Futures traders expect a cautiously positive open after stabilising house prices helped US stocks eke out skinny overnight gains.
The September SPI 200 futures contract ended the night session eight points or 0.2% higher at 3991 as oil and copper edged higher in subdued trade ahead of the start of a European Union summit tomorrow.
US stocks overcame a drop in consumer confidence as the first improvement in house prices this year encouraged hopes that the battered housing market is finally on the mend. The S&P 500 advanced 0.48% as News Corp surged 8.3% following reports that Rupert Murdoch plans to split the media giant's publishing and entertainment wings into separate companies. The Dow put on 32 points or 0.26% and the Nasdaq added 0.63%.
"There are lots of variables at play," the chief investment officer at Fifth Third Asset Management in the US told Bloomberg. "People are looking at signs of stabilisation in the housing market, there's the European summit this week, it's almost quarter end. It's going to be a volatile week."
House prices in US capital cities jumped 1.6% in April, their first rise since the northern autumn. The report added to signs of a turn in the housing market after a separate report on Monday showed sales of new homes increased 7.6% last month.
The housing report offset further signs of deteriorating consumer confidence. A closely-watched index declined for a fourth straight month to its lowest level since January.
European markets closed little changed despite another night of mostly negative developments: German Chancellor Angela Merkel told politicians Europe would never have joint euro-bonds "as long as I live"; Germany's credit rating was cut one notch by Egan-Jones; and Spanish banks plunged after Moody's cut credit ratings on 28 banks and the nation's borrowing costs rose sharply at an auction of short-term debt. Despite the headwinds, Germany's DAX rallied 0.07%, France's CAC fell 0.3% and Britain's FTSE lost 0.07%.
There was little pattern to commodities trade, where oil rebounded from mid-session losses, gold back-tracked and industrial metals were mixed. The oil market was rattled by Chancellor Merkel's pre-empting of this week's EU summit, but swiftly recovered as US equities advanced. West Texas crude for August delivery was recently up 24 cents or 0.3% at US$79.45 a barrel after earlier falling as low as US$78.32.
Copper squeezed out a second day of gains in London but was little changed in the US. In London, copper and tin both added 0.3%, while aluminium lost 1.1%, lead 1.15%, nickel 0.8% and zinc 1.6%. US copper for July delivery was recently up 0.02% or less than a cent at US$3.32 a pound.
"Given their cyclical nature, industrial metals have suffered from the deterioration of leading economic indicators," Credit Suisse said in a research note quoted on Reuters. "However, the sector remains a mixed bag. With the exception of tin, all markets are undervalued. The larger markets - copper and to a lesser extent aluminum - have better supply-demand balances and look healthier from a technical point of view, making them our preferred picks."
Gold gave back most of yesterday's gains. Gold for August delivery was lately down $15.50 or 1% at US$1,572.90 an ounce.
TRADING THEMES TODAY
BUILDING A SHORT-TERM BASE?: There were signs of stability in the US housing market last night and in equity markets as well. Wall Street muddled higher despite the cold winds blowing across the Atlantic, while the big European markets held fairly steady. Australia's large miners rallied in US trade and should provide a platform for a modest bounce on the ASX this morning. It looks very much like world markets have now factored in another EU failure at this week's summit, allowing attention to move to other matters. Expectations for US economic data are considerably lower than they were a few months ago and analysts are downgrading their earnings projections for next month's quarterly reporting season. Industrials, oilers and banks were among the leaders last night in the US, while gold/silver miners, telecoms and transport stocks lost ground.
ECONOMIC NEWS: A quiet week for domestic data offers traders nothing significant today, but a big week in the US continues tonight with durable goods/core durable goods, pending home sales and crude oil inventories.
