The Australian market will be looking for a small gain when trading resumes this morning after Wall Street faltered its way to a new high for the S&P 500.
It was a less than convincing night for Wall Street and European markets as investors eyed a speech tonight from Fed chair Janet Yellen.
With a June rate rise clearly off the agenda and economic activity muted since the last Fed meeting, markets want Ms Yellen to provide more guidance (the poor dears). She is unlikely to give it.
The local market should start higher after a small gain on the overnight futures market, but another fall in iron ore prices (‘only’ 0.3%) to a new three-week low of $US57.60 a tonne, will make investors cautious about iron ore miners.
But a plus is the abandonment of an inquiry by the Federal Government last night – a big loss for Fortescue chair, Andrew Forrest who has campaigned strongly for such a probe, even as his company revealed plans to add more capacity to its WA iron ore business.
On Wall Street, the S&P 500 closed at a record high overnight despite more disappointing economic data.
A survey of US manufacturing showed slowing growth, but still growth unlike China where growth continues to fade, while sales of existing homes fell in April in something of a surprise after the big rise in housing starts reported earlier this week.
US traders noted that trading overnight was again below average, leading them to wonder if the market’s recent highs (for the S&P 500 mainly) is now based on a precarious footing.
Traders warned that below-average volume in recent sessions suggests that not all of Wall Street may be confident in the market’s gains.
In fact Reuters noted that “as the quarterly earnings reporting season draws to a close, volume on U.S. stock markets has been below the month-to-date average for several sessions. On Thursday, about 5.6 billion shares changed hands on U.S. exchanges, below the 6.3 billion average this month, according to BATS Global Markets.”
The S&P 500 added 4.97 points, or 0.2%, to end at 2,130.82 points, barely beating its previous record close of 2,129.2 on Monday and attempts on Tuesday and Wednesday to top that level.
The Dow ended virtually flat at 18,285.74, while Nasdaq rose 19.05 points, or 0.4%, to 5,090.79. Gold dipped around $US3 an ounce and oil jumped back over $US60 a barrel in New York. And the Australian dollar was trading just under 79 US cents in early Asian trading this morning.
