Overnight declines in resource stocks and key commodities have Australian shares aiming lower this morning despite a second night of gains on Wall Street as the US economy accelerated and Syrian concerns receded.
The September SPI 200 futures contract retreated 10 points or 0.2% to 5066 as BHP and Rio Tinto fell in US trade and oil, gold and copper gave up some of the week's gains.
The S&P 500 pared its loss for the week but struggled to hold early gains as traders fretted that an upbeat GDP report increased the likelihood that the Federal Reserve will start to reduce its stimulus program at next month's meeting. The benchmark index closed three points or 0.19% higher after earlier rising as much as 11 points. The Dow held on to a final gain of 16 points or 0.11%, while the Nasdaq advanced a more convincing 0.74%.
"The stock people are torn between two things," the president of EverBank World Markets told MarketWatch. "The GDP going up would normally push stocks higher, but this is the last GDP report that prints before the Fed meets again."
Commerce Department figures showed gross domestic product grew at an annualised rate of 2.5% over the second quarter, compared to an initial estimate of 1.7% and a median forecast of 2.2%. A separate report showed first-time claims for unemployment benefits last week fell by 6,000 to 331,000 from a revised 337,000 the week before. The four-week moving average inched up by 750 to 331,250 but remained near a five-year low.
Energy stocks gave back some of their gains for the week as the likelihood of an imminent air strike on Syria receded. Governments in the UK and France said they want to wait for UN inspectors to report on the alleged use of chemical weapons by the al-Assad regime. US Defense Secretary Chuck Hagel reiterated overnight that the US will not act alone. President Barack Obama said on Wednesday that he has yet to make a decision on military action.
Oil fell back from two-year highs as some of the risk premium came out of the market. West Texas Intermediate crude for October delivery was recently down $1.93 or 1.8% at US$108.17 a barrel.
"The threat of Western military action in Syria is obviously still there, but much of this risk has already been priced in," a technical analyst at GFT Markets told MarketWatch. "For all we know, the West may decide against military action so the potential for a correction is there."
Rio Tinto dropped 1.95% in US trade and BHP 0.19%. Spot iron ore for import to China yesterday slipped 20 cents to US$138.30 per dry metric tonne.
Gold also drifted lower as the US dollar was boosted by the GDP report and haven-buying abated. Gold for December delivery was lately down $11.30 or 0.8% at US$1,407.60 an ounce.
Copper slumped to a three-week low as the rising US dollar sapped overseas demand. US copper for September delivery was recently down seven cents or 2.1% at US$3.23 a pound.
European markets staged a partial recovery from three days of declines. Germany's DAX rallied 0.45%, France's CAC 0.64% and Britain's FTSE 0.82%.
TRADING THEMES TODAY
MINERS TO WEIGH: A mildly negative platform for the day, with overnight gains in US and European markets offset by falls in BHP, Rio, oil, gold and copper. Syrian concerns eased overnight and US traders focussed mostly on the positives of an improving economy. Still, the short-term trend in the US remains down, despite the ASX's resilience over the last few weeks. A slower day ahead for corporate earnings news includes reports from CAF, EVN, GBD, HVN and VAH (sources: Fairfax, BRR).
ECONOMIC NEWS: Japan releases a swag of data just ahead of our market open, including inflation, employment and industrial production figures. Back home, monthly private-sector credit data is due at 11.30am EST. A busy night of second-tier data in the US includes: personal spending and income, core PCE price index, Chicago PMI, revised consumer sentiment and inflation expectations and a speech by a Fed board member.
