Market wrap: Modest gains on Wall Street and commodity markets should see the Australian share market open at a fresh 18-month high this morning.
With 15 minutes left to trade, the June SPI futures contract was ahead 6 points at 4981, pointing to a positive start to local trade.
Wall Street opened underwater as a strong dollar pressured equities but gains in the financial sector helped the major indexes rally. The S&P 500 closed 0.17% higher and the Nasdaq advanced 0.3% but the Dow finished 4 points or 0.03% lower. The BNY Mellon Australia Classic ADR Index, which tracks Australian companies listed on American stock indexes or sold over the counter in the US, rallied 0.35%.
The market was largely unmoved by the release of the minutes of the central bank's March meeting, which confirmed that the cash rate will be kept low for an "extended period".
"We are still in a sweet spot," an investment strategist told MarketWatch. "Unemployment is the key. It's difficult to raise rates when unemployment is as high as it is."
The resource sector came under mild pressure overnight as the U.S. dollar made headway, increasing the cost of buying dollar-denominated commodities to foreign buyers. Oilers closed flat, natural gas companies were off 0.15% and precious metals miners down 0.3%. Other standouts were financial stocks, up 2.5% and REITs +2.1%.
The dollar index, which marks the greenback against six currency rivals, climbed 0.3%. However, commentators remarked on a break in the traditional inverse relationship with commodity prices as oil, gold and other metals eked out small gains.
Optimism about the improving outlook for the U.S. economy helped crude oil trade at a fresh 17-month high. Crude futures were recently up 17 cents or 0.2% at $86.79 a barrel.
The spot gold price neared the $1,140 an ounce resistance level that has held since early March but pulled back to trade recently at $1,134.50, a rise of $3.70 from Monday's New York close.
Copper hit a 20-month high above US$8,000 a tonne on Tuesday as most base metals advanced. In late trade in London, copper was up 0.9%, aluminium 1.4%, lead 4.1% and zinc 0.9%. Nickel was 1.3% lower and tin down 0.5%.
The major European markets hit new highs for the year. Britain's FTSE added 0.62%, Germany's DAX 0.27% and France's CAC 0.49%.
TRADING THEMES TODAY
5000 IN SIGHT: Our market will open within one decent session of the 5000-point milestone, but today is unlikely to be the day. Resource stocks were mostly flat to negative in the U.S. overnight, despite rising commodity prices. However, financial stocks were strong and that offers clues to where the strength may lie in our market this morning.
ECONOMIC NEWS: The monthly Australian Industry Group's Services Index is due at 9.30 am. Recent readings have been weak, coming in under 50, indicating contraction. A quiet-ish week in the U.S. continues tonight with crude oil inventories and consumer credit the highlights.
