A muted start to the Australian trading week after corporate scandals and mixed Chinese economic data dragged US stocks lower.
The ASX 200 looks likely to open lower for a third day after index futures declined 14 points or 0.2 per cent to 6602. The benchmark Australian index fell 87 points over the final two sessions of last week after upbeat jobs data undermined the outlook for near-term rate cuts.
Wall Street ended a positive week of quarterly earnings on a low note on Friday. The Dow slumped 256 points or 0.95 per cent as Boeing and Johnson & Johnson ran into regulatory trouble. The broader S&P 500 shed 12 points or 0.39 per cent and the Nasdaq 67 points or 0.83 per cent.
Boeing shares dived 6.8 per cent – the aircraft manufacturer’s largest fall in more than three years – after the airline manufacturer was accused of withholding internal communications that showed the company was aware of problems with an anti-stall system on its troubled 737 MAX model years before crashes in Indonesia and Ethiopia. The Chair of the US House of Representatives transportation committee said the revelations indicated the company had withheld information from the Federal Aviation Administration.
Fellow Dow component Johnson & Johnson tumbled 6.2 per cent after US regulators found trace amounts of asbestos in a single bottle of baby powder. The company has previously been the subject of a wave of lawsuits alleging its talc products cause cancers.
While those two companies accounted for much of Friday’s weakness, confirmation of a slowdown in Chinese growth also contributed. Data released on Friday showed the pace of growth eased from 6.2 per cent to 6 per cent last quarter, the weakest reading since the early 1990s. The GDP disappointment was partly offset by an unexpected improvement in September industrial production figures and by steady retail sales.
Rio Tinto continued to outperform BHP in overseas action following last week’s quarterly updates. Rio’s US-listed stock put on 0.35 per cent, while its UK-listed stock held steady. BHP lost 0.29 per cent in the US and 0.37 per cent in the UK.
Oil declined after the Chinese GDP report underlined weakness in the global economy. Brent crude settled 49 cents or 0.8 per cent lower at $US59.42 a barrel for a weekly loss of 1.8 per cent.
Copper took its cue from the uptick in Chinese industrial production, rising 1.2 per cent on the London Metal Exchange. Aluminium gained 0.6 per cent and zinc 0.7 per cent. Lead dipped 0.4 per cent, nickel 0.3 percent and tin 1.2 per cent.
Gold trimmed its gain for the week to 0.4 per cent as traders awaited fresh catalysts. Gold for December delivery settled $4.20 or 0.3 per cent weaker at $US1,494.10 an ounce. Demand for the precious metal has been dulled by signs of progress on Brexit and the US-China trade war.
The dollar opened more than a tenth of a cent lower this morning at 68.44 US cents.
Looking ahead, a slow start to the week appears likely before the pace picks up with a heavy week of US corporate earnings. The domestic economic calendar is exceptionally light this week. There is more going on overseas, with Wall Street awaiting updates on home sales, durable goods orders, manufacturing and consumer confidence.