A flat start is likely after US stocks rejected record levels as a sell-off in momentum stocks continued.
The June SPI 200 futures contract edged up three points or less than 0.1% to 5462 as Wall Street closed mixed and the big Australian miners retreated following a drop in the price of iron ore.
The S&P 500 rose 0.6% in early trade, drawing within two points of a record before falling to a closing loss of two points or 0.12% with tech stocks and small caps leading the way. The tech-heavy Nasdaq lost 17 points or 0.41%, its third straight decline. The Dow was again the best of the major indexes, holding on to a gain of 32 points or 0.2%.
"We continue to see this churning of the market and rotation out of hyper-growth names into value," Walter Todd, chief investment officer at Greenwood Capital in the US, told Bloomberg. "You see strength in the morning as people try to see if there's going to be a breakout, and when that doesn't occur, you see selling come in the afternoon."
The Russell 2000 index of small caps slid 1% to close near a three-month low. The Dow Jones Internet Composite Index fell 0.3%, extending a 4.9% fall over the previous two sessions.
The market opened brightly on upbeat jobless claims and signals that the European Central Bank is ready to stimulate the European economy. First-time claims for unemployment benefits declined 26,000 to 319,000 last week from a revised 345,000 the previous week. Economists surveyed by Bloomberg anticipated a reading at around 325,000.
European stocks surged in volatile trade after ECB President Mario Draghi said the central bank was "comfortable with acting" to tackle the threat of deflation at the next policy meeting, offsetting initial disappointment that the bank did not act this meeting. The Stoxx Europe 600 index rallied 1.05% as Germany's DAX jumped 0.9%, France's CAC 1.36% and Britain's FTSE 0.63%.
Draghi's comments pushed the euro lower against the dollar, but had negligible effect on dollar-priced commodities. Nickel rocketed to a two-year high after Vale halted operations at a mine in New Caledonia. Three-month nickel on the London Metal Exchange closed 4% higher after earlier rising as much as 6.1%. Also in London, copper rose 1.1%, lead 0.7%, tin 0.4% and zinc 0.1%. Aluminium dipped 0.2%. US copper for July delivery was recently up 0.9% or three cents at US$3.06 a pound.
Spot iron ore for import to China fell $1.40 to US$103.70 a dry tonne. In US trade overnight, BHP slid 0.11% and Rio Tinto 1.27%.
Oil hovered above US$100 a barrel as any further advance was capped by US inventories sitting near record levels. West Texas Intermediate crude oil for June delivery settled 51 cents or 0.5% lower at US$100.26 a barrel.
Gold was range-bound near break-even for most of the session. Gold for June delivery was recently up $1.10 or 0.1% at US$1,290 an ounce after settling earlier at US$1,287.70.
TRADING THEMES TODAY
MIXED LEADS: A choppy week looks likely to end with minimal change on mixed overnight leads from Wall Street. Value investing has been the theme in the US for the last month, which makes sound sense with indexes near record levels, but does not offer anything like as much fun as when momentum stocks are running. That trend has been mirrored to some extent on the ASX and may explain why day trading has been a struggle for many lately. The pluses for today are a big move in nickel, gains in most base metals and strength in European equities. The minuses are a fall in iron ore and weakness in US small caps, biotechs and tech stocks.
ECONOMIC NEWS: The Reserve Bank releases its quarterly monetary policy statement at 11.30am EST. Chinese consumer and producer inflation figures are due around noon, although the exact release time is imprecise. A big week of US data ends quietly with JOLTS job openings and wholesale inventories the pick of the night ahead.
