Powell - Wednesday
US GDP - Thursday
US May consumer inflation (PCE) - Friday
S&P 500: down 13 points or 0.22%
Dow: up 35 points or 0.08%
Nasdaq: down 99 points or 0.51%
VIX: up 2.38% to 20.62
US 10-year treasury yield: 4.383%
Dollar: down 0.57% to 64.3 US cents
Iron ore (Dalian): up 0.93% to US$97.85
Brent crude: down US$1.84 or 2.3% to US$77.01
Gold (futures): down US$22.30 or 0.7% to US$3,385.80
Gold (spot): down US$1.72 or 0.05% to US$3,367.91
Silver (spot): down 42 US cents or 1.16% to US$35.98
Palladium (spot): down US$2.50 or 0.24% to US$1,041
Antimony (China ore): down 0.72% to US$19,795
NYSE Arca Gold Bugs: down 1.07%
Bitcoin: down 3.15% to US$99,484
Copper (LME): up 0.28% to US$9,660.50
Nickel (LME): down 0.3% to US$15,011
Lithium carbonate (China spot battery grade): up 0.12% to 7,426 yuan
Global X Lithium & Battery Tech ETF: down 1.28%
Uranium (spot): up 2.94% to US$76.75
Global X Uranium ETF(URA): down 2.65%
BHP: down 3.11% (US); down 0.69% (UK)
