Morning traders. Thanks Rx7 and after-market regulars.
Market wrap:
Australian stocks are eyeing a mildly positive start after gains in resource stocks offset weakness in biotechs during a mixed night on Wall Street.
The December SPI200 futures contract advanced six points or 0.1% to 5175 as BHP and Rio Tinto edged higher and oil hit a three-month high.
The S&P 500's five-session winning run ended with a loss of seven points or 0.36% as a retreat in the health care sector resumed following a brief relief rally at the end of last week. The biotech-heavy Nasdaq was the worst of the major indices, falling 33 points or 0.69%. The blue-chip Dow bucked the downtrend with a rise of 14 points or 0.08%.
“We’ve had five really good days in a row, it’s not surprising that we’re getting a little bit of a pullback,” Michael Mullaney, chief investment officer at Fiduciary Trust in the US, told Bloomberg. “Probably a little bit of short-term bias fatigue.”
The iShares Nasdaq Biotechnology Index fell 3.67% after leading light Illumina missed Q4 sales targets. The sector has come under selling pressure for the last two weeks as a medicine pricing scandal ramped up political pressure to cap price increases.
Energy, materials and industrials were the best of the sectors for a third straight session since Friday's unexpectedly weak September jobs report convinced traders that rates are unlikely to rise the year. BHP put on 1.63% and Rio Tinto 0.4% in US trade.
The US energy ETF rallied 2.22% to a seven-week high after crude oil advanced to its strongest level in almost three months. West Texas Intermediate crude oil for November delivery settled $2.27 or 4.91% ahead at US$48.53 a barrel as the US Energy Information Administration cut its supply expectations for next year amid signs that weak prices are undermining drilling activity.
The prospect of record low rates for longer helped drive the US dollar index down 0.69% overnight. The Australian dollar was this morning up 1.3% or almost a cent at 71.74 US cents, its highest level in more than two weeks.
The quarterly earnings season, which kicks off in earnest with results from Alcoa tomorrow night, is off to a positive start according to analyst Nick Raich. Of the 20 S&P 500 companies that have reported, 17 beat earnings expectations and 12 exceeded revenue targets.
"It's only 20 companies but it's an encouraging start to earnings season," Raich, CEO of The Earnings Scout, told CNBC. "We have yet to see a financial company or an earnings company report. ... Those are going to drag down the overall earnings."
A third day of gains lifted Europe's benchmark index to a three-week high after soft German manufacturing data raised speculation that the European Central Bank will extend stimulus measures. The Stoxx Europe 600 rose 0.58%, Germany's DAX 0.9%, France's CAC 0.95% and Britain's FTSE 0.43%.
The NYSE Arca Gold Bugs index rallied 4.36% to a six-week high as the weaker greenback helped gold moved higher. Gold for December delivery settled $8.80 ahead at US$1,146.40 an ounce.
Copper held steady during a mixed session on the London Metal Exchange as buying volumes continued to be depressed by a week-long Chinese holiday. London copper edged up 0.1%, lead 0.2%, nickel 0.1% and tin 1%. Aluminium and zinc both declined 0.7%. US copper for December delivery was recently up 0.2% at US$2.36 a pound.
Spot iron ore for import to China yesterday held steady at US$54 a dry ton.
TRADING THEMES TODAY
RESOURCES REVIVAL: No surprise to see Wall Street take a breather after an impressive five-day surge. Bulls will be comforted by the fact profit-taking was modest, implying there are plenty of traders expecting more from this rally as we enter another US earnings season. The omens from the first few reports appear positive. Also highly positive for the ASX is an on-going recovery in commodity prices and resource stocks as traders bet that US rates earned a reprieve on Friday. It's a short-term revival (US rates have nowhere to go but up), but has certainly injected some interest back into a moribund sector. Energy stocks should see buying this morning.
ECONOMIC NEWS: The AIG Construction Index is due at 9.30am EST. A low-key night ahead in the US includes crude oil inventories and consumer credit data.
