A fourth decline on Wall Street in five sessions is set to keep Australian stocks little changed at today's open.
The June SPI 200 futures contract dropped four points or less than 0.1% to 5341 as choppy end-of-quarter trading in the US saw traders continue to take profits on the post-GFC bull rally's most successful sectors.
The S&P 500 surrendered an early gain of 0.2% to close four points or 0.19% in the red following a mixed batch of economic data. The Dow, the strongest of the three major indexes over the last week, closed five points or 0.03% in the red. The Nasdaq lost 23 points or 0.54% as tech stocks remained out of favour.
"People are reducing their risk portfolios a little bit," John Fox, director of research at Fenimore Asset Management in the US, told Bloomberg. "Some of the speculative parts of the market have been selling off. If you own a stock and the reason you own it is it's going up and it stops going up, there's no reason to own it."
The Russell 2000 index of small caps, which had rallied more than 230% in five years, fell 0.34%. The Nasdaq Biotechnology Index, up more than 300% in five years but which had lost 11% since February, bounced 0.41%.
Financials were the biggest drag on the S&P 500, retreating nearly 1% after five banks failed Federal Reserve stress tests. Citigroup was the worst affected, skidding 5.4% after failing to convince the Fed it could safely raise its dividend and launch a US$6.4 billion buyback.
US gross domestic product for the last three months of last year was revised upwards to 2.6%, slightly below economists' expectations. First-time claims for unemployment benefits declined by 10,000 to a seasonally- adjusted 311,000 last week, a four-month low. Pending home sales slid 0.8% last month to the lowest level in at least two years.
"Data has largely been in line. It's been incredibly uneven, and that is another reason why there is some hesitancy," Peter Kenny, chief executive officer of Clearpool Group in the US, told Reuters.
Australia's major miners bucked the downtrend as iron ore continued to edge higher. BHP advanced 0.45% in US trade and Rio Tinto put on 0.29%. Spot iron ore for import to China yesterday gained 40 cents at US$112.30 a dry tonne.
Oil rallied to a three-week high as geopolitics continued to dim the outlook for production. Analysts identified possible sanctions against Russia, political upheaval in Ukraine, on-going protests in Libya and problems in Nigeria as current threats to output. West Texas Intermediate crude oil for May delivery was lately up $1.06 or 1.1% at US$101.37 a barrel after settling at US$101.28.
Gold stocks in the US ignored the metal's first close below US$1,300 in six weeks. The Gold Bugs Index bounced 0.81% from Wednesday night's six-week low. Gold for April delivery was recently off $10.60 or 0.8% at US$1,292.80 an ounce after settling at US$1,294.70 as a rising greenback pressured alternative stores of wealth.
Copper rebounded amid speculation of improved demand from China and Europe. Reuters quoted analysts as saying there had been a seasonal pick-up in Chinese buying as the weather improved this month. US copper for May delivery was recently up 0.9% or three cents at US$2.99 a pound. In London, copper gained 0.8%, aluminium 0.5%, lead less than 0.1%, tin 0.7% and zinc 0.1%. Nickel lost 1.2%.
European markets were held back by directionless trade on Wall Street and by losses among banks after the US arms of several European giants failed the Fed's stress tests. The Stoxx Europe 600 index gained 0.14% as Germany's DAX inched up 0.03%, France's CAC lost 0.14% and Britain's FTSE gave back 0.26%.
TRADING THEMES TODAY
NEUTRAL FINISH TO CHOPPY WEEK: Not much of a lead for the ASX from a fairly directionless session on Wall Street. The selling in biotechs and gold stocks dried up but the bounce was too modest to inspire confidence that these retraces are over. BHP and Rio squeezed out gains, which should cushion the XJO. Small caps remained under the pump, but the Australian specs have seen nothing like the rebound in the US and therefore have less to give back.
ECONOMIC NEWS: No significant domestic news scheduled today. US highlights include personal spending and income, revised consumer sentiment and inflation expectations, and the core price index.
