The ASX Today

The ASX is indicating it will open lower as it waits for important data drops, despite moves to the upside almost everywhere else overnight.

In the US, the rotation out of tech and into more traditional companies has seen the Nasdaq slide and the Dow and S&P 500 gain. European equities made up for lacklustre Friday performances during Monday trade as well.

But locally, and following an underwhelming performance yesterday, ASX SPI 200 Futures are down 22 points this morning.

Miners are likely to form the bedrock of any gains for the session, based on industrials and materials performing well overseas, and the local index is also likely to take direction from the retail sales data drop later today. Investors are hoping for a surprise to the upside. 

The RBA's monthly meeting is likely to rate of less importantance to investors who are confident the central bank will keep the cash rate on hold, essentially continuing business as usual.

KEY POINTS

• ASX hinting at a weaker start
• October retail sales data, dropping at 11.30am AEDT, likely to rate among investors today and provide guidance for the index
• Weekly consumer confidence data drop
• Q3 current account balance and net exports data published at 11.30am AEDT ahead of full Q3 GDP tomorrow
• Final RBA meeting for 2017 this afternoon, rates widely tipped to stay on hold

The materials space could grab hold of leads from its overseas peers, but moves would have to be significant to offset weakness in other sectors of the index. Banks proved a heavyweight drag on the index yesterday.

Iron ore has surged back into a bull market, topping $US72 a tonne overnight, but analysts suspect this is on the back of suddenly higher steel prices rather than fundamentals. 

Despite commodity-centric sectors outperforming others overnight, base metal prices aren't in fact any firmer. Base metals fell by up to 2.4 per cent on the London Metals Exchange with zinc and lead falling the most. Nickel rose by 0.8 per cent on Chinese steel demand. BHP was lower in overseas trade. 

The ASX is simply lacking the catalysts that are driving overseas indices — namely, tax cuts in the US, and a better outlook economically for the eurozone based on strong recent data.

We shouldn't expect any significant progress from local energy names today. After rallying hard in recent times, oil has started to slip back. 

Overnight, WTI lost more than1.5 per cent to $US57.45 a barrel and Brent crude lost about 2 per cent to $US62.45 a barrel. This is a shale oil story, with investors seemingly giving weight to plans in the US to increase drilling rigs against OPEC's promise to extend production cuts through the end of next year. 

A product of region weakness and a stronger US dollar, the Australian dollar is down another notch, losing 0.2 per cent to US75.95c.

With the banking sector performing in a mixed manner since the Royal Commission was announced towards the end of last week, and the big banks being the major drag on the index yesterday, below is some commentary from Citi on how the Royal Commission could really impact the sector.  

The scope of the Commission is very broad, analysts have noted, and it will likely be “backward looking and focused on issues that occurred some years earlier” in the words of Citi strategists. The Commission is likely to distract leaders at the Big Four and smaller banks for the better part of two years.

It's actually an investigation of the entire financial services industry — looking into any ADI licensed by APRA, any licensed insurance entity, any financial services license holder, and any registrable superannuation entity. 

Citi predicts a potentially minor impact on near-term earnings, but as said above, the largest impact will be the distraction of senior management. Note that ANZ and NAB in particular are in the midst of large organisational restructures, while CBA is currently searching for a new CEO.