Shares are expected to open higher this morning as gains in the big two miners and metal prices offset a flat close on Wall Street.
The March SPI 200 futures contract rallied 25 points or 0.5% to 5339 after BHP and Rio Tinto advanced in US trade and copper hit a four-month high in London.
US stocks ended a second week of gains with minor declines during a low-volume session lacking major drivers on Friday. The S&P 500 eased 0.06% or less than a point, breaking a four-day winning streak. The Dow lost two points or 0.01% and the Nasdaq fell 0.24%. The Dow gained 1.6% last week, while the S&P 500 and Nasdaq both put on 1.3%.
"A year-end rally like this is not usual, but we have to keep in mind trading volumes are light and corporate news is certainly sparse," Robert Landry, executive director and money manager at USAA Investments, told Bloomberg. "You can't read too much into the market's move. It's somewhat of a Santa Claus rally and perhaps that's attributed to some portfolios managers in the office making some year-end moves."
Six out of ten S&P 500 industry groups retreated, led by consumer discretionary stocks. Twitter plunged 13.04% following a downgraded outlook from Macquarie.
BHP and Rio Tinto benefitted from an improved iron ore price and an easing of liquidity concerns in China after the central bank injected money into the system. BHP added 0.94% in US action, Rio 1.61%. Spot iron ore for import to China rebounded $1.90 to US$134 a dry tonne on Friday after the People's Bank of China manufactured the biggest decline in the nation's benchmark money rate since 2011. The move helped the Shanghai Composite rally 1.35%. Read more here.
Copper hit a four-month high as trading on the London Metal Exchange resumed following a two-day Christmas break. Copper jumped 1.5%, aluminium 3.1%, lead 1.9%, nickel 0.7%, tin 0.3% and zinc 0.9%. US copper for March delivery eased nearly two cents or 0.5% to US$3.38 a pound.
A decline in US inventories helped oil push back above US$100 a barrel. West Texas Intermediate crude oil for February delivery ended the session 60 cents or 0.6% ahead at US$100.15 a barrel after earlier settling at US$100.32.
A weak dollar helped gold edge higher to secure a gain for the week. Gold for February delivery rallied 60 cents or less than 0.1% to $1,212.90 an ounce on Friday for a weekly gain of 0.9%.
European markets played catch-up with gains in the US during a two-day Christmas break. Germany's DAX advanced 1.06%, France's CAC 1.41% and Britain's FTSE 0.85%.
TRADING THEMES THIS WEEK
HOLIDAY-SHORTENED WEEK: This week's trading hours on the ASX look like this: Today: normal operating hours. Tuesday: Early close 2.10pm EST (including auction) Wednesday: Closed. Thursday: normal operating hours. Friday: normal operating hours.
US ECONOMY GATHERING PACE?: Wall Street has shrugged off the launch of the stimulus taper in the hope/expectation that it means the economy is accelerating. For the 'Santa rally' to continue, we will likely need to see strength in the following economic reports: pending home sales (tonight); consumer confidence, home prices, Chicago PMI (tomorrow); weekly jobless claims, manufacturing PMI, ISM, construction spending (Thu); and motor vehicle sales (Fri).
CHINESE UPDATES: The start of a new month brings a flurry of Chinese economic data. The official manufacturing PMI is due on New Years Day, while the ASX and Chinese markets are closed. The week also brings the final version of HSBC's rival manufacturing index on Thursday and the official services PMI on Friday.
ECONOMIC NEWS: An unsurprisingly light week for domestic data includes: monthly private-sector credit (tomorrow); and the manufacturing index and commodity prices (Thu).
