A soft start to trade is likely after modest falls on Wall Street on Friday ahead of tonight's US public holiday as concerns about Spain mounted.
The June SPI 200 futures contract ended 13 points or 0.3% weaker on Saturday morning at 4018 as US stocks ended their first winning week in a month with a low-volume fade.
The S&P 500 eased 0.22% on Friday but still finished the week 1.7% higher than where it started. The Dow lost 75 points or 0.6% on the day for a 0.7% gain for the week.
"Not unexpectedly considering the [looming public] holiday and market paralysis, today was the slowest trading volume day of the year looking at consolidated New York Stock Exchange volume," Peter Boockvar, equity strategist at Miller Tabak, told MarketWatch.
European concerns once again overshadowed solid US economic news. A string of negative headlines from Spain included: a regional government begging the central government for assistance because debt markets are closed to it; reports that the government is preparing for the largest bank bailout in Spain's history; credit downgrades for five banks as S&P warned of a double-dip recession; and a jump in Spanish bond yields. Despite all that gloom, the IBEX 35 rallied 0.13% as most European markets squeezed out slender gains following claims by Italy's Prime Minister that joint euro-bonds are likely to come soon. Germany's DAX put on 0.38%, France's CAC 0.32% and Britain's FTSE 0.03%.
This month's final revised consumer confidence report continued the recent trend towards upside surprises in US economic data. A Reuters index delivered its strongest reading since October 2007, but at 79.3 was still well below the pre-GFC average of 87.
Oil and key metals found buyers despite gains in the US dollar that pushed the euro to a 22-month low. West Texas crude for July delivery resisted a fade in US equities to close six cents or 0.1% stronger at US$90.72 a barrel after earlier running as high as US$91.32.
The deteriorating outlook for Spain brought gold some safe-haven buying ahead of the long weekend. Gold for June delivery added $15.60 or 1% at US$1,573.10 an ounce. Silver, platinum and palladium also improved.
Copper continued to recover from its weakest level since January but other industrial metals struggled for traction as buyers showed little enthusiasm ahead of the US holiday. In London, copper rallied 0.2% and zinc 0.8%. Aluminium eased less than 0.1%, lead 0.5%, nickel 0.3% and tin 1.05%. US copper for July delivery rallied two cents or 0.55% to US$3.45 a pound.
TRADING THEMES THIS WEEK
WALL STREET CLOSED TONIGHT: Barring breaking news, we're likely in for a lacklustre, low-volume session today with Wall Street closed tonight for the Memorial Day public holiday. US equities had their weakest trading volume this year on Friday, a pattern that is likely to be mimicked here as local investors wait for fresh leads. Several European markets are also closed, including Germany and France.
EUROPEAN WOES: World markets are likely to remain hostage to events in Europe until at least mid-June, when Greeks return to the polls (June 17) and the leaders of France, Germany, Spain and Italy meet again to discuss the crisis (June 22). However, three weeks is an eternity in financial markets and if we're lucky euro-fatigue will set in and US investors will start to focus on some of the recent positive surprises in domestic economic data (see below).
SLEW OF US DATA: With tonight's public holiday, the trading week is likely to get off to a slow start and become increasingly volatile as a welter of US economic news is released towards Friday. Highlights include consumer confidence tomorrow night, GDP on Thursday and the monthly employment figures on Friday. See below for more.
CHINESE MANUFACTURING: On Friday China releases the official government purchasing managers' index, which tends to be more upbeat than its private-sector rival. Nonetheless, analysts are tipping a modest slowdown in expansion from a reading of 53.3 last month to 52.1. HSBC is due to release the final version of its rival index on the same day.
ECONOMIC NEWS: The domestic calendar this week includes: house sales (tomorrow); retail sales, construction work (Wed); building approvals, private capital expenditure, private sector credit (Thu); and the manufacturing index and commodity prices (Fri). Highlights in the US this week include: consumer confidence (tomorrow); weekly jobless claims, GDP, Chicago manufacturing (Thu); non-farm payrolls, unemployment rate, personal income, consumer spending, core PCE price index, ISM and construction spending (Fri).
