Market wrap: Local shares are likely to open lower this morning after falls in key commodity prices and a tentative night on Wall Street ahead of the start of the U.S. earnings season.
With 20 minutes left to trade, the June SPI futures contract was down 14 points at 4993 as modest gains for overseas shares failed to convince local futures traders.
The Dow Jones Industrial Average closed above 11,000 for the first time since September 2008 but the overnight advance was a mere 9 points or 0.08% as caution prevailed ahead of Alcoa's after-market report. The Dow closed at 11,006, the broader S&P 500 rallied 2 points or 0.18% and the Nasdaq added 0.14%.
Market commentators said overnight trade was muted ahead of the earnings season as investors pondered whether this week's reports will justify six straight weeks of gains on U.S. equity markets.
"By the end of the week, we should have a reasonable idea of whether investors' high expectations for terrific earnings reflected in recent stock price gains over the last eight weeks have been warranted," one chief market strategist told MarketWatch.
Alcoa launched the earnings season with a narrowed loss and its shares were trading higher in after-market trade despite missing analyst expectations (see below for more).
A recovery in the U.S. dollar forced key commodity prices lower. The U.S. dollar index, which measures the greenback against a basket of major currencies, rallied 0.22%.
The price of oil retreated for a fourth day ahead of inventory data that was expected to confirm rising stockpiles in the U.S. Crude futures were recently down 61 cents or 0.7% at $84.31 a barrel.
Precious metals pulled back in afternoon trade. The spot gold price was recently down $6.30 or 0.6% from Friday's New York close at $1,155.10 an ounce. Silver was also lower but platinum was marginally ahead.
Copper hit a 20-month high before falling back as analysts fretted that the recent rally has been overdone. Copper for three-month delivery hit $8,043.75 a tonne on the London Metal Exchange, its highest level since August 2008, but fell back to $7,905 late in the session.
"The market's very nervous about being overbought," the head of base metals at London's RBC Capital Markets told Reuters. "People had $8,000 in their sights as a target and it's been achieved."
In late trade in London, aluminium was up 0.1%, lead 0.3%, nickel 1.7% and tin 0.05%. Zinc was down 0.2%.
European markets were little changed as investors digested the latest relief plan for Greece and the media and metals sectors lost ground. Britain's FTSE closed 0.12% stronger, Germany's DAX added 0.02% and France's CAC was unchanged.
TRADING THEMES TODAY
U.S. EARNINGS: Aluminium giant Alcoa kicked off the U.S. first-quarter earnings season after markets closed last night. Alcoa shares were recently down 0.2% in after-market trade after higher aluminium prices helped the company trim its loss to US$201 million or 20 cents a share, compared to US$497 million or 61 cents a share a year ago. However, the improved result was still below the consensus analyst expectation of a profit of 11 cents a share. Our market is likely to be sensitive to how Alcoa trades this morning - track the share price here: http://www.marketwatch.com/investing/stock/AA. Read more here: http://www.marketwatch.com/story/higher-aluminum-prices-helps-alcoa-trim-loss-2010-04-12?dist=afterbell
ECONOMIC NEWS: Local March business confidence figures are due at 11.30 am. Also due then: February lending finance data. Tonight in the U.S.: trade balance, monthly import prices, consumer confidence and a speech from Treasury Secretary Tim Geithner.
