A seventh week of gains for US stocks and an Iranian nuclear breakthrough have the ASX primed to continue the rebound that commenced on Friday.
The December SPI 200 futures contract rose 23 points or 0.4% to 5372 as Wall Street's record run continued and base metals recovered from recent lows.
The S&P 500 rallied nine points or 0.51% to close above 1,800 for the first time at 1,805. The index has inflated by 27% this year and is on course for its biggest annual increase since 1998. The Dow added 55 points or 0.34% and the Nasdaq 0.58%.
"It's hard to ignore all the tailwinds to this market," Chris Bouffard, chief investment officer of the Mutual Fund Store in the US, told Bloomberg. "We've got low oil, that's definitely helping consumers, especially going into the key holiday spending period. Buybacks and dividends are doing very well."
With no fresh economic news to change the dynamic, the market extended gains that followed Thursday's big drop in benefit claims and an improvement in consumer confidence. Industrials and health stocks led the gains. Airlines also outperformed after the billionaire head of hedge fund Appaloosa Management said his "big play" was US-listed airlines.
Australia's biggest mining stocks remained under pressure in US trade. BHP lost 0.78&, Rio Tinto 0.92%. Spot iron ore for import to China gained 20 cents at US$136.50 a dry tonne.
Overnight, US President Barack Obama announced a deal that halts Iran's nuclear program in exchange for an easing of international sanctions. The deal has implications for tensions in the Middle East and the price of crude oil - a major cost for businesses. Read more here.
On Friday, oil pared its first gain in seven weeks. West Texas Intermediate crude for January delivery fell 72 cents or 0.75% to US$94.72 a barrel after settling at US$94.84. The contract put on 1.1% over the week.
A weaker US dollar helped most base metals recoup some of their recent losses. US copper for December delivery rallied nearly three cents or 0.8% to US$3.23 a pound. In London, copper gained 1.1%, lead 0.9%, nickel 1% and zinc 1.1%. Aluminium lost less than 0.1%, while tin dropped 0.4%.
Gold ended its worst week in 10 weeks little changed. Gold for December delivery fell 70 cents or less than 0.1% to US$1,242.90 after earlier settling modestly higher at US$1,244.10 an ounce.
European markets closed mixed after a boost to German business confidence. The Ifo business-climate index improved to 109.3 this months from 107.4 in October, beating expectations. Germany's DAX gained 0.25%, France's CAC put on 0.59% and Britain's FTSE gave up 0.11%.
TRADING THEMES THIS WEEK
SHORT WEEK ON WALL STREET: The US holiday season is upon us with Wall Street suspending trade on Thursday for Thanksgiving and re-opening for just half a session on Friday. That has implications for economic data-flow, trading volumes and sector interest, with retail stocks and consumer spending coming under the spotlight. Volumes in Australia are likely to tail off towards the end of the week in line with international trends.
IRAN DEAL: Weekend news of a nuclear deal with Iran may place the price of crude oil under renewed pressure this week. Obviously that would have a negative impact on oil stocks, however there is a modest benefit to the broader market since energy is one of the principal costs for many listed companies.
ECONOMIC NEWS: This week's Australian diary includes: a speech by RBA Deputy Governor Phil Lowe (tomorrow); quarterly construction work (Wed); quarterly private capital expenditure (Thu); and private sector credit (Fri). The US calendar is heavily weighted towards the front of the week. Highlights include: consumer confidence (tomorrow); weekly jobless claims, durable-goods orders, Chicago PMI and consumer sentiment (Wed).
