Market wrap: A positive start to local trade lies ahead after upbeat retail sales helped Wall Street erase early overnight losses.
With 15 minutes left to trade, the June SPI futures contract was 25 points stronger at 4967.
Wall Street opened in the red last night as credit default swaps on Greek government debt - essentially a bet that Greece will default - blew out to a record high. But new sales figures from Target, Macy's and Gap beat expectations and sparked a wave of buying on renewed hopes of a consumer-led recovery in the U.S.
The S&P 500 closed 0.34% higher, the Dow added 0.27% and the Nasdaq 0.23%.
"The retail numbers look good," a U.S. chief investment officer told Bloomberg. "Anything that leads the market to believe it's going to be a normal, or a consumer-led, recovery is good. This would seem to indicate that, though it's very short-term."
European markets continued to slide as a drop in Greek bonds pushed the yield on the governments 10-year note up 20 basis points to 7.36%, the highest since before the euro was introduced in 1999. Fears that other debt-laden European countries will also struggle with funding pushed Portugals 10-year yield 9 basis points higher to 4.34%.
Greek banks slumped, with the country's largest lender falling 8.1%. Britain's FTSE dropped 0.86%, Germany's DAX 0.81% and France's CAC 1.2%.
Also harming sentiment in the U.S. was a rise in jobless claims. Initial claims rose by 18,000 to 460,000 last week, worse than the consensus expectation of a slight decline to 438,000.
Commodity prices were mostly lower as the U.S. dollar's rise made them more expensive for foreign buyers. The dollar index, which tracks the greenback against a basket of major currencies, was recently 0.06% higher after an early surge faded.
The price of oil fell for a second day as rising stockpiles weighed on the market. Crude futures were recently down 30 cents or 0.35% at $85.58 a barrel.
The spot gold price tracked sideways and was recently $2.70 higher than Wednesday's New York close at $1,150.70 an ounce. Analysts said upward momentum was good but technical resistance between the $1,152 and $1,154-an-ounce mark is proving a tough obstacle.
"Everybody is pretty much bullish, but it seems we're stuck at the moment," the head of trading at MKS Finance in Geneva told MarketWatch. "We have tried to take this wall out at least a few times this morning, but no luck for the time being."
Industrial metals were mostly lower overnight as a stronger U.S. dollar sapped demand. In London, copper slipped 0.7%, lead 0.2%, nickel 0.2%, tin 0.3% and zinc 0.6%. Aluminium gained 0.3%.
TRADING THEMES TODAY
FRIDAY FADE?: Yet again, yesterday's dip looks like a buying opportunity as futures traders expect our market to eradicate yesterday's losses at today's opening bell. After that? A tilt at the 5000 mark for the XAO is possible but last night's commodities action makes it a long shot, IMO. More likely that we'll see another dreary fade into the weekend.
GOLD: The next 24 hours could be critical for gold bulls. Momentum is good and the price is hovering under an important resistance level. A break through the $1,152/$1,154 mark will open the way for a run back towards the old record high above $1,200 an ounce.
ECONOMIC NEWS: The Australian Industry Group's Construction Index is released at 9.30 am. There's an unusually quiet end to the week in the U.S., with monthly wholesale inventories the highlight. However, U.S. futures may also react to any surprises in a speech by Federal Reserve chairman Ben Bernanke due to be delivered at 10.30 this morning Sydney time.
