Morning traders. Thanks Trees and after-market regulars.
Market wrap:
Australian shares look set to open above yesterday's two-year closing low after Wall Street declined for the fourth time in five sessions but losses were contained.
The December SPI200 futures contract rebounded 11 points or 0.2% to 5006 as a low-volume session in the US proved less damaging than yesterday afternoon's futures implied.
The S&P 500 gave up four points or 0.2%, closing in the lower half of its overnight trading range but six points above its session low. The Dow lost 51 points or 0.31% and the Nasdaq four points or 0.08%. Trading volumes were a fifth below the recent norm as many sat out the session for the Jewish holiday of Yom Kippur.
“We have the Jewish holiday, but we also have a speech out of [Federal Reserve Chairman Janet] Yellen tomorrow [tonight Australian time]," Matt Maley, equity strategist at Miller Tabak in the US, told
Bloomberg. "People are hoping that she’ll make some further comments that will take away some of the confusion and uncertainty that her comments from last week made.”
Resource stocks led the retreat after a report yesterday showed Chinese factory activity this month contracted at the fastest pace since the end of the financial crisis. Caixin's manufacturing purchasing managers' index declined to 47, a six-and-a-half-year low, from an August reading of 47.3. Analysts polled by Reuters had anticipated a rebound to 47.5. The report helped drive the ASX 200 down 105 points or 2.1% to its weakest close in more than two years. The Shanghai Composite gave up 2.19% and Hong Kong's Hang Seng 2.26%.
The raw materials sector fell more than 2% last night in the US. BHP shed 2.13% and Rio Tinto 1.47%, both ending just above last month's closing lows.
The energy sector was the other main drag, with the energy SPDR ETF losing 1.29% as crude slid to a one-week low. West Texas Intermediate crude oil for November delivery settled $1.88 or 4.1% weaker at US$44.48 a barrel as Chinese factory data overshadowed a second straight weekly drop in US inventories.
Biotechs steadied after a three-session rout fuelled by the threat of increased price regulation. The iShares Nasdaq Biotechnology Index closed 0.77% lower after moving in and out of positive territory several times.
European markets edged higher despite mildly disappointing economic data. Markit's composite purchasing managers index, which measures activity in the manufacturing and services sectors, dropped to 53.9 this month from 54.3 in August, indicating a deterioration in the pace of growth.
Read more here. The Stoxx Europe 600 rose 0.09%, Germany's DAX 0.44%, France's CAC 0.1% and Britain's FTSE 1.62%.
Copper extended Tuesday's loss, the heaviest in two months, as the Chinese factory report further dampened buyer appetite. London copper shed 0.5% and aluminium 0.8%. Lead improved 0.9%, nickel 0.4%, tin 0.9% and zinc 1.4%. US copper for December delivery was recently down 0.15% at US$2.29 a pound.
Gold's first rise in three sessions failed to put a floor under US precious metals miners. The NYSE Arca Gold Bugs index declined another 1.36% as gold for December delivery settled $6.70 or 0.6% higher at US$1,131.50 an ounce.
Spot iron ore for import to China declined 30 cents yesterday to US$56.80 a dry ton.
The dollar was this morning buying 70.11 US cents.
TRADING THEMES TODAY
MAPLESS AT THE LOWS: Not the sort of clear overnight lead you want when the index is sitting at a two-year low. Last night's Wall Street action did little to clarify where world markets go from here. US and Europeans markets took yesterday's dire Chinese factory report pretty well, but did not give the sort of unequivocal bounce that the XJO needed to kick clear of 5000 this morning. Trading volumes in the US were low due to the religious holiday and may not have much weight. Resource stocks came under predictable pressure. BHP and Rio are back where bargain hunters must be tempted, but is today the day for heroics? Time will tell. I won't be in a rush to touch anything at the bigger end of the market until it's clearer what the mood for the day will be.
ECONOMIC NEWS: No significant domestic news scheduled today. A big night ahead in the US includes a speech by Fed Chair Janet Yellen, August durable goods/core durable goods, weekly unemployment claims and new home sales.
Good luck to all.
