Mild declines in most US stocks on Friday and a public holiday in the US tonight point to a muted start to the trading week.
The March SPI 200 futures contract eased two points or less than 0.1% to 5265 as poorly-received profit reports from Intel and General Electric weighed on US trade. Wall Street trading is suspended tonight for the Martin Luther King Jr public holiday.
All 10 industry groups lost ground as the S&P 500 lost seven points or 0.37%. The index lost 0.2% last week as a fourth-quarter earnings season got off to a choppy start. The Nasdaq reversed 0.49% on Friday, while a rally in AmEx and Visa helped the Dow rise 42 points or 0.26% for a weekly gain of 0.1%.
"The market just can't seem to get going this year," Wayne Wilbanks, chief investment officer at Wilbanks, Smith & Thomas Asset Management in the US, told Bloomberg. "Earnings are okay, but for the market to go much higher, earnings are going to have to be really good."
Seven S&P 500 companies delivered Q4 earnings on Friday. Among the big names, General Electric, Intel and UPS were sold off, while AmEx and Morgan Stanley rallied.
"The market was teased [last week] in a good way by some of the first earnings, tempered later with disappointing numbers, and it's trying to make a sense of what the quarter is going to be," John Manley, chief equity strategist at Wells Fargo Funds Management in the US, told Reuters.
The day's economic data was mixed, with gains in industrial production and job openings offset by declines in consumer sentiment and house construction. December industrial production increased by 0.3%, in line with expectations. The number of jobs openings hit a five-year high of four million in November. A gauge of consumer sentiment unexpectedly weakened this month to 80.4 from 82.5 in December, below expectations. Construction of new homes fell 9.8% in December.
BHP and Rio Tinto recorded slender gains in US trade despite a continuing slide in the price of iron ore. BHP put on 0.24%, Rio 0.27%. Spot iron ore for import to China deteriorated $1 to US$127.30 a dry tonne.
The dollar hit a three-and-a-half-year low against the greenback this morning. The Aussie was lately buying 87.83 US cents, down from 88.15 on Friday.
Gold stocks outperformed in the US after the metal settled at a five-week high. The NYSE Gold Bugs index of US miners rallied 3.47%. Gold for February delivery ended the session ahead $13.30 or 1.1% at US$1,253.50 after settling at US$1,251.90 an ounce.
Oil marked a two-week high, but the deterioration in consumer sentiment stripped most of the gains by the end of the session. West Texas Intermediate crude oil for February delivery closed the day 13 cents or 0.1% stronger at US$94.09 after earlier settling at US$94.37 a barrel.
Industrial metals were mixed but broadly positive. US copper for March delivery declined a fraction of a cent or less than 0.1% to US$3.34 a pound. In London, copper rose 0.4%, nickel was flat, aluminium, lead, zinc advanced and tin retreated.
European markets were helped by encouraging UK retail sales and improved sentiment towards miners following Citigroup's bullish call on Thursday. Germany's DAX added 0.26% and France's CAC and Britain's FTSE both rose 0.2%.
TRADING THEMES THIS WEEK
PUBLIC HOLIDAYS: The ASX likely faces a subdued start to the trading week with two sessions to come before Wall Street next trades following tonight's Martin Luther King Jr public holiday. Trading volumes are likely to be lower than normal. In addition, we may also see profit-taking towards the end of the week as traders close the books ahead of Monday's Australia Day public holiday.
US EARNINGS: Quarterly corporate profit reports will be the main focus of a holiday-shortened week in the US that is light on economic data. Roughly 70 S&P 500 companies and eight Dow components are scheduled to report. Among the most significant names are Microsoft, IBM, McDonald's, Netflix, Johnson & Johnson, Verizon, Procter & Gamble and eBay.
CHINESE OUTLOOK: With Wall Street closed tonight, a batch of lunchtime Chinese economic data may determine how the ASX performs for the next two days. 1pm EST brings a quarterly GDP report that is anticipated to show a mild slowdown to growth of 7.6% from 7.8% the previous quarter. Also due at 1pm: industrial production, retail sales and fixed asset investment. HSBC's Flash Manufacturing PMI is due on Thursday.
ECONOMIC NEWS: A fairly light week for domestic data includes the monthly inflation gauge (10.30am EST today); consumer price index/trimmed mean CPI, consumer sentiment (Wed); and inflation expectations (Thu). Thursday is the only day this week with any significant US data: existing home sales, weekly jobless claims and flashy manufacturing PMI.
