Australian shares face a cautious start after gains on Wall Street mostly fizzled away ahead of after-market earnings reports this morning from market heavyweights Apple and Amazon.
The December SPI 200 futures contract ended the night session five points or 0.1% stronger at 4506 as the big miners rallied in US trade and oil and most metals rebounded.
The Dow began the night around 90 points in the green but faded to a gain of 27 points or 0.2% as traders focussed more on corporate revenue misses than headline earnings. The S&P 500 held on to four points or 0.3% of an initial 12-point advance and the Nasdaq added 0.14%.
"The market is zigzagging each day on earnings," the head of asset allocation for ING Investment Management in the US told Bloomberg. "Earnings did come out better-than- estimated yet revenue surprises are negative."
Around 50 companies reported in the US overnight and the trend for this quarterly earnings season continued: above-estimate earnings but below-estimate revenue. Just over a third of companies have beaten revenue expectations this season, compared with a long-term average of nearly two-thirds, according to Reuters. Dow component Procter & Gamble was one of the standouts, rising 2.8%. Shares in Apple retraced 1.1% ahead of the release of its quarterly earnings shortly after regular trade concluded this morning.
Earnings worries overshadowed generally bright economic news: durable goods orders surged 9.9% in September, jobless claims dropped 23,000 to a seasonally-adjusted 369,000 last week and pending home sales recouped 0.3% of August's sharp decline. Britain's GDP jumped 1% last quarter, the biggest increase in five years.
European markets surrendered most of their gains in the final hour as Wall Street turned south. Germany's DAX added 0.1%, France's CAC lost 0.42% and Britain's FTSE was unchanged.
Rio Tinto and BHP benefitted from a generally positive night on commodity markets. BHP rallied 1.33% and Rio Tinto put on 0.78% after iron ore yesterday climbed back above US$120 per dry metric tonne.
Oil broke a five-session losing run as the night's economic news lifted sentiments after yesterday's larger-than-expected increase in US stockpiles. West Texas crude for December delivery was lately ahead 45 cents or 0.5% at US$86.15 a barrel.
Precious metals found belated support in yesterday's Federal Reserve policy statement, which reaffirmed the central bank's commitment to low interest rates and extra liquidity. Gold for December delivery advanced $11.60 or 0.7% to US$1,713.20 an ounce. December silver gained 52 cents or 1.6% at US$32.14 an ounce.
Gains in industrial metals were capped by a modest rise in the US dollar. US copper for December delivery was recently down one cent or 0.3% at US$3.56 a pound. In London, copper rallied 0.1%, aluminium 0.1%, lead 0.1% and tin 0.6%. Zinc eased 0.65% and nickel 1.2%.
TRADING THEMES TODAY
TREADING WATER: A troubling session on Wall Street showed that macro-economic improvements are currently taking a back seat to a tepid corporate earnings season. On the face of it, there was enough good news around last night to fuel a decent rebound in the indexes, but it didn't happen. That suggests to me that we're heading lower. Today's direction will likely be dictated by the reaction to after-market earnings from Apple and Amazon (see below). Shares in Amazon are down 7% at time of writing, with Apple still to come.
APPLE, AMAZON REPORT: Two of the modern world's market heavyweights were due to release earnings this morning following the close of regular trade on Wall Street. The reaction, indicated by US futures, will likely dictate how our market fares today. MarketWatch will have full coverage.
ECONOMIC NEWS: No significant domestic reports scheduled today. The highlights in the US apart from the reaction to Apple's earnings reports are advance GDP figures, advance GDP price index and revised consumer sentiment and inflation expectations.
