Trading will start cautiously today, but keep an eye on China where, despite the signs of government support, the market sold off yesterday.
Wall Street was mixed, rising early, then fading, but European shares were mostly solid, along with most of Asia, except for China and Hong Kong.
The US dollar rose after a solid first estimate for June quarter economic growth, and oil and gold ended the day on an uncertain footing.
The Aussie dollar slipped back under 73 US cents as a result of the greenback’s rise and the local share futures contract has the ASX 200 up 10 points at the start – a not very convincing gain. Iron ore prices eased 0.4% overnight, but remain above $US55 a tonne.
But it will pay to keep a close eye on China because, given the volatile trading yesterday, a big slide today would not be a surprise.
Chinese shares swung wildly in the last hour of trading on Thursday, and extending that pattern of intraday volatility that started with mid-June’s big selloff.
The Shanghai Composite ended down 2.2% at 3705.77, after breaking a three-day losing streak on Wednesday thanks to late buying by government entities.
On Monday the Shanghai index suffered its worst daily percentage decline in more than eight years, and another big slide is not out of the question given the way traders ignored the state support yesterday.
The smaller Shenzhen Composite lost 3.2% at 2128.16, while Hong Kong’s Hang Seng Index fell 0.5%, and an index of Chinese companies listed in Hong Kong dropped 2.7%, mirroring the Shanghai slide.
The weakness in China was mostly forgotten overnight as markets focused on firstly good GDP figures from Spain, Ireland and Sweden, and then a moderate set of numbers from the US, plus solid weekly jobless data.
The GDP figures showed a first estimate for the June quarter of 2.3% growth (annualised), while a restatement of the March quarter figures showed growth of 0.6% (annual), instead of the fall of 0.2%.
To traders that says rate rise still looms in September.
US GDP grows 2.3% in second quarter
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The Dow ended 0.03% weaker at 17,745.98 (after rising more than 100 points in early trading); the S&P 500 was unchanged at 2,108.63. and the Nasdaq Composite added 0.33% to end on 5,128.79.
The GDP report helped the US dollar to a four-month high as the greenback rose against all of its 16 major currency partners.
That was after the Fed turned more bullish on US employment compared with their meeting in June ahead of deciding when to raise interest rates for the first time since 2006.
