Market wrap: The Australian share market looks set for a flat start after choppy trade on Wall Street and further falls in commodity prices.
American stock indexes closed mixed but little changed as traders mulled a speech by Fed Reserve chairman Ben Bernanke that soothed rate-hike concerns but again raised questions about the strength of the recovery. Indexes were modestly higher ahead of Bernanke's speech but rolled over as the US dollar clawed back early losses against its peers. The Dow closed 0.01% higher, the S&P 500 lost 0.25% and the Nasdaq 0.22%.
Bernanke flagged a steady course for U.S. monetary policy, which has included holding the central bank's rate target near zero. The remarks helped quash fears of impending rate rises.
"Though we have begun to see some improvement in economic activity, we still have some way to go before we can be assured that the recovery will be self-sustaining," Bernanke said.
The U.S. dollar initially lost ground after Bernanke's remarks but recovered its losses by the end of the session. The dollar index, which measures the greenback's performance against a basket of other currencies, was recently 0.17% higher.
Financial and tech stocks, the twin pillars of this year's American rally, lost ground. The S&P Bank Index fell 2.11% and the Nasdaq Computer Index was off 0.55%. Also lower: gold/silver miners -1.64%, REITs -2% and oilers 0.5%. Industrials, airlines and insurers advanced.
European markets fell hard at the open on selling in the resources sector but trimmed losses as the session progresed. Britain’s FTSE finished 0.22% lower, Germany’s DAX lost 0.57% and France’s CAC 0.17%.
Oil slid to a two-month low after the U.S. dollar reversed its losses. Crude oil futures were recently trading at $73.95 a barrel, down 2.04% for a fourth straight loss.
Gold was little changed since yesterday afternoon EST. The spot price dipped below $1,140 an ounce overnight but has since recovered to trade recently at $1,157.60 an ounce, less than $4 below Friday's close.
Recent gains in base metals were under pressure for a second session. In London, copper slipped 0.74%, lead 3.97%, zinc 2.53%, tin 1.81% and nickel 0.31%, but aluminium edged 0.23% higher.
Futures traders expect a flat start to the trading day. The SPI futures index closed 1 point higher at 4674.
TRADING THEMES TODAY
FOLLOW THE DOLLAR: Last night's action appears to confirm that the US dollar holds the key to the short-term direction for Wall Street, with commodity prices and equities moving inversely to the dollar. When the dollar turned north, crude oil futures plunged. The falls of the last two days on the local market indicate the extent to which international investors treat Australian equities as a proxy for commodity prices. A rising US dollar will hurt our resources-heavy stock market.
ECONOMIC NEWS: For once, most of the interest in the next 24 hours is local: at 11.30 am there are NAB monthly business confidence data and ABS quarterly current account figures; at 7.15 pm tonight, a speech by RBA governor Glenn Stevens. The US is uncharacteristically quiet, with just consumer confidence data scheduled.
