Market wrap: Australian stocks are likely to open modestly higher this morning after a mixed session on Wall Street overnight erased some of Friday's solid gains.
With 10 minutes left to trade, the June SPI futures contract was this morning 12 points weaker for the session at 4895 after giving back some of Friday night's closing premium.
U.S. stocks had a strong session to finish last week but wobbled overnight as the government's plan to start selling Citigroup shares weighing on financials. The Dow Jones Industrial Average closed 1 point higher for its sixth straight day of gains but the broader S&P 500 fell 0.43% and the Nasdaq closed 0.28% lower. On Friday, the Dow rose 0.6%, the S&P 500 0.7% and the Nasdaq 0.4%.
Citigroup shares tumbled 5% after the Treasury Department said it would sell up to 1.5 billion of the bank's shares acquired during the global financial crisis. Goldman Sachs shares were down nearly 4% after a Senate panel released emails from Goldman managers celebrating profits from the crashing housing market. The S&P Bank Index tumbled 2.6% as most sectors closed lower.
Upbeat results from Caterpillar and Whirlpool limited overnight losses on the major indexes with outlooks that point to a healthy recovery in U.S. manufacturing.
"Economic conditions are definitely improving, particularly in the world's developing economies," Caterpillar Chairman and CEO Jim Owens told MarketWatch. "As a result, we are hard at work ramping up production to meet increasing demand from customers."
Commodity prices were mixed overnight as the U.S. dollar weakened against most of its major rivals. The dollar index was recently off 0.2%.
Oil closed lower after hitting resistance around the $85 mark as demand worries continued to weigh. Crude futures were recently down $1.29 or 1.5% at $83.83 a barrel.
The spot gold price rose sharply on Friday from below $1,140 an ounce to close at $1,157.50, but lost a little lustre overnight, trading recently at $1,153.70 an ounce.
Industrial metals were mostly stronger overnight, with copper hitting a 10-day high. In London, copper rose 0.5%, lead 1.5%, nickel 0.4%, tin 0.3% and zinc 1%. Aluminium slipped 0.6%.
The major European markets advanced overnight despite the cost of insuring Greek, Portuguese and Spanish government debt hitting record intraday levels. Britain's FTSE gained 0.53%, Germany's DAX 1.16% and France's CAC 1.17%.
Asian markets kicked higher yesterday. Japan's Nikkei surged 2.3% and Hong Kong's Hang Seng added 1.6%.
TRADING THEMES THIS WEEK
U.S. Q1 EARNINGS: The blizzard of reports from what has so far been an exceptional Q1 earnings season continues this week and is expected to drive the market higher. Of the 172 S&P 500 companies that had reported earnings by Friday, 83% had beaten analyst expectations. That is well above the 61% in an average quarter and above the record 79% from the third quarter of 2009, according to Thomson Reuters data quoted on Reuters.
PLAYING CATCH-UP: Our market lags recent gains in the U.S. by some distance. Strong gains in Asia on Friday point to a reasonable session here today, despite last night's soft session on Wall Street.
ECONOMIC NEWS: A busy holiday-shortened week lies ahead, starting with quarterly business confidence and producer price index data today at 11.30 am. The rest of the week brings CPI (Wed); the leading index (Thu); new home sales and private sector credit (Fri). Earnings results remain the main focus in the U.S. but tonight brings consumer confidence, regional manufacturing, the house price index and testimony in Washington from Fed chairman Ben Bernanke.
