Market wrap: Stocks look set for a flat start today after a late recovery in the US dollar undermined rallying US equities and commodity prices.
There were solid gains for oil, gold and base metals overnight but modest advances for the major US stock indexes evaporated in the final hour as the US dollar erased early losses. The Dow closed 0.1% lower while the S&P 500 gained 0.11% and the Nasdaq 0.27%.
The mood on Wall Street was positive in early trade after housing construction rebounded from a big drop, and the U.S. current account deficit showed a rise in America's appetite for imported oil and other consumer and industrial goods. But the market sagged after the Federal Reserve's latest policy announcement, which left the cash rate unchanged and reiterated the central bank's pledge to keep interest rates low for "an extended period."
The US dollar index, a measure of the greenback against a basket of other currencies, was underwater for much of the session but spiked higher after the Fed statement, recently trading little changed at 76.93 or 0.04% lower.
In other economic news, U.S. consumer prices rose in line with analyst expectations in November, while core inflation was unchanged.
There were gains in the US for airlines (+3.18%), gold/silver miners (+1.39%), oilers (+1.07%) and some financials.
European markets had a strong session despite another ratings agency downgrading the outlook for Greece. Britains FTSE rallied 0.65%, Germanys DAX 1.58% and Frances CAC 1.09%.
Oil surged for a second day after a big drop in US stockpiles. Crude for January deliver hit an intraday high of $73.63 a barrel, its highest level since early December, before the US dollar's recovery dragged it back to $72.76 a barrel, a gain of 2.93%.
Gold rose to its highest level in more than a week. The spot gold price was recently trading at $1,137.20 an ounce, a gain of $14.20.
Early woes for the US dollar translated into a bright session for base metals in London. Zinc hit its highest level since March 2008, nickel hit a five-week high and aluminium neared the 14-month high it struck earlier this week. Copper gained 1.81%, aluminium 1.75%, lead 1.69%, nickel 2.66%, tin 0.98% and zinc 4.07%.
Futures traders expect our market to open modestly higher. The SPI futures index closed 5 points ahead at 4659.
TRADING THEMES TODAY
COMMODITIES: A bright night for metals and oil. The US dollar's late run is a worry but the gains were still strong enough to encourage buying this morning. Zinc looks great, gold and nickel bounced and aluminium shrugged off another big rise in stockpiles.
ECONOMIC NEWS: The Housing Industry Association releases new home sales figures for last month at 11 am but the main local interest lies in the RBA's monthly bulletin at 11.30 am, which should provide more insight into the likely pace of rate rises next year. In the US tonight: unemployment claims, manufacturing figures, November leading indicators and natural gas inventories.
