An eighth day of gains is within reach following a late recovery on Wall Street as improved housing figures and merger activity offset weakness on the Nasdaq.
The June SPI 200 futures contract rallied 21 points or 0.4% to 5521 despite a downleg for the big miners in US trade after the price of iron ore slumped to a six-week low.
A roller-coaster session saw the S&P 500 close six points or 0.3% ahead after earlier falling as much as 0.7% as heavyweights like Facebook, Amazon and Netflix steered the index lower. The tech-heavy Nasdaq recovered from being down roughly 1.5% mid-session to close with a deficit of two points or 0.04%. The Dow was again the pick of the indexes, rising 88 points or 0.54%.
"It's remarkable how volatile the market can be on an intraday basis," John Carey, fund manager at Pioneer Investment Management in the US, told Bloomberg. "Most of the companies that have reported so far have exceeded expectations and there’s M&A [mergers and acquisition activity] that’s bubbling along and that could be causing some optimism, with big deals and restructuring."
The market opened brightly on news that a measure of pending house sales improved in March for the first time in nine months. The National Association of Realtors' gauge increased by 3.4%, a sign the housing market might be stabilising following a downturn.
Also helping sentiment was confirmation that Pfizer made a second takeover offer to UK firm AstraZeneca valued at almost US$100 billion and that Comcast has struck a deal to sell subscribers to Charter Communications.
The mid-session weakness came as traders once again sold the bull market's best performers on valuation concerns. The Russell 2000 index of small caps and Nasdaq Biotechnology Index both dived to two-week lows before paring their losses to 0.53% and 0.4%, respectively. Amazon, Facebook and Netflix were among the 10 worst performers on the Nasdaq 100.
Investors also kept a wary eye on developments in Ukraine. The US and European Union announced new sanctions on Russia overnight aimed at officials and companies closest to President Vladimir Putin.
BHP fell 1.1% and Rio Tinto 2.52% in US action after spot iron ore for import to China yesterday skidded $2.40 or 2.2% to US$108.60 a dry tonne. The decline came after the release of data showing ore stockpiles at Chinese ports at record levels. Read more here.
Oil edged higher as fresh sanctions against Russia kept alive the prospect of future sanctions on energy supplies. West Texas Intermediate crude oil for June delivery was lately up 30 cents or 0.3% at US$100.89 a barrel after earlier settling at US$100.84.
Nickel fell from 15-month highs as the modest scale of US/EU sanctions against Russia dampened expectations that the metal market will be affected. In London, nickel lost 1.5%, copper 0.3%, aluminium 1.3%, lead 1.2% and tin 0.1%. Zinc improved 0.4%. US copper for May delivery was recently down 0.5% or nearly two cents at US$3.11 a pound.
Gold drifted back below US$1,300 an ounce. Gold for June delivery was recently off $4.70 or 0.4% at US$1,296.20 an ounce after earlier settling at US$1,299.
European shares ended a choppy session modestly higher as Pfizer's move on AstraZeneca bolstered sentiment on the takeover appeal of European equities. The Stoxx Europe 600 index gained 0.19% as Germany's DAX added 0.47%, France's CAC 0.39% and Britain's FTSE 0.21%.
TRADING THEMES TODAY
BULL RUN CONTINUES: A remarkable eighth straight gain is possible for the XJO today as the market pushes further into territory last seen on the way down in June 2008. However, as I mentioned yesterday, eight-day rallies are rare on the ASX, so some caution may be warranted late in the session given the maturity of this latest run. The big miners may see further pressure from the sliding ore price. Gold stocks were also weak in the US. OBJ and ENT injected some excitement yesterday. Some caution regarding the latter is advisable, given how hard it ran before entering a trading halt pending a news announcement.
ECONOMIC NEWS: No significant domestic news scheduled today. Japanese trade is suspended for a public holiday. The monthly consumer confidence report is the highlight of a news-light session tonight in the US.
