Morning traders. Thanks Trees and after-market regulars.
Market wrap:
Shares look set to build on yesterday's slender gains after a record close on Wall Street as China slashed borrowing costs to boost its economy.
The December SPI 200 futures contract, now the most active, rallied 27 points or 0.5% to 5430 as BHP and Rio Tinto shrugged off another weak session for commodities.
US stocks advanced for a third straight night, pushing the S&P 500 up nine points or 0.47% to an all-time closing high of 2,011.39. The Dow gained 109 points or 0.64% for its own record and the Nasdaq 31 points or 0.68%. The gains came a day after the Federal Reserve retained its commitment to keep its key rate at a record low for a "considerable time" after it ends its stimulus program next month.
“The market’s still in Fed mode,” Joe Bell, senior equity analyst at Schaeffer’s Investment Research in the US, told
Bloomberg. “A majority of people are thinking July 2015 may be the rate increase and the market’s responding positively to the idea that rates aren’t coming any sooner.”
Strong jobless claims and manufacturing reports offset weak housing news. Claims for unemployment benefits plunged 36,000 last week to 280,000, their lowest level in two months, and the less-volatile four-week average of new claims dropped 4,750 to 299,500. A separate report showed more manufacturers in the greater Philadelphia region expect to take on new workers than any time since 1983. New orders and shipments in the region also improved, despite a mild decline in business conditions.
Wobbles in the US housing market continued with news of a sharp deterioration in new construction last month. The annual rate of housing starts dropped by 14.4% from a seven-year high the previous month.
China surprised the market overnight by reducing borrowing costs for banks, its second stimulus move this week following a recent run of worrying signals from the economy. The central bank cut the interest rate on 14-day repurchase agreements by 20 basis points to 3.50%. The move followed an injection of liquidity into the nation's five largest banks earlier in the week and was interpreted as an indication of further stimulus measures ahead.
"This is a significant policy signal. The chances of a benchmark interest rate cut are rising because the central bank is clearly guiding interbank rates lower now," Liu Dongliang, senior analyst with China Merchants Bank, told
MarketWatch.
The Chinese announcement helped resource stocks overcome another weak session for raw materials. BHP advanced 0.38% and Rio Tinto 0.61% in US trade despite news that Spot iron ore for import to China yesterday declined for a third day, falling $1.20 or 1.4% to US$83 a dry tonne.
Gold skidded to an eight-month low following a bearish outlook from Barclays. Gold for December delivery dropped $9 or 0.7% to US$1,226.90 an ounce after Barclays predicted a surging US dollar and rising US interest rates will dampen demand next year. The contract was lately trading at US$1,225.60.
Oil extended its decline following Wednesday night's bearish US inventory report. West Texas Intermediate crude oil for October delivery slumped $1.35 or 1.4% to settle at US$93.07 a barrel and was last at US$92.99.
Base metals declined as traders reacted to news that the prices of new homes in China deteriorated for a fourth straight month in August. In London, copper lost 1.3%, nickel 1%, aluminium 0.9%, lead 1.3%, tin 0.4% and zinc 0.2%. US copper for December delivery was recently down five cents or 1.6% at US$3.09 a pound.
European markets played catch-up following Wednesday's Fed-driven rally in the US and as early polls showed Scotland likely voted to stay within the United Kingdom last night. The Stoxx Europe 600 index rose 0.98% as Germany's DAX added 1.41%, France's CAC 0.46% and Britain's FTSE 0.56%.
The dollar was this morning buying 89.97 US cents.
TRADING THEMES TODAY
RELIEF AT LAST?: The Australian share market has been ignoring positive overnight leads for the last few weeks as international money rotated into assets seen to have brighter outlooks, such as the greenback and US treasuries. However, the ducks finally seem to be lining up, with the Chinese government acting again overnight to stimulate economic activity and Wall Street at record highs. The negatives for the day are weakness in oil, metals and iron ore, but that did not stop BHP and Rio making headway in the US, so here's hoping. Small caps kept pace with the broader market in the US - be nice to see something similar here to boost confidence after a subdued week.
ECONOMIC NEWS: No significant news scheduled here today or in the US tonight.
Good luck to all.