MARKETS SPECTATOR: Iron clad

Local investor willingness to leave positions open over the weekend speaks volumes for the market's underlying strength.

It looks like we’re set for a rather lacklustre start to what’s going to be a very quiet week in terms of economic data flow domestically. In fact, I don’t remember too many weeks when I’ve seen fewer economic reports due.

Friday’s session in the US was largely unchanged as the major indices straddled the flat line amid a complete lack of market-moving corporate or economic information. The major indices were in positive territory for much of the session before late day profit taking crept in, which was probably related to the options expiry.

The NASDAQ was the only index to finish in the black, adding 0.1 per cent as Apple shares nudged new highs of $US705.07 following all the publicity surrounding the highly successful launch of the iPhone 5. Elsewhere, the Dow Jones Industrial Average and S&P 500 both finished weaker by 0.1 per cent.

Locally, it looks like the S&P/ASX 200 benchmark is going to open around the 4410 mark, which will be flat on the session. The fact the broader market, but most particularly the more cyclical materials sector was able to rally during Friday’s session – and importantly, maintain most of its gains – tells us a lot about the state of market participants. Only a few weeks or months ago the market would have succumbed to the classic Friday pattern of profit taking, with traders and investors too worried about the weekend event risk to hold positions, let alone initiate any on a Friday afternoon. However, now it seems concerns over weekend event risk have declined dramatically and participants are actually willing to leave positions open, which speaks volumes for the underlying strength of the market.

Today, with leads so flat from overseas its difficult to see which way the individual sectors will move, if at all. Leads for the heavily weighted materials space are mixed at best, with Rio Tinto down 1.2 per cent in London. BHP Billiton lost a modest 0.1 per cent with its ADR in the US pointing towards a slightly lower Australian open. Iron ore prices drifted slightly, falling 2.5 per cent to $US106.40/t while base metals on the London Metals Exchange all finished higher between 0.1 per cent and 1.6 per cent firmer, with nickel the best.

Gold continued to be well supported, trading around the $US1772.40/oz level. Gold stocks should remain well bid although it’s worth noting that Australia's biggest gold play, Newcrest Mining, will trade without its dividend this morning.

Other stocks to trade ex dividend this morning include Cabcharge Australia, Crown, Fletcher Building Australia, Myer Holdings, PanAust, Seven Group Holdings and The Reject Shop.

So, with leads pointing towards the flat line, participants will be keeping their eye on trade is Asia for further signs of where markets may be heading next. Following last week's stimulus announcement from the Bank of Japan, this morning’s monetary policy meeting minutes release from the Reserve Bank will be in focus as the market looks for further clues as to the bank's outlook.