Market wrap: Australian traders will look to a speech this morning from President Obama to boost sentiment ahead of today's open after a negative night on Wall Street.
The September SPI futures contract ended the night session 17 points or 0.4% weaker at 4170 as US stocks retreated following a poorly-received speech by Federal Reserve Chairman Ben Bernanke. President Obama is due to outline a stimulus package before Congress at 9 am AEST this morning.
US stocks fell around 1% overnight as traders expressed disappointment after the Fed Chairman failed to detail specific measures to stoke the stumbling US economy. Financials and industrials were the biggest losers as the S&P 500 fell 1.06%. The Dow declined 119 points or 1.04% and the Nasdaq lost 0.78%.
Bernanke warned that the challenges to economic growth have increased and said the Fed will discuss fresh measures at this month's meeting. However, stocks fell away as traders realised the speech contained no detailed plan of action.
"It's a little disappointing," the chief investment strategist at the private-banking unit of KeyCorp in the US told Bloomberg. "Like he didn't even care to put anything new out there. Investors are grasping for some clear indication of where we are going to be moving and there just isn't enough to provide that clarity."
Also weighing on sentiment were cuts to growth forecasts in Europe, the US and Japan. The European Central Bank cut its forecast for euro-zone growth overnight as bank president Jean-Claude Trichet warned the "downside risks" had increased. Separately, the Organisation for Economic Cooperation and Development lowered its outlooks for the US and Japan.
The night's US economic reports were mixed, with jobless claims ticking up 2,000 to 414,000 last week, while the trade deficit tightened more than forecast as exports hit record levels in a positive sign for growth.
Gold resumed its up-trend as investors once again favoured havens over risk assets. Gold for December delivery was recently ahead $54.70 or 3% at US$1,872.20 an ounce. December silver was up 81 cents or 1.9% at US$42.40 an ounce.
Oil and copper reversed in the US as the greenback rallied, but industrial metals clung to some of the night's gains in London. Crude oil for October delivery was recently off 63 cents or 0.7% at US$88.71 a barrel. In London, copper added 0.2%, aluminium 0.7%, lead 2.4%, nickel 0.65%, tin 0.1% and zinc 0.2%. US copper was recently down 0.3%.
The major European markets squeezed out gains in choppy action after the European Central Bank indicated an end to rate rises and cut its growth outlook. Britain's FTSE put on 0.41%, Germany's DAX 0.05% and France's CAC 0.41%.
TRADING THEMES TODAY
US FUTURES AND OBAMA: Bernanke disappointed, now what about Obama? The US President starts his speech at 9 am AEST and it will pay to watch how US futures respond to get a feel whether his speech changes the outlook for our market this morning. Otherwise we're going down. The ASX yesterday pre-empted a little of the overnight weakness following the jobs disappointment, which should cushion any fall today. Small caps lost around 2% in the US and the banks were notably weak. Precious metals were again the place to be and that provides a clue for today's local action.
CHINA UPDATE: Today's other potential game-changer is the noon AEST monthly economic update from China. Traders will look for strength in industrial production, retail sales and fixed asset investment, and weakness in the inflationary pressures that have been forcing steady monetary tightening measures from the central bank. The consensus forecast is for a dip in the consumer price index from last month's year-on-year rate of 6.5% to 6.3%.
ECONOMIC NEWS: President Obama delivers his stimulus package to Congress at 9 am AEST. The monthly Chinese economic update is due at noon and includes CPI, PPI, retail sales, industrial production and fixed asset investment. The G7 begins a weekend meeting tonight. Wholesale inventories is the only scheduled economic report tonight in the US.
