Morning traders. Thanks Trees and after-market regulars.
Market wrap:
Slim gains on European share markets, flat US futures and a new two-year low in iron ore point to a muted start to Australian trade following last night's US public holiday.
The September SPI 200 futures contract ceased trading at midnight EST, five points or 0.1% lower at 5604.
The prospect of further European Union sanctions against Russia clouded European trade for most of the session before a late rally in the closing minutes. The Stoxx Europe 600 index ended 0.25% higher as Germany's DAX put on 0.08%, France's CAC lost 0.02% and Britain's FTSE added 0.09%.
“Markets are choosing to wait and see what happens at this week’s European Central Bank meeting,” Jacques Porta of Ofi Gestion Privee in France, told
Bloomberg. "Investors are expecting a strong move from the ECB because [ECB President Mario] Draghi said he will do something to help growth. The continued conflict in Ukraine, with the EU considering more sanctions, does not help markets.”
Risk appetite in Europe was dampened by yesterday's soft Chinese factory reports and by events in Ukraine, where pro-Russian rebels attacked Ukrainian coast guard ships as fighting continued around Luhansk airport. Russia's Foreign Minister warned that his country will retaliate against any new sanctions imposed by the EU and US.
The impact of the conflict was underlined by weak German GDP and manufacturing reports released overnight. The German economy, often seen as the engine room of the European economy, contracted 0.2% over the June quarter. A separate report showed manufacturing activity across Europe slowed more than expected last month. The Markit PMI slipped to 50.7 from 51.8 in July.
With Wall Street closed overnight for the Labor Day public holiday, European trading volumes were more than a third below the recent average. Emini Dow futures were lately down two points or less than 0.1% at 17,083.
Australia's largest miners trade mixed in UK action despite a ninth fall in the price of iron ore in ten sessions. Spot iron ore for import to China yesterday declined 80 cents to US$87.10 a dry tonne, the commodity's lowest close since September 2012 when it marked a low of US$86.70. BHP slid 0.13% in the UK. Rio Tinto rallied 0.55%.
Read more here.
Copper was pressured by yesterday's monthly manufacturing updates from China which confirmed that the economy lost momentum last month. In London, copper lost 0.6%, nickel 0.3%, aluminium 0.1%, lead 0.4%, tin 1.1% and zinc 0.1%. US copper for December delivery fell nearly one cent or 0.3% to US$3.15 a pound.
"The Chinese manufacturing data once again increased speculation that the [world's] second-biggest economy is slowing down and this has made traders cash in some of their chips," Naeem Aslam, chief market analyst at Ava Trade, told
Reuters.
Gold inched higher on haven-buying' from increased Russia-Ukraine tensions. Gold for December delivery advanced 70 cents or 0.05% to US$1,288.10 an ounce.
Oil was little changed as weaker demand expectations from China offset any risk premium from the Ukraine conflict. West Texas Intermediate crude oil for delivery in October dropped 29 cents or 0.3% to settle at US$95.67 a barrel.
The dollar was this morning buying 93.34 US cents.
TRADING THEMES TODAY
SIDEWAYS DRIFT LIKELY TO CONTINUE: The market has gone nowhere for the last week and a half and - barring black swans - that trend appears unlikely to change today. Considering the headwinds from China and Europe, that's not a bad outcome. European markets marked time overnight, commodities were generally downbeat and US futures are offering few clues yet as to how Wall Street will open tonight. Iron ore is a worry but not yet at the point of outright panic. This morning's domestic building approvals and current account reports may offer the market some direction, but the RBA is unlikely to change the script with this afternoon's rate policy announcement.
ECONOMIC NEWS: Monthly building approvals and current account figures are due at 11.3am EST, followed by the Reserve Bank's monthly cash rate announcement and policy statement at 2.30pm. Wall Street re-opens with twin manufacturing PMIs, manufacturing prices, construction spending and economic optimism reports.
Good luck to all.
