Market wrap: Local stocks look set to open in positive territory after modest gains on Wall Street.
Futures traders expect our market to recover yesterday's losses at today's open. The SPI futures index closed 28 points up at 4776 after a night of lukewarm economic indicators saw US stock indexes edge north.
The Dow Jones Industrial Average was off 45 points at its overnight low but closed 30 points or 0.29% higher, helped by rallies in commodity-related stocks. The S&P 500 and Nasdaq also limped into positive territory late in the session, closing 0.09% and 0.27% higher, respectively.
Investors were largely unmoved by weak readings of industrial production, inflation, builders' confidence and chain-store sales and a disappointing outlook from retail giant Home Depot. Market commentators suggested investors were increasingly viewing bad economic news as incentives for the Fed to hold interest rates near zero far into 2010.
"There's no question the economy is facing a long slog to recovery, but at the same time, all the talk about rates has brought a lot of buyers into the market," said an American chief investment officer quoted on MarketWatch.
The major European indexes fell back from yesterday's 13-14 month highs. Britain’s FTSE surrendered 0.68%, Germany’s DAX 0.45% and France’s CAC 0.88%.
Gold traded lower for most of the night but recently pushed higher, helped by news of a purchase by the central bank of Mauritius. The spot price was recently trading at $1,141, up $1.20 from yesterday. Oil futures advanced for a second day. Crude futures were recently trading around 0.25% higher at $79.21 a barrel.
Base metals held most of yesterday's big gains despite a modestly rising US dollar. But growing stockpiles and weak demand continue to raise concerns. David Moore, commodity strategist at Commonwealth Bank of Australia told Reuters: "Base metals are quite fully valued, with investors pricing in bullish assumptions for the international economy. At some point, we'll see some pullback in prices." In London, aluminium gained 0.49% to a three-month high, nickel added 0.6% and tin 1.02%, while copper was flat, lead slipped 1.05% and zinc 0.83%.
TRADING THEMES TODAY
INCHING HIGHER?: Last night's gain was the Dow's ninth in ten sessions. If only Australian investors showed the same conviction. Our market continues to lag global peers, but the financial sector, the main drag on yesterday's trade, may find some support today after buying in the US, where the S&P Bank Index rallied 0.91%.
ECONOMIC NEWS: Locally, there is a speech by RBA official Guy Debelle at 9.05 am, the Melbourne Institute's Leading Index of economic indicators at 11 am and the ABS's wage price index, a leading indicator of consumer inflation, at 11.30 am. A busy week in the US continues tonight with the consumer price index, building permits, housing starts and crude oil inventories.
