The ASX looks set to open little changed after mixed signals on US-China trade talks weighed on Wall Street.
Australian index futures dipped one point or less than 0.1 per cent to 6716 as the wait-and-see continued on a looming deadline for increased US trade tariffs.
US stocks marked time, with investors reluctant to add to positions ahead of tonight’s Federal Reserve policy statement and Sunday’s deadline for trade negotiations. The S&P 500 traded near break-even for much of the session before fading to a loss of three points or 0.11 per cent. The Dow shed 28 points or 0.1 per cent and the Nasdaq six points or 0.07 per cent.
Investors sat on their hands as they awaited clarity on trade talks. A night of conflicting reports included claims from two separate White House officials that a round of US tariffs due to kick on Chinese imports on December 15 were “still on the table”, while the Wall Street Journal reported that negotiators were “laying the groundwork for a delay”. A Chinese newspaper report claimed it was “increasingly unlikely” a deal will be completed this week, but sources close to the talks expected the December 15 tariffs to be delayed to allow more time to finalise a deal. Meanwhile, Congress was reported to be planning to ban the use of federal funds to buy Chinese-made buses and rail carriages, a move likely to complicate negotiations.
The night brought one breakthrough on trade, with the White House and House Democrats reaching a deal to revise the NAFTA trade agreement with Canada and Mexico.
The Federal Reserve commenced its final two-day policy meeting of the year. While the US central bank is widely expected to leave its benchmark rate on hold, tonight’s policy statement will be closely examined for clues to the future direction of rates. The S&P 500 has risen 25 per cent this year as the Fed cut rates.
Australian shares broke a three-session winning run yesterday. The ASX 200 eased 23 points or 0.3 per cent on the lowest volume in more than three weeks as investors took to the sidelines.
BHP and Rio Tinto cushioned the local market from deeper losses yesterday, but the outlook for today is less certain following a mixed performance on overseas markets. BHP’s US-listed stock gained 0.65 per cent, but its UK-listed stock shed 0.27 per cent. Rio Tinto edged up 0.29 per cent in the US and closed dead flat in the UK. The rally in iron ore stuttered yesterday, the spot price at Tianjin slipping $1.20 or 1.3 per cent from a four-month high to $US93.15 a dry ton.
A string of multi-month highs on the London Metal Exchange included a near-five-month peak in copper, a three-month high in tin and a two-month best in aluminium. Benchmark copper rose 0.4 per cent to $US6,100 a tonne, the highest price since mid July. Tin gained 1.6 per cent, nickel 0.5 per cent and lead 0.7 per cent. Aluminium faded to a loss of 0.1 per cent. Zinc gave up 0.5 per cent.
Oil crept higher in jittery trade. Brent crude rose nine cents or 0.1 per cent to $64.34 a barrel. The US benchmark, West Texas Intermediate, put on a more convincing 22 cents or 0.4 per cent to $US59.24 a barrel.
Gold found support as buyers hedged against the possibility a delayed trade deal. February gold settled $3.20 or 0.2 per cent ahead at $US1,468.10 an ounce.
The dollar retreated more than a tenth of a cent to 68.13 US cents.
The session ahead brings domestic consumer sentiment data at 10.30 am EST. Wall Street has inflation figures and weekly crude oil inventories on tap tonight, plus the policy outcomes from this week’s Fed meeting.