A fretful night on world markets points to a flat start in Australia after Wall Street broke its five-session winning run.
The December SPI 200 futures contract ended the night session four points or 0.1% ahead at 4436 as traders speculated that the ASX yesterday pre-empted modest overnight falls in US stocks, oil and gold.
With little fresh economic data to maintain last week's momentum, traders took profits ahead of news on Greece and the fiscal cliff this week and amid concerns over Christmas shopping discounts in the US. The S&P 500 dropped 0.22% after last week delivering its best weekly return since June. The Dow gave back 43 points or 0.33% and the Nasdaq put on 0.34% as index heavyweights Apple and Facebook rallied.
"We had a good week last week and absent any news we were going to give something back today," the managing director of listed equity trading at Stifel Nicolaus Capital Markets in the US told Reuters. "There's no catalyst to continue the rally we saw last week, though Greece would have been important if we weren't dealing with the fiscal cliff."
Investors were in wait-and-see mode as euro-zone finance chiefs gathered for a third attempt at breaking a deadlock over the next tranche of Greek rescue funds and politicians in the US prepared to debate a US$607 billion package of spending cuts and tax increases that will come into force on January 1 unless a compromise is struck. With just three weeks available before Congress breaks for Christmas, concerns were raised by weekend comments by a senior Democrat that fiscal cliff talks have made little progress.
"Fiscal-cliff negotiations are likely to be the immediate focus this week," a strategist at Deutsche Bank in London told Bloomberg. "There are only 36 days left until the fiscal cliff is due to kick-in."
The S&P 500 retail index eased 0.7% as analysts fretted over the depth of discounts offered at the start of the Christmas shopping season. Bargain-hunting helped deliver record Black Friday sales at the end of last week.
European markets pulled back as euro-zone ministers re-assembled for discussions with the International Monetary Fund and European Central Bank over a funding shortfall created by a decision to give Greece two more years to get its finances in order. The shortfall is roughly US$13 billion. Germany's DAX dropped 0.23%, France's CAC 0.79% and Britain's FTSE 0.55%.
Oil retreated from two days of gains as a cease-fire in the Middle East stripped some of the risk premium out of the market. West Texas crude for January delivery was recently down 46 cents or 0.5% at US$87.82 a barrel.
Industrial metals were mixed as last week's improved Chinese factory data helped offset uncertainty over European debt discussions. US copper for December delivery was recently up one cent or 0.3% at US$3.54 a pound. In London, copper advanced 0.2%, aluminium 0.7% and zinc 1.1%. Lead fell 0.6%, nickel 0.4% and tin 0.4%.
Gold moderated last week's gains but remained well bid as global uncertainties mounted. Gold for December delivery was lately off $2.80 or 0.2% at US$1,748.60 an ounce.
TRADING THEMES TODAY
HOLDING THE LINE: Expectations of a weak night on Wall Street capped yesterday's ASX advance and gives our market a little breathing space this morning. Most US stocks retreated amid profit-taking but closed well off their intraday lows. Our market may kick a bit higher in early trade but is once again hostage to Greek debt discussions taking place in Brussels at time of writing (see below). Tech stocks were the stand-out in the US overnight. Precious metals miners and defensive sectors benefitted from all the uncertainty.
GREECE - AGAIN: Deja vu, anyone? Another week, another EU arm-wrestle over Greece. The troika of international lenders are in the midst of their third attempt in recent weeks to agree on a plan that will give Greece another round of bailout cash. As with last week, news could break any time with the potential to push our market one way or the other. Personally, I'll be wary of trading the bigger end of the market until there is an announcement.
ECONOMIC NEWS: No significant domestic news scheduled today. The outcome of the Eurogroup meeting is today's main focus in Europe. Highlights tonight in the US include: durable goods/core durable goods, consumer confidence, house price index, Richmond manufacturing index and a speech by Federal Reserve Chairman Ben Bernanke.
