In overnight action, all three of the major US indices finished in the red as concerns over Europe continued to linger, with pressure now on Spain to ask for a bailout. After opening the session lower the benchmark indices rallied for the bulk of the session, with the NASDAQ eventually closing the weakest – down 0.6 per cent – thanks to selling pressure on Facebook and Apple.
Elsewhere, the broad-based S&P 500 lost 0.22 per cent while the Dow Jones Industrial Average slid 0.15 per cent.
So locally, it looks like another flat to slightly weaker start as materials names continue to suffer profit taking following a strong push higher in the last ten days. Based on S&P/ASX 200 SPI futures it looks like the market will open around the 4382 level, basically in line with where it closed yesterday.
As mentioned above, most of the weakness is going to be seen across the materials sector following a weak set of leads from offshore markets. The basic materials sector was the softest performer among US sectors, sliding 0.8 per cent, while in London, Rio Tinto and BHP Billiton fell 2 per cent and 0.4 per cent respectively. BHP’s ADR is pointing towards a fall of about 0.8 per cent on the open.
If that wasn’t enough, base metals on the London Metals Exchange retreated between 2.4 per cent and 0.4 per cent, with aluminium sold down the most. Iron ore prices followed suit, drifting another 2.6 per cent to $US103.7/t. Expect some weakness too among gold names after the precious metal gave up 0.8 per cent to be trading around the $US1764.60/oz level.
After bouncing slightly following last week’s rout, crude oil retreated 1 per cent to $US91.93/bbl and will likely weigh on Australian oilers.