A subdued open is likely despite further gains on Wall Street on Friday as strong trade data pointed to an upswing in the global economy.
The March SPI 200 futures contract dipped nine points or 0.2% to 4926 as traders bet that the market pre-empted a new five-year high on the S&P 500 during Friday's 50-point ASX rally.
The S&P 500 advanced 0.57% for a sixth straight winning week following improved trade figures from the US, China and Germany. The Dow added 49 points or 0.35% but fell 0.1% for the week. The Nasdaq gained 29 points or 0.91% for a new 12-year high.
The ASX rallied strongly on Friday after the January Chinese trade report beat expectations. Exports increased 25% and imports 28.8% from a year earlier for a trade surplus of US$29.2 billion. US data also came in stronger than predicted, raising hopes that a preliminary 0.1% contraction in fourth-quarter GDP will be revised upwards. The US deficit plunged to a seasonally-adjusted US$38.5 billion, the smallest in two years, as exports increased 2.1%. Read more here.
"That will make people have a little more confidence in GDP, and will probably revise the fourth-quarter number up a little bit," a trust manager at Wilmington Savings Fund Society in the US told MarketWatch.
European markets rallied as Germany's trade surplus hit a five-year high and political leaders agreed on a new seven-year budget for the European Union. German exports increased 3.4% to record levels last year, ahead of a 0.7% increase in imports. Germany's DAX share index put on 0.81%, France's CAC 1.36%, Britain's FTSE 0.57%, Italy's FTSE MIB 1.41% and Spain's IBEX 35 2%.
Industrial metals benefitted from evidence of increased activity in the global economy. US copper for March delivery rallied three cents or 0.8% to US$3.76 a pound. In London, copper jumped 1.2%, aluminium 1%, lead 0.6%, nickel 0.7%, tin 0.7% and zinc 1.9%.
US oil traders ignored a surge in Brent crude to a nine-month high following the Chinese data. West Texas intermediate crude for March delivery eased seven cents or less than 0.1% to US$95.76 a barrel.
Gold also drifted lower as traders favoured assets more exposed to economic growth. Gold for April delivery slipped $3.90 or 0.2% to US$1,667.90 an ounce.
TRADING THEMES THIS WEEK
EARNINGS SEASON HEATS UP: The domestic earnings season accelerates this week with reports from the likes of CBA, Rio Tinto and Wesfarmers. Highlights include: COF, HIL, JBH (today); BKN, BWP (tomorrow); ANN, BLD, CBA, CPU, CSL, LEI, OZL, SGP, SGN, WOR (Wed); DOW, DXS, GPT, MGR, OGC, RIO, SAI, WES (Thu); and DUE, CQR and PXS (Fri).
CHINA CLOSES FOR LUNAR NEW YEAR: ASX trading volumes are likely to be depressed this week as our market misses one of its principal leads. There will be no trade on the Shanghai Stock Exchange this week while China celebrates the traditional Lunar New Year holiday. Industrial metals activity on the London Metal Exchange will also be significantly weaker than normal without Chinese traders. Japan's Nikkei exchange is also closed today for National Foundation Day.
SEQUESTRATION WAR IN WASHINGTON: If markets are looking for a reason to consolidate recent gains, Washington may supply one with another ugly political stalemate brewing in Congress. "Sequestration" refers to round of spending cuts due to kick in on March 1 unless Democrat and Republican find another compromise. The weekend brought a fresh exchange of fire. Read more here.
ECONOMIC NEWS: A light week for domestic news includes: home loans (11.30am EST today); business confidence (tomorrow); consumer sentiment (Wed); and inflation expectations (Thu). Highlights of a slow-starting week in the US include: retail sales, import price index, inventories (Wed); weekly jobless claims (Thu); and Empire state index, industrial production and consumer sentiment (Fri).
