The share market has broadly positive leads despite Wall Street breaking its longest winning run in nine years overnight amid mixed economic data.
The March SPI 200 futures contract this morning ended the night session three points or less than 0.1% weaker at 4830 for a two-day gain of 28 points as solid gains in the S&P 500 on Friday offset a minor pullback overnight.
In two trading sessions since the ASX closed for the Australia Day long weekend, the S&P 500 has put on five points or 0.3%, including a decline of three points or 0.2% overnight. The Dow has put on a total of 56 points or 0.4%, despite a loss of 14 points or 0.1% overnight.
"The sentiment is really, really bullish," the president of James Investment Research in the US told Bloomberg. "That is a little bit of a warning sign to us that we could be more in a topping phase than actually a new bull phase. It would take a lot to really convince everyone that happy days are here, and we can just ride this off into the sunset."
The S&P 500 pared another weak open overnight to narrowly miss a ninth straight advance. Its eight-session winning run was its longest rally since November 2004 and saw the index close above 1,500 for the first time since 2007.
The gains came as improving durable goods orders and corporate earnings overshadowed an unexpectedly sharp fall in home sales. Orders for durable goods spiked 4.6% last month, largely because of big demand for aircraft. Also helping sentiment were an improved forecast from heavy equipment-maker and Dow component Caterpillar and a rebound in Apple from its worst week in five years.
Falls in building stocks helped pull the indexes underwater after pending home sales slumped 4.3% last month. Analysts had been anticipating little change. The soft figures followed news of a 7.3% plunge in sales of new homes on Friday that raised questions about the strength of the recent revival in the US housing market.
Growing unrest in north Africa helped oil extend its recent rally overnight. West Texas crude for March delivery was lately up 64 cents or 0.7% at US$96.52 a barrel as Egypt remained wracked by violent protests and terrorists hit a pipeline in Algeria.
Gold slipped for a fourth session as traders took profits ahead of Wednesday night's Federal Reserve meeting amid concerns that support for quantitative easing within the central bank is softening. Gold for February delivery was down $1.80 or 0.1% at US$1,654.80 an ounce.
Copper improved after US durable goods data offered encouraging signs about demand. US copper for March delivery was recently up one cent or 0.2% at US$3.66 a pound. In London, copper rallied 0.3%, lead 0.9% and nickel 1.2%. Aluminium eased 0.1%, tin lost 1.4% and zinc was unchanged.
TRADING THEMES THIS WEEK
US EARNINGS: The US earning season continues to gallop at full pace this week with reports due from the likes of Ford, Amazon, Boeing, Facebook, Time Warner and Exxon Mobil (now the world's largest company following Apple's fall from grace). The fact the market has recorded its longest winning streak since 2004 tells you all you need to know about how these fourth-quarter results have been received.
STORM DAMAGE: Firstly, commiserations to any readers on the receiving end of the storms that have hit the east coast over the long weekend. Cruel business. There will be repercussions on the ASX today, with insurers likely to come under pressure. I'd be surprised if short-sellers don't target the likes of SUN, IAG and QBE. There may also be implications for any mining stocks with holdings in flood-affected areas. On a more positive note, there could conceivably be positive spin-offs for select building stocks, but that may be drawing a long bow.
CHINESE MANUFACTURING: Friday brings final January manufacturing figures from our biggest trading partner. HSBC's preliminary purchasing managers index beat expectations earlier this month and the final reading is tipped to confirm that strength. The main interest lies in the official government index, which is predicted to improve to 51.1 from 50.6.
ECONOMIC NEWS: This week's domestic highlights include: leading index (10am EST) and business confidence (11.30am, both today); new home sales, import prices and private sector credit (Thu); and manufacturing index, producer price index and commodity prices (Fri). US highlights include: consumer confidence (tonight); advance GDP, ADP non-farm employment change, Federal funds rate and statement (Wed); weekly jobless claims, personal income (Thu); and unemployment rate, non-farm employment change and manufacturing PMI.
