Stocks are likely to open marginally higher this morning after a slide in copper into bear market territory partially offset Wall Street's rebound from a six-week low.
The June SPI 200 futures contract inched up 11 points or 0.2% to 4937 on Saturday morning as BHP and Rio Tinto rallied in US trade and gold and oil pared heavy weekly losses.
US stocks ended their worst week in months on a positive note as corporate earnings "hits" outnumbered the "misses". The S&P 500 cut its loss for the week to 2.1% with a rise of 13 points or 0.88% that lifted it back above its 50-day moving average. A sharp fall in IBM restricted the Dow to a gain of 11 points or 0.07% for a weekly loss of 2.1%, its worst performance since June. The Nasdaq added 1.25%.
"Earnings are front and centre, and to date they've been a little on the disappointing side, but I look for expectations to improve, in part because we'll get results from consumer discretionary," the chief equity strategist for US Bank Wealth Management told MarketWatch.
A heavy schedule of first-quarter corporate results on Friday included well-received reports from Google (+4.43%), Microsoft (+3.39%) and Capital One (+6.4%), as well as disappointments from IBM (-8.28%), GE (-4.06%) and McDonald's (-1.95%).
Risk appetite appeared to improve, with rises in the Morgan Stanley Cyclical Index (+1.16%) and Dow Transportation Average (+1.51%) and a 14.75% drop in the VIX, Wall Street's "anxiety gauge". BHP advanced 0.22% in US trade and Rio Tinto put on 1.8%.
Copper capped its worst week since 2011 with another loss on Friday as rising inventories continued to undermine demand. US copper for May delivery dropped five cents or 1.5% to US$3.15 a pound. The April contract lost 5.3 cents or 1.7% to bring its decline from its February high to 21%, signifying a technical bear market. In London, copper dipped 1.5%, aluminium 1.4%, nickel 2% and zinc 0.2%. Lead gained 0.3% and tin 0.4%.
"People are increasingly realising that copper supply has heavily surprised on the upside," a Danske Bank analyst told Reuters. "That is increasingly weighing on copper, alongside the heavy build-up in exchange inventories."
Gold extended its rebound into a second session but still ended the week 7% in the red. Gold for June delivery settled at US$1,395.60 an ounce before a late jag took it $14.50 or 1% higher for the day at US$1,407.
Oil ended its third straight losing week with a tepid bounce after an OPEC official hinted at a cut in output following recent price declines. An official from Venezuela said the fall might justify an emergency OPEC meeting to discuss quota cuts. West Texas intermediate crude for May delivery edged up 27 cents or 0.3% to US$88 a barrel.
TRADING THEMES THIS WEEK
LOOKING FOR GROWTH: The global share rally has stalled over the last few weeks as economic data from the US and China missed growth targets. Share declines may accelerate if this week's data continue the recent deteriorating trend. Economists have lowered their expectations in the light of recent figures, but that may not be enough to put a floor under share prices. This week's key numbers are tomorrow's preliminary April manufacturing report from China, housing figures from the US tonight and tomorrow, US durable goods on Wednesday night and US GDP on Friday.
US EARNINGS: The choppy run on world markets is likely to continue this week as hopes rise and fall with Q1 earnings results out of the US. Earnings "beats" this season have been slightly ahead of average, but revenue beats have been scarcer than usual. Read more here. Among the big names reporting this week are Apple, Caterpillar, Amazon, AT&T, Procter & Gamble, Boeing and Exxon.
HOLIDAY-SHORTENED WEEK: Thursday's national Anzac Day holiday complicates the outlook for the week, with some traders likely to close out positions on Wednesday to avoid exposure to two trading sessions in the US. Friday is also likely to see lower trading volumes than usual as some traders take the chance for a long weekend.
ECONOMIC NEWS: A light Australian diary this week includes: a leading index (tomorrow); and the consumer price index/trimmed CPI (Wed). US highlights include: existing home sales (tonight); new home sales, flash manufacturing, Richmond manufacturing (tomorrow); durable goods/core durable goods (Wed); jobless claims (Thu); and advance GDP and revised consumer sentiment (Fri).
