Stocks look set to recoup the bulk of yesterday’s losses at the open following a sideways session on Wall Street.
ASX SPI200 index futures rebounded 28 points or 0.4 per cent to 6658 this morning. The benchmark local index, the ASX 200, yesterday faded to a loss of 37 points or 0.6 per cent as China signalled a harder line in trade negotiations with the US.
US stocks finished mixed and little changed for a second night on news of a possible delay in signing a deal. An unnamed White House official told reporters a meeting between President Donald Trump and Chinese President Xi Jinping might have to be pushed back to December as the two sides work on a final draft and a venue acceptable to both.
A market light on catalysts dipped, then largely recovered, when reports of a possible delay first surfaced. The S&P 500 closed at its session high, two points or 0.07 per cent ahead. The Nasdaq was held back by declines in Facebook and Microsoft, falling 24 points or 0.29 per cent. The Dow finished dead flat.
While a “phase one” trade deal is expected to be concluded, analysts fretted overnight about the risk of talks collapsing once more. “The longer it stretches out, the greater risk it blows up,” Art Cashin, director of floor operations at UBS, told CNBC.
Chinese demands for tariff relief were not expected to derail negotiations, according to a Reuters report. The ‘phase one’ deal is expected to include a US commitment to abandon plans to introduce fresh tariffs on December 15. China also wants the US to scrap tariffs that came into force on September 1.
The search for a mutually acceptable venue to sign a deal has proven contentious since the APEC summit in Chile was cancelled. Trump wants to sign in the US; image-conscious China wanted an Asian venue. Switzerland has been proposed as a neutral location.
A generally downbeat night on commodity markets saw crude, copper and most industrial metals retreat, while gold and iron ore rebounded. BHP’s US-listed stock declined 0.87 per cent and its UK-listed stock lost 0.09 per cent. Rio Tinto shed 0.29 per cent in the US after rising 0.12 per cent in the UK. The spot price for iron ore landed in China edged up 70 cents or 0.8 per cent to $US83.40 a dry tone.
Oil fell back from six-week highs after US crude supplies increased for a second week. Brent crude settled $1.22 or 1.9 per cent lower at $US61.74 a barrel. The US Energy Information Administration reported US crude supplies rose by 7.9 million barrels last week, almost three times as much as analysts expected.
Copper fell back from a seven-week peak during a generally negative session on the London Metal Exchange. Benchmark copper lost 0.6 per cent, lead 1.8 per cent, nickel 0.2 per cent and zinc 0.9 per cent. Aluminium finished flat. Tin improved 0.7 per cent.
Gold rebounded as the greenback softened and traders bought yesterday’s dip to the lower edge of the metal’s recent trading range. December gold settled $9.40 or 0.6 per cent higher at $US1,493.10 an ounce.
The dollar responded to the possible trade delay by declining a fifth of a cent to 68.83 US cents.
The banks will be back in the spotlight today as NAB delivers full-year earnings. Disappointing updates from ANZ and Westpac sent tremors through the sector over the last week. Domestic trade and construction figures are also due this morning. A light night ahead for US economic data, with consumer credit the only item likely to have much impact.