Australian shares have mixed leads for the day after strength in commodities was offset by a pullback in US shares from four-year highs.
The September SPI 200 futures contract ended the night session three points or 0.1% weaker at 4373 as reports of fresh economic stimulus plans in China and optimism over Europe supported the market against Wall Street's sharpest decline in three weeks.
The S&P 500 set a new four-year high in early trade before retreating as market heavyweight Apple fell back from record levels. The benchmark index ended the session five points or 0.35% in the red. The Dow lost 68 points or 0.51% and the Nasdaq 0.29%.
"Tech's seeing weakness across the board," a money manager at Huntington Asset Advisors in the US told Bloomberg. "Year-to-date, tech's up the most, so if you're going to see profit-taking anywhere, you'd likely see it there."
The Dow advanced nearly 60 points in morning trade to its highest level since 2007 after a British newspaper confirmed European Central Bank plans to cap Spanish and Italian borrowing costs. The Daily Telegraph said that despite denials, the ECB is preparing to buy sovereign bonds to support the euro-zone.
The shine came off the market as profit-taking set in as the major indexes pushed against technical resistance. Apple, which makes up 5% of the S&P 500, fell 1.4% after yesterday becoming the world's biggest company by market capitalisation.
Earlier, European markets were buoyed by a report from China's state-run Xinhua news agency of new economic stimulus planned for later this year. The report helped the Shanghai Composite advance 0.54% yesterday and the ASX 200 rally to a three-and-a-half month high. Germany's DAX put on 0.79% overnight, France's CAC 0.94% and Britain's FTSE 0.57%.
The promise of further monetary easing in China helped support oil and metals against the slide in US equities. Oil reached its highest level since mid-May before trimming gains. West Texas crude for September delivery was recently ahead 58 cents or 0.6% at US$96.5 a barrel after earlier running as high as US$97.60.
Copper hit a one-month high on strong volume after China reported the city of Chongqing will invest US$236 billion in major industries. In London, copper put on 0.9%, aluminium 1.6%, lead 0.3%, nickel 1.6%, tin 2.2% and zinc 0.8%. US copper for September delivery was recently up seven cents or 2.1% at US$3.44 a pound.
Stimulus talk in Europe and China helped gold reach its strongest level since early May. Gold for December delivery was lately up $16 or 1% at US$1,639 an ounce.
TRADING THEMES TODAY
CHINA VS WALL STREET: The Australian market caught a nice leg-up yesterday from reports of stimulus plans in China. If Shanghai rallies again today, will that fire up our market for a second day? Overnight Wall Street suffered its biggest decline in three weeks, but volatility is so low that that was a fall of around a third of a percentage point. Ho-hum. US precious metals miners were a pocket of strength overnight after gold broke above its recent trading range - look for similar strength here. US financials, telecoms and airlines were also solid.
ECONOMIC NEWS: The Melbourne Institute's leading index of economic indicators is due at 10.30am EST. A slow week in the US finally kicks into life tonight with the minutes from the last Federal Reserve meeting, existing-home sales and crude oil inventories.
