Market wrap: Australian index futures point towards modest gains today after US markets ended a stunning week mixed.
The SPI closed 11 points higher at 3993 after a flat finish to trading in the US after a week when American indexes rocketed more than 7%, their best performance since March. On Friday, the Dow finished 0.37% higher but the Nasdaq and S&P 500 closed virtually flat. A strong earnings result from IBM bolstered hopes for recovery but results from Bank of America and General Electric were more sobering. GE's profit dropped nearly 50% and BoA's result was marred by climbing credit losses.
The financial sector and REITs retreated but there were advances in the IT sector, oil/gas and precious metals.
Oil continues to recover, rising for a third straight session after upbeat US housing data. Crude futures added 2.5% to $63.42. Gold futures were virtually unchanged for a second session despite some strength in the US dollar. Base metals are at a key point for their short-term direction - after another strong session, most either are pressing against resistance levels or squeezed out new highs for the year. Copper added 1.4% and aluminium 0.96% to make new 2009 highs.
Spot iron ore prices, compiled weekly, jumped $US4 a tonne to $US91 on Friday night, the fifth straight weekly gain.
TRADING THEMES THIS WEEK
IRON ORE: Last week's rise lifts spot prices to their highest level in nine months. According to The Australian newspaper, spot prices are now "midway between 2009 contract prices negotiated by Rio with non-Chinese customers and the record 2008 prices. Traders reportedly said there was little Australian spot iron ore available, which supported price gains." Time to sift through the sector.
BASE METALS: The next few trading sessions will either confirm a break to higher levels or cement the significance of the current resistance. Copper and aluminium are leading the way, with the others not far behind. Watch this space.
US REPORTING SEASON: Strength in the early profit results sparked last week's massive turnaround in global market sentiment. Will this week's slew of reports bolster the case for a second half recovery in the US? Coming this week: Apple, Microsoft, Western Union, Halliburton, McDonald's and Amex.
