Futures traders sent the SPI 200index futures contract down 30 points or 0.4 per cent to 6604, ahead of the unofficial start of a new US quarterly earnings season tonight.
US stocksended last week at fresh all-time highs, thanks to signs the Federal Reserve stands ready to cut rates to support a faltering economy. The S&P 500 rose 14 points or 0.46 per cent on Friday to close above 3,000 for the first time, sealing a gain of 1 per cent for the week. The Dow’s Friday gain was 244 points or 0.9 per cent. The Nasdaq added 48 points or 0.59 per cent.
This week may bring headwinds as companies start to report earnings for the June quarter. Expectations are low. The market consensus is that earnings among S&P 500 companies will on average be 3 per cent weaker than this time last year, according to FactSet. That sets up the market for a so-called “earnings recession”, defined as back-to-back quarterly declines. Earnings among index-listed firms declined 0.3 per cent over the first three months of the year.
Other headwinds for the local market this morning are a resurgent dollar and a wobble in iron ore. The dollar pushed back above 70 US cents on Friday night as the greenback was pressured by rate-cut expectations. The Aussie was this morning buying 70.15 US cents.
Iron orehit a five-year peak earlier this month, before easing as Chinese steelmakers agitated for government intervention. On Friday the spot ore price at Tianjin dropped 70 US cents or 0.6 per cent to $US118.55 a dry tonne. BHP‘s US-listed stock edged up 0.05 per cent and its UK stock gained 0.42 per cent. Rio Tintoshed 0.23 per cent in the US and 0.32 per cent in the UK.
Nickel hit a four-month high following reports that commodity powerhouse Indonesia will reimpose an export ban in 2022. Nickel rose 2.6 per cent on the London Metal Exchange to $US13,470 a tonne, the highest since early March. London copper and aluminium both dropped 0.3 per cent and tin 0.8 per cent. Zinc gained 0.5 per cent and lead 0.2 per cent.
Gold was boosted by the declining greenback. Gold for August delivery advanced $5.50 or 0.4 per cent to settle at $US1,412.20 an ounce, securing a weekly tally of 0.9 per cent.
A tropical storm in the Gulf of Mexico and tensions in the Middle East helped oil edge higher at the end of a strong week. Brent crude rose 20 cents or 0.3 per cent to $US66.72 a barrel as Iranian vessels menaced a British oil tanker in the Persian Gulf. Texas crude settled a cent higher at $US60.21 a barrel as Tropical Storm Barry neared refineries in Louisiana.
The ASX lost ground last week as bond proxies and exporters weakened. The ASX 200retreated 55 points or 0.8 per cent from the previous week’s eleven-and-a-half-year high.
The domestic economic calendarthis week brings the minutes from the latest Reserve Bank policy meeting, due tomorrow, and the monthly employment report on Thursday. Quarterly Chinese GDP figures are due today, as well as monthly factory and retail data. On Wall Street, the spotlight is likely to swing this week away from economic data onto company earnings as a new quarterly season gets underway.