Market wrap:
Shares are aiming modestly lower after a jittery night on world markets saw US and European stocks give back some of Friday's rebound.
The September SPI 200 futures contract retreated four points or 0.1% to 5496 as weekend bloodshed in Gaza and the threat of deeper sanctions against Russia dampened risk appetite.
The S&P 500 fell as much as 0.6% before paring its loss to four points or 0.21%. The Dow trimmed a triple-digit decline to a final deficit of 48 points or 0.28%. The Nasdaq lost seven points or 0.16%.
“The geopolitical situation is an overarching damper on the market and underneath that this week we’re right in the heart of second-quarter earnings,” Matthew Kaufler, manager of Federated Investor’s Clover Value Fund, told Bloomberg. “While the market is net focused on earnings, we’re still trying to keep a pulse on what’s going on around the world.”
A low-key start to a heavy week for US data offered no major economic or corporate earnings reports to distract from a bloody weekend in the Middle East. Israel lost 13 soldiers on Sunday and dozens of Palestinians were killed on the deadliest day of the conflict.
US stocks began to recover when President Obama called for a diplomatic solution to the stand-off in Ukraine over a downed Malaysian Airlines passenger jet, but announced no new sanctions against Russia. Several European leaders called for tougher sanctions over the weekend.
Oil surged to a three-week high in anticipation that sanctions against Russian energy exports are increasingly likely. West Texas Intermediate crude oil for delivery in August rallied $1.46 or 1.4% to settle at US$104.59 a barrel and was lately buying US$104.68.
Gold picked up some haven buying, although gains eroded as the session wore on. Gold for August delivery rose $4.50 or 0.3% to settle at US$1,313.90 an ounce and was recently at US$1,312.60.
Australia's largest miners eased in US action as iron ore continued to be pressured by concerns about the Chinese property market. BHP lost 0.13% and Rio Tinto 0.11%. Spot iron ore for import to China yesterday dropped 60 cents to US$96 a dry tonne.
Aluminium and zinc touched their highest levels in more than a year as momentum buyers capitalised on interest in alternative assets to equities in the current climate. In London, copper rallied 0.6%, nickel 0.9%, aluminium 2%, lead 0.7%, tin 0.5% and zinc 1.9%. US copper for September delivery was recently up 0.4% or more than a cent at US$3.20 a pound.
Russia's benchmark equity index, the MICEX, fell 2.7% for a sixth straight loss in anticipation of further sanctions. The Stoxx Europe 600 index gave up 0.5% as Germany's DAX lost 1.11%, France's CAC 0.7% and Britain's FTSE 0.32%.
The dollar eased more than a tenth of a cent to 93.78 US cents.
TRADING THEMES TODAY
CLOUDS NOT YET CLEARING: There was little on offer on Wall Street overnight to distract from the lingering gloom over MH17 and events in Gaza. The result was a downbeat session that eventually brought in dip-buyers. Barring major developments in Ukraine or the Middle East, tonight should see a refocusing on US domestic interests with a heavy menu of economic data and corporate earnings. That being so, I can't see our index dropping too far from yesterday's six-year closing high. Oilers and precious metals miners should find a bid. Biotechs bucked the downtrend in the US.
ECONOMIC NEWS: No significant domestic news scheduled today. China releases a leading index of economic indicators at noon EST, which generally has limited impact. RBA Assistant Governor Guy Debelle and Governor Glenn Stevens are due to deliver speeches at Sydney events at 9.25am and 1pm, respectively. The US tonight releases the latest consumer price index/core CPI, house price index, existing home sales and Richmond Manufacturing Index.
