Market wrap: Local stocks are tipped to open in the red for a second session after a soft end to last week for overseas equities.
Futures traders marked the local SPI futures index down 7 points to 4694 after last week's pullback in Europe and the USA stretched into a third day on Friday.
The major indexes in the US once again tumbled at the open but pared losses before the close. The Dow closed 0.14% lower, the S&P 500 lost 0.32% and the Nasdaq 0.55%.
The losing run on Wall Street is the longest since early October. Tech stocks were sold off for a third session after Dell's quarterly earnings disappointed the market. Market analysts pointed to a flight to safety, with investors switching cash out of equities and into treasuries and the US dollar.
"It looks like some of this is investors shutting down for the end of the year," rotating money out of profitable stock positions and parking it in safe havens, said a currency-portfolio manager quoted on MarketWatch. "But if you look at expectations for a Fed [rate] hike, they've still been pushed further out. That should favour taking on more risk, not less, over the long term."
Resource stocks were undermined by a rising US dollar. Oilers retreated 0.79%, gold/silver miners 0.84% and natural gas companies 0.82%. The banking sector was knocked down 0.7% and the few sectors to advance were defensive, including pharmaceuticals +0.51%, utilities +0.28% and consumer stocks +0.18%.
The major European markets were dragged down by selling in the financial and resources sectors. Britain’s FTSE lost 0.31%, Germany’s DAX 0.68% and France’s CAC 0.82%.
Inflation worries saw gold advance for a sixth straight session and to a new closing high. The spot gold price rallied nearly $6 to $1,150.90 an ounce.
Crude oil futures slipped to the lower band of its recent trading channel. Oil prices have been fluctuating between $76 and the low $80s since mid-October and closed on Friday 0.96% weaker at $76.76 a barrel.
Base metal prices mostly improved in London, despite rising stockpiles. Aluminium rose 1.08%, copper 0.99%, lead 0.77%, tin 0.93% and zinc 2.03%. Nickel lost 1.41%.
TRADING THEMES THIS WEEK
GOLD: Another day, another record high (in US dollars, at least). The uptrend is intact and shows no real sign of weakening.
PULLBACK TO BOTTOM OUT?: Friday was Day 3 of the current pullback on overseas markets but long-term uptrends since March remain intact. Every pullback since March has been a buying opportunity. It's wise to be cautious when markets are falling, but there's no reason yet to view this as more than a minor retreat in an uptrend.
ECONOMIC NEWS: October vehicle sales are due at 11.30 am today. Unusually, all the action in the US this week comes in the first half of the week, ahead of Thursday's Thanksgiving holiday when markets close. Tonight's data includes existing home sales and the Chicago Fed National Activity Index.
