Morning traders. Thanks Trees and after-market regulars.
Market wrap:
Australian shares look set to extend yesterday's rebound after US stocks regained most of Tuesday's heavy losses as a two-day Chinese public holiday promised respite from bad news from the world's second-largest economy.
The September SPI200 futures contract rallied 30 points or 0.6% to 5081 as the mood improved on global markets last night.
The S&P 500 rose 35 points or 1.83%, closing at its session high after the Federal Reserve's 'Beige Book' said economic growth across the US continued to expand last month. The Dow bounced 293 points or 1.82% and the Nasdaq 114 points or 2.46%.
“China’s going to be closed the next few days and that means there won’t be this negative lead-in to markets in the morning so that will be a nice reprieve,” Stephen Carl, principal and head equity trader at Williams Capital Group in the US, told Bloomberg. “The date for a potential rate raise is certainly going back and forth and with the recent volatility in the market and situation overseas, people don’t have much conviction on when it will be.”
The Shanghai Composite closed 0.2% lower yesterday but well off its lows amid reports of government intervention after the index fell as much as 4.7% in early trade on the last trading session before a two-day holiday to mark the 70th anniversary of the end of World War II. The index lost 2.2% this week despite government attempts to boost sentiment. Read more here.
The night's US economic data continued this year's theme of mildly disappointing growth, reigniting the debate about whether the Federal Reserve will raise its key rate this month. Private employers added 190,000 new hires last month, up from a downwardly revised 177,000 in July but below the 200,000 expected by economists.
“Investors are interpreting the ADP data, showing 190,000 jobs as not big enough for the Fed to go ahead with the September rate hike, but solid enough to indicate there is no spillover from China’s weakness into our economy,” John Canally, investment strategist and economist at LPL Financial in the US, told MarketWatch.
Factory orders increased 0.4%, less than half the 0.9% rise anticipated by analysts. Productivity jumped 3.3% last quarter, but enthusiasm was tempered by the weakness of the long-term trend - 0.7% growth in 12 months
The Fed's 'Beige Book' portrayed an economy with pockets of weakness and strength. While several districts reported increasing wage pressures from tightening job markets, others said a strengthening dollar and weak oil prices were depressing activity. Read more here and here.
BHP gained 2.46% and Rio Tinto 2.56% in US trade. Spot iron ore for import to China yesterday edged up 10 cents to US$55.80 a dry ton.
The US energy ETF rose 0.92% after crude reversed early losses amid speculation that last night's economic data will delay a rate rise. West Texas Intermediate crude oil for October delivery settled 84 cents or 1.9% ahead at US$46.25 a barrel.
Gold stocks remained under pressure, with the NYSE Arca Gold Bugs index falling 1.3% after gold logged its sixth loss in eight sessions. Gold for December delivery settled $6.20 or 0.5% lower at US$1,133.60 an ounce as traders favoured riskier assets.
Copper recouped most of Tuesday's 1.3% fall on the London Metal Exchange, bouncing 1.1%. Also in London, nickel advanced 0.5%, tin 3.8% and zinc 0.4%. Aluminium shed 0.2% and lead 0.8%. US copper for September delivery was recently up 1.2% at US$2.33 a pound.
European markets ended a choppy session with modest gains ahead of tonight's European Central Bank rate decision and press conference. The Stoxx Europe 600 edged up 0.27%, Germany's DAX 0.32%, France's CAC 0.3% and Britain's FTSE 0.41%.
The dollar was this morning buying 70.43 US cents after dipping briefly below 70 US cents yesterday for the first time in six years.
TRADING THEMES TODAY
SHORT-TERM BOTTOM IN?: Yesterday's ASX reversal session looked a lot like a successful re-test of last week's two-year low. If that is the case and the XJO has indeed put in a 'higher low', the path is clearing for a push to a 'higher high' in the days ahead. The temporary absence of any Chinese distractions should help with that. Wall Street remains volatile and very hard to read, with economic data offering no easy answer to the rate debate. The VIX came off a bit last night but remains at elevated levels, indicating a lack of conviction that this turbulent episode is over yet. We likely need to get through the Fed meeting in the middle of the month before there is any chance of a return to 'more normal' times. The spec end of the market has been livelier this week.
ECONOMIC NEWS: The AIG Services Index is scheduled for 9.30am EST. Of greater interest are July trade and retail data at 11.30am. Trade figures are also on tap tonight in the US, along with weekly benefit claims and twin services PMIs.
