A week of uphill battles for Australian stocks looks set to continue this morning despite broadly positive leads.
The September SPI 200 futures contract retreated nine points or 0.1 per cent to 6594 as the major US stock indices closed mixed. The predicted soft start to local trade follows the pattern this week as investors wait to see whether the US and China can patch up their trade differences at a side-meeting tomorrow at the G-20 summit in Japan.
However, market bulls have cause for optimism: overnight, the S&P 500 broke its four-session losing streak; iron ore hit a record in Chinese trade, boosting BHP and Rio Tinto in overseas action; and oil consolidated Wednesday night’s big surge. The benchmark local index, the S&P 200, yesterday rose 26 points or 0.4 per cent, putting it 16 points ahead for the week despite a string of negative leads each morning from index futures trading.
Overnight, a rally in bank stocks helped the S&P 500 rise 11 points or 0.38 per cent. Market sentiment was boosted by a report in the South China Morning Post claiming US and China have struck a “tentative truce” ahead of tomorrow’s G-20 meeting between US President Donald Trump and Chinese President Xi Jinping. The report said a delay in extending US tariffs was China’s price for meeting with Trump. The other major US stock indices were mixed: the Nasdaq powered 0.73 per cent ahead; the Dow lagged with a loss of ten points or 0.04 per cent.
The big iron ore miners’ overseas listings saw gains in overnight action as the price of iron ore improved. BHP put on 0.59 per cent in the US and 0.17 per cent in the UK. Rio Tinto added 0.41 per cent in the US and 0.01 per cent in the UK.
Iron ore briefly surged 5.4 per cent yesterday to an all-time high of $US121.93 a tonne on the Dalian Commodity Exchange before easing to $US119.45, a gain of 3.3 per cent. The spot price – which has traded much higher than the Dalian benchmark in past decades – edged up 1 per cent to $US114.75.
Oil inched to a new five-week high ahead of next week’s meeting of OPEC, the Organization of the Petroleum Exporting Countries. Texas crude crept up 5 cents or 0.1 per cent to settle at $US59.43 a barrel. Crude jumped 2.7 per cent 24 hours earlier following reports of a big drawdown on US inventories.
Gold continued to ease from Tuesday’s five-year peak. August gold declined for a second night, falling $3.40 or 0.2 per cent to settle at $US1,412 an ounce.
Nickel scored a ten-week high on the London Metal Exchange, but most industrial metals softened. Nickel rose 1.4 per cent to $US12,690 a tonne. Tin was bid 0.2 per cent higher. Copper dipped 0.3 per cent, aluminium 0.9 per cent, lead 0.2 per cent and zinc 1.4 per cent.
The dollar pushed back above 70 US cents for the first time in more than two weeks. The Aussie was lately up a third of a cent at 70.1 US cents.
It has been a dull week on global markets, with investors gun-shy ahead of tomorrow’s meeting of the world’s super-powers in Osaka. Most traders will be relieved to hear tonight’s closing bell. Let’s hope Monday brings fireworks.