MARKETS SPECTATOR: China watch

After opening Friday's session sharply lower following a disappointing read on the Institute for Supply Managements Mid-West Business activity survey, markets only finished the session modestly weaker to close out what's been a strong Q3. For the session the NASDAQ was the weakest performer, slipping 0.66 per cent while the S&P 500 and Dow Jones Industrial Average both fell 0.40 per cent.

For the quarter, The NASDAQ was the strongest rallying 6.17 per cent while the S&P 500 added 5.76 per cent and the Dow 4.32 per cent. It was the strongest Q3 performance since 2010.

Locally, it looks like the domestic benchmark is set for a slightly weaker open with SPI futures pointing towards a start around the 4362 level in what will be a quiet day's trade given the public holiday in NSW.

The materials index will probably be even to slightly lower after the likes of Rio Tinto and BHP were flat and 0.4 per cent softer in London trade. BHP's ADR lost 0.4 per cent in US trade too. However, modest gains across the London Metals Exchange complex should keep the declines light. Gold names may see some selling as the precious metal futures lost 0.4 per cent to $US1773.90/oz.

Following last week's relatively light data load, things look set to get a bit busier. First up today we have the release of the AIG Manufacturing Index at 9.30am followed by the MI Inflation Gauge at 10.30am; these are both fairly low level indicators so shouldn't have too much affect on the Australian dollar or the stock market.

Despite it being the Golden Week holiday in China, there is still a major economic release due. The official read into Chinese Manufacturing PMI is due at 11 and will garner a lot of interest. Expectations are for a reading of 49.9 which is a 0.7 increase from the previous months reading. Traders will be watching this closely as any big deviation from expectations could see both the currency and stock market affected.