A modestly positive start to trade is probable following a rebound in commodities and equity gains on Wall Street overnight.
The June SPI 200 futures contract ended the night session five points or 0.1% stronger at 4318 as oil and most metals rallied and the big Australian miners advanced in US trade.
The S&P 500 reached its highest level in nearly three years as a share buyback and dividend announcement from Apple underlined the improvement in corporate profits in the US. The benchmark index put on 0.4% and the tech-heavy Nasdaq added 0.76%. The Dow Jones Industrial Average, which does not include Apple - the US's biggest listed company by market capitalisation - as a component, gained seven points or 0.05%.
"There's plenty of room for dividends to increase," the head of asset allocation at ING Investment Management in the US told Bloomberg. "Paying dividends is a sign of health in the companies and the economy. That plays well in terms of investors' confidence."
Also helping sentiment in the US was a solid housing report, the first of several due this week. Sentiment among builders of new single-family homes this month held near a five-year high in another sign that the housing market is slowly regaining traction.
Financial, commodity and tech stocks led the gains as cyclical stocks outperformed defensive sectors. In US trade, BHP put on 1.1%, Rio Tinto 0.6% and Alumina 3.5%.
A "risk-on" night saw commodities recoup some of Friday's losses as the US dollar again retreated. Oil advanced to a two-week peak in the US. Crude for April delivery was lately up 93 cents or 0.9% at US$107.99 a barrel.
Gold recouped some of last week's 3.3% slide as bargain-hunters snapped up metals. Gold for April delivery was recently ahead $7.20 or 0.4% at US$1,663 an ounce.
Most base metals improved overnight, but volumes were held down by a weekend report showing house prices in China deteriorated for a fifth straight month in February. The report helped drag Hong Kong's Hang Seng index to a 0.95% loss yesterday. In London overnight, copper gained 0.9% aluminium 0.9%, nickel 0.65%, tin 1.2% and zinc 0.3%. Lead fell 0.1%. US copper was recently up 0.7%.
"We do not see expect to see metals do much over the short-term," a metals analyst at INTL FCStone told Reuters. "Although the US recovery seems to be on track, it is showing tentative signs of topping out. More of a concern is the slowdown in China, which we suspect is actually worse than the official numbers suggest."
European markets eased back from eight-month highs. Britain's FTSE lost 0.08%, Germany's DAX 0.05% and France's CAC 0.47%.
TRADING THEMES TODAY
BUTTING RESISTANCE: A late fade on Wall Street stripped much of the enthusiasm for the day from our futures this morning as the Dow eased about 30 points from its high. Still, market sentiment here remains bullish and the overnight rise in commodity prices should support our mining sector this morning. The index will start the day near the 4300/4310 horizontal resistance level that has proved stubborn over the last two months. Shanghai yesterday shook off Saturday's weak housing report but Hong Kong's property stocks took a tumble. With Japan closed for a public holiday today, it will be worth keeping an eye on how China fares today.
FALLING VOLATILITY: An interesting conclusion to this Bloomberg market report points out that intraday swings and trading volumes in the US have slumped this year. The average intraday trading range for the S&P 500 is less than half what it was last year and volumes are the weakest in 13 years. I suspect that picture is mirrored to a large extent in Australia. Overall, low volatility is good news for long-term investors but challenging for traders who depend on intraday price movement for profit opportunities.
ECONOMIC NEWS: The Conference Board's leading index is due at 10am EST, followed by the minutes from the last Reserve Bank meeting at 11.30am. The Nikkei is closed today for a holiday in Japan. Housing is once again tonight's main focus in the US, with building permits and housing starts scheduled for release. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner are both scheduled to give public addresses.
