Market wrap: A cautiously positive start to trade is likely after a late rally on Wall Street following a night of mixed economic news and hopeful signs for Greece's debt crisis.
The new September SPI futures contract ended the night session 9 points or 0.2% stronger at 4478 as traders bet that gains for the Dow, S&P 500, oil and precious metals will offset further losses in Europe and among industrial metals and Australian miners in US trade.
US stocks rallied at the open, slumped following a downbeat regional manufacturing report and news of tighter international financial regulations, then recovered in the final hour. The blue chips of the Dow led the major indexes, rebounding 64 points or 0.54%. The S&P 500 added 0.18%, while the Nasdaq closed in the red, off 0.29%.
The US economy continued to deliver confused signals. The Philadelphia Fed's manufacturing index turned negative for the first time in nine months, but traders were cheered by stronger-than-expected housing news and jobless claims. Housing starts improved 3.5% last month after a steep drop in April and fewer people claimed unemployment benefits last week than economists had predicted.
US financial stocks were sold off after reports that draft international regulations will include surcharges that penalise lenders that exceed a certain size. The Basel Committee on Banking Supervision is said to be considering capital surcharges as high as 3.5% to stop companies getting "too big to fail".
Worries over Europe's ability to deal with its debt crisis were partially soothed by a fresh pledge from the International Monetary Fund to support Greece and claims that an impasse will be resolved on Sunday. However, market-watchers said the unresolved situation will dominate trade in the days ahead.
"What happens in Greece over the next several days is probably the biggest issue facing the market in the near term," the chief market strategist at RDM Financial told MarketWatch. "There's been a lot of talk but no final action taken to resolve the situation, and the longer this goes on the more uncertainty it creates. Any positive news out of Greece should lead to a decent short-term rally, assuming the situation does get resolved soon."
Commodity markets settled down after Wednesday's bloodbath. Crude oil for July delivery was recently up 26 cents or 0.3% at US $95.07 a barrel.
Industrial metals declined for a second session in London but US copper was little changed. In London, copper dropped 0.5%, aluminium 1.2%, lead 1.1%, nickel 1.3%, tin 0.65% and zinc 1.3%. US copper was recently up 0.01%.
Precious metals continued to find some support from safe-haven buying as the outcome to the Greek crisis hangs in the balance. Gold for August delivery was recently ahead $3.80 or 0.25% at US $1,530 an ounce. July silver was up 15 cents or 0.4% at US $35.57 an ounce.
European trade was dominated by the Greek crisis but the major markets pared losses by the close. Britain's FTSE fell 0.76%, Germany's DAX 0.07% and France's CAC 0.38%.
TRADING THEMES TODAY
STABILISING AT LEAST FOR NOW: Good to see some stability return to overseas equity and commodity markets overnight, even if we didn't get the sort of conclusive rejection of lower levels that would fuel a real rebound on our market today. Uncertainty over the Greek situation will likely cap any major moves, but we may see some bargain-hunting after yesterday's waterfall. The last day of the week is often cautious, so we will most likely have to wait until Monday to find out if a short-term relief rally is in the offing. There is also the problem that the support lines our market broke yesterday may now offer resistance in the days ahead.
ECONOMIC NEWS: No significant news scheduled here today. The menu in the US tonight includes consumer sentiment, inflation expectations and the leading index of economic indicators.
