Morning traders. Thanks Trees and after-market regulars.
Market wrap:
Shares are likely to open little changed after a mixed overseas session included a rout in US small caps and internet stocks, gains in blue chips, a five-year low in a commodities gauge and a strong rebound in iron ore.
The September SPI 200 futures contract edged up two points or less than 0.1% to 5475 as futures traders parsed a range of conflicting market signals.
A risk-averse night saw US traders dump the bull market's best-performing sectors in favour of blue chips ahead of this week's Federal Reserve policy meeting and Scottish independence vote. The S&P 500 pared initial losses to end the session two points or 0.08% in the red. The Nasdaq suffered its biggest fall in six weeks, tumbling 49 points or 1.06% as social media stocks, biotechs and small caps were sold off. The Global X Social Media Index plunged 3.88%, the Nasdaq Biotechnology Index 1.53% and the Russell 2000 index of small caps 1.21%. The Dow offered a safe haven against the market trend, rising 43 points or 0.26%.
“There is a lot of speculation on whether the Fed will update the timing of interest-rate increases," Steven Wieting, global chief investment strategist at Citi Private Bank in the US, told MarketWatch. "Also, the uncertainty surrounding the Scottish vote, which has already hit UK stocks and sterling, is weighing on sentiment as a ‘yes’ vote will threaten political unity in Europe."
Analysts attributed some of the tech sell-off to investors freeing up money to take part in this week's much-anticipated float of Chinese e-commerce giant Alibaba. Bull-market stars such as Tesla, Facebook and Twitter took big hits.
"A lot of these companies have had good runs and this is part of a healthy correction,” Mike Balkin, portfolio manager of the William Blair Small Cap Growth Fund, told Bloomberg.
The night's US economic data continued the theme of mixed messages. While national industrial production unexpectedly recorded its first decline since January, a measure of manufacturing in the greater New York region hit a five-year high.
BHP and Rio Tinto finished mixed in US trade despite a substantial bounce in iron ore. Spot ore for import to China yesterday rallied $3.20 or 3.9% to US$85.20 a dry tonne during its best session since March. BHP lost 0.84% in US action, while Rio Tinto advanced 0.73%.
The Bloomberg Commodities Index plumbed a five-year low following weekend news that Chinese growth is slowing. The index, which measures 22 commodity futures, fell 0.4% to its lowest level since July 2009 before staging a partial recovery. Read more here.
Brent crude oil hit a two-year low, but West Texas Intermediate turned higher as the US dollar pared gains. Brent for October settlement dropped 46 cents or 0.5% to expire at US$96.65 a barrel. WTI crude oil for October delivery rallied 65 cents or 0.7% to settle at US$92.92 a barrel.
Nickel touched a three-month low as the downbeat Chinese news depressed demand expectations for base metals on the London Metal Exchange. Nickel lost 1.9%, copper 0.26%, aluminium 1.87%, lead 1.13%, tin 0.94% and zinc 1.16%. US copper for December delivery was recently down 0.6% or around two cents at US$3.09 a pound.
Gold steadied following a five-session losing streak last week as traders anticipated further strength in the US dollar. Gold for December delivery advanced $3.60 to settle at US$1,235.10 an ounce and was last trading at US$1,233.80.
European stocks drifted lower as China-exposed stocks suffered downward pressure. The Stoxx Europe 600 index eased 0.1% as Germany's DAX gained 0.09%, France's CAC slipped 0.29% and Britain's FTSE lost 0.04%.
The dollar edged back above 90 US cents after hitting a six-month low of 89.84 US cents overnight. The Aussie was this morning buying 90.28 US cents.
TRADING THEMES TODAY
MUDDLED SIGNALS: There was some logic to last night's events on world markets, but you have to work fairly hard to find it. The main theme appeared to be the continuing bias towards taking profits and paring risk ahead of the two-day Federal Reserve policy meeting which starts tonight and ends with a policy statement and press conference at 4am EST on Thursday morning. Small caps and other recent strong performers bore the brunt. Commodities were all over the place, with iron ore a stand-out, oil and gold bouncing and base metals taking a solid hit. How much does it all mean for Australia? Well, the Chinese economic data appeared to have limited impact, which has to be a plus, considering the scale of yesterday's local retrace. May be room for a bounce here today.
ECONOMIC NEWS: The minutes from the August RBA policy meeting are due at 11.30am EST. Tonight's US menu includes the producer price index/core PPI and long-term purchases.
