Morning traders. Thanks loungers, especially @Ravgnome and...

Morning traders. Thanks loungers, especially @Ravgnome and @Patterns.


Outlook for the day: Futures are pointing sharply lower for a third session following the S&P 500's worst week in a month. If that futures reading proves correct, the ASX 200 will test levels last seen in early November.

ASX futures: down 65 points or 0.94%


Friday themes:

• US stocks wrap up a challenging week with further losses as treasury yields test key levels and Israel shows no signs of de-escalating Middle East tensions that have inflated energy prices.
• Stocks fall on Friday as the yield on 10-year treasuries crosses 5% for the first time in 16 years. The 10-year yield touches 5.001% before retreating, trading this morning at 4.928%. The 30-year yield reached 8% earlier in the week, a level last seen in 2000.
• Yields are rising as bond markets factor in the risk of another interest rate hike and the possibility that official rates will not reverse until late next year at the soonest. On Friday, Cleveland Fed President Loretta Mester said she favoured one more rate increase.
• “The stock market now is glued to the bond market. We’ve hit the point where long-term yields are essentially the No. 1 problem for everything” - Michael Lebowitz, portfolio manager at RIA Advisors.
• (Higher bond yields affect equity markets in several ways. Higher yields increase borrowing costs for businesses while lowering demand as consumers face increased rates for mortgages, credit cards and other loans. And improvements in the returns offered by risk-free bonds divert investment flows away from equities.)
• The odds on another rate hike have risen as geopolitical tensions in the Middle East fueled a strong rally in energy prices, a key input to inflation. Brent crude trimmed its advance for the week to 1.4% after easing 0.2% on Friday.
• For the week, the S&P 500 loses 2.4%, the Dow 1.6% and the Nasdaq 3.2%. (By comparison, the ASX 200 shed 2.1%.)
• BHP and Rio Tinto sink in overseas trade following a sharp reversal in iron ore. January ore sheds 3.2% on China's Dalian Commodity Exchange. The Singapore ore benchmark gives up 3.8%.

Key events this week:

• Flash manufacturing, non-manufacturing PMIs - tomorrow
• Conference address by new RBA Governor Bullock - tomorrow
• US flash manufacturing, non-manufacturing PMIs - tomorrow
• Quarterly Consumer Price Index - Wednesday
• Speech by Fed Chair Powell - Thursday
• US GDP, durable goods - Thursday
• US inflation (Personal Consumption Expenditures) - Friday
• Also this week: earnings from US megacaps Microsoft, Amazon and Alphabet.

S&P 500: down 54 points or 1.26%

Dow: down 287 points or 0.86%

Nasdaq: down 202 points or 1.53%

Dollar: up 0.06% to 63.16 US cents

Iron ore (Dalian): down 3.2% to US$114.64

Brent crude: down 22 US cents or 0.2% to US$92.16

Gold: up US$13.90 or 0.5% to US$1,994.40

NYSE Arca Gold Bugs: up 0.32%

Copper (LME): down 0.56% to US$7,948.50

Nickel (LME): up 0.37% to US$18,588

Lithium carbonate (China spot): down 0.58% to US$24,027

Global X Lithium & Battery Tech ETF: down 1.27%

BHP: down 2.99% (US); down 2.33% (UK)

Rio Tinto: down 2.16% (US); down 2.4% (UK)