The ASX Today

The ASX is hinting at a higher open after seeing US equities hit record highs on Friday and Chinese equities find a bid again.

The S&P 500 finished 0.2 per cent higher to a new level of 2602 points, the Dow went up 0.14 per cent to 23,557 points, and the Nasdaq rose 0.36 per cent to 6409 points.

However, this was from a short session and light trading volumes following the Thanksgiving holiday. Analysts have pinpointed the S&P 500 as reaching its new high from volumes that were 64 per cent below its 30-day average. 

In light of the above, the ASX SPI 200 Futures index put on just one point on Saturday morning. OPEC anticipation is likely to provide more momentum for energy stocks in the first half of this week, and the material sector also has a positive lead considering spot prices mostly rose on Friday. 

KEY POINTS

• Light economic data week ahead on the local front
• Metals and iron ore look to move higher, defying China dip 
• Energy sector supported by more strength in oil prices
• ASX likely to hang on global markets until local CAPEX drop on Thursday 

Metals and iron ore have rallied even after a significant dip in Chinese equities on Thursday. Base metals rose by up to 1.1 per cent on Friday on the London Metals Exchange, with lead and alumni leading the way. Iron ore rose by $US1.30 on Friday to $US67.80 a tonne to make headway of 9.4 per cent over the week. 

Considering there's no major economic data slated for release until this Thursday though, when Australian CAPEX is published to market, the ASX seems likely to assume natural behaviour and take cues from offshore moves. As in, it's likely to be more sensitive to the many meetings and talks talking place around the US Federal Reserve, and a string of US economic data, over the next few days. 

Global oil prices remain at two-year highs. WTI and Brent crude closed the week at $US58.95 and $US63.86 respectively. There were reports during Friday's session that Saudi Arabia and Russia had agreed to extend the oil production agreement. It's widely expected this will be formally announced on Thursday at the OPEC meeting, with the market already baking in a nine-month extension of the production cut. 

And on that note, the ASX energy sector was the local market's star performer last week, gaining 2.3 per cent. However, a word of caution from IG's Chris Weston as we enter into this OPEC-dominated week:

“It would not surprise to see crude undergoing a classic ‘buy the rumour, sell the fact' scenario through Thursday and Friday. Let's see how things shape up, but energy and materials are performing well and this space still feels like it is the place to be given the global macro backdrop, but there are risks this week and that needs to be managed.”

The euro was the star currency at the end of the week, surging against the US dollar on stronger eurozone data (particularly from Germany). The Australian dollar is at US76.19, lagging alongside other commodity bloc currencies. 

Lastly, leaving you with this tweet from head of research at Topdown Charts, Callum Thomas, which might be telling of why global equities seem to lack narrative and a clear direction forward. Admittedly, the survey is a straw poll of 392 respondents, but it does a good job at highlighting the divide in sentiment we're seeing right now [click the date to follow through]:

Your equities view/positioning is (primary reason in brackets):

— Callum Thomas (@Callum_Thomas) November 25, 2017