Market wrap: Stocks face an uncertain start despite gains on Wall Street on take-over news and support for ailing Dubai.
Futures traders expect our market to open modestly in the red. The SPI futures index closed 7 points lower at 4667.
U.S. and European markets rallied overnight on news that Dubai had received US$10 billion in financing from Abu Dhabi. The cash will help pay debts held by Dubai World and its property unit Nakheel. Also increasing the appetite for risk in the US was a take-over bid for XTO Energy by oil giant Exxon Mobil.
The S&P 500 advanced 0.7% and the Nasdaq 0.99%. The Dow Jones Industrial Average was held back by heavy selling in Exxon but edged 0.28% higher.
There were broad gains across U.S. sectors, with resources stocks recovering lost ground and financials inching higher. Standouts included natural gas companies, up 4.53%, REITs +1.83%, transport stocks +1.54% and biotechs +1.52%.
European markets were cheered by Abu Dhabi's support for Dubai. Britain’s FTSE rallied 1.02%, Germany’s DAX 0.8% and France’s CAC 0.7%.
A dip in the US dollar helped metals prices but couldn't prevent another losing session for oil. The dollar index, which measures the greenback against a basket of major currencies, slid 0.34% after the news out of Dubai and helped gold, silver and platinum bounce off recent one-month lows. The spot gold price was recently trading at $1,124.10 an ounce, up $9. March silver rose 1.5% and January platinum gained 1.7%.
Oil's decline stretched to a ninth session overnight, marking its worst losing streak in eight years. Crude oil futures recently traded at $69.68 a barrel, down 0.27%. A global oil analyst quoted on MarketWatch said, demand was "still very weak and stocks are still very high, so there is no real support for prices."
Aluminium hit its highest level in more than a year in London before falling to a small loss. Other base metals advanced. Copper gained 1.32%, lead 1.56%, nickel 1.7%, tin 0.82% and zinc 1.83%, while aluminium lost 0.75%.
TRADING THEMES TODAY
US DOLLAR DIP: Abu Dhabi's support for Dubai encouraged a greater appetite for risk overnight, which translated into a fall in the US dollar and gains for most commodity prices. The combination should provide some support for our battered resources sector today. I'm more bullish than our futures figure. Could be opportunities among goldies and base metals miners.
ECONOMIC NEWS: Local interest includes the minutes from the last RBA Board meeting and housing starts, both due at 11.30 am. A busy night in the U.S. includes the producer price index, long-term securities, manufacturing data, industrial production and a housing market index.
