Australian shares are set to open slightly higher on Tuesday, as investors look to data both locally and in the US for guidance on whether a Federal Reserve rate hike is imminent.
Here's what you need2know:
SPI futures are mostly flat, edging higher 0.019% to 5336 on Tuesday morning
AUD is at US72.24¢, 78.92 Japanese yen, 64.39 Euro cents and 49.87 British pence
On Wall St, Dow +0.07%, S&P500 -0.1%, Nasdaq +0.07%
In Europe, Stoxx 50 -0.99%, FTSE -0.32%, CAC -0.66%, DAX -0.74%
Spot gold flat at $US1251.04 an ounce
Brent crude -0.1% to $US48.32 a barrel
Iron ore -6.67% to $US51.22 a tonne
What's on today
RBA governpor Glenn Stevens speaks in Sydney, ANZ-Roy Morgan weekly consumer confidence
Currencies
The US dollar tumbled nearly 1 per cent against the yen on Monday on Japanese trade data and Washington's resistance to currency intervention by Tokyo, but was little changed against the euro as investors awaited fresh US economic data.
The dollar was last down 0.86 per cent at 109.19 yen, near a session low, after data showing Japan logged a trade surplus for the third consecutive month. The dollar was set for its biggest daily per centage decline against the yen in more than three weeks.
Besides the trade data, a Group of Seven finance ministers' meeting concluded on Saturday with the United States warning Japan against intervening to weaken the yen, a rift that is perceived as preventing Tokyo from acting.
"You had no firm resolution coming from G7 with respect to the potential for intervention from the Bank of Japan, which makes people a little bit more comfortable in being long yen, and you had a marketplace that was frankly over-short yen," said Richard Scalone, co-head of foreign exchange at TJM Brokerage in Chicago.
Commodities
Iron ore prices that soared amid China's speculative frenzy last month just took another leg down, plummeting as rising port inventories in the top user spurred concern global supplies are once again topping demand.
Ore with 62 per cent content sank 6.7 per cent to $51.22 a dry metric ton on Monday, taking losses from the peak of more than $70 in April to 27 per cent, according to Metal Bulletin Ltd. The drop, the most since March 9, was preceded by a slump in futures in Asia, with the SGX AsiaClear contract falling as much as 6.3 per cent to $45.72 as futures in Dalian closed at the lowest since February.
Iron ore has been on a tumultuous ride this year as investors sought to gauge conflicting economic signals from Asia's biggest economy against still-elevated port stockpiles. In China, traders piled into raw-material futures including iron ore in March and April, helping to boost prices, only to switch track when regulators clamped down. Inventories at ports have climbed above 100 million tons, offering fresh evidence of increased supplies from Australia and Brazil, and BHP forecast last week that there may be further increases.
"Stockpiles have once again broken the 100 million ton-level, indicating that supply pressure has increased significantly," Fan Lu, an analyst at Sinosteel Futures Co., said in a note on Monday. "Mills' margins have narrowed as steel output recovered," suppressing demand for iron ore, she said.
The port inventories swelled 1.6 per cent to 100.45 million tons last week, the highest level since March 2015, according to data from Shanghai Steelhome Information Technology Co. They're up 7.9 per cent this year. Miners' shares retreated in Sydney, with BHP Billiton Ltd., Rio Tinto Group and Fortescue Metals Group Ltd. all lower on Monday.
United States
Wall Street edged higher on Monday as a bounce in Apple helped offset growing concerns that the US Federal Reserve could raise interest rates sooner than later.
The timing of future Fed rate hikes in the face of a sluggish economy is a major focus among stock investors who have benefited from historically low borrowing costs since the 2008 financial crisis.
San Francisco Fed President John Williams and his St. Louis counterpart, James Bullard, both struck hawkish tones in separate appearances on Monday.
Last week, investors were surprised at central bank minutes that opened the door to a rate hike as soon as June. Investors will listen for fresh clues to the Fed's intentions when Chair Janet Yellen speaks on Friday.
"The market needs to be coddled and gently eased into a slightly higher interest-rate environment, and that appears to be what the Fed is doing," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
Apple rose 1.60 per cent and the Philadelphia SE Semiconductors Index added 1 per cent after Taiwan's Economic Daily News reported that Apple asked suppliers to build more of its next-generation iPhones than previously expected.
At 2:42 pm, the Dow Jones industrial average was up 0.27 per cent to 17,547.78 points and the S&P 500 had edged up 0.09 per cent to 2,054.25.
The Nasdaq Composite added 0.29 per cent to 4,783.35.
Europe
European shares retreated as automakers and oil producers tumbled, while investors speculated on the potential timing of a Federal Reserve interest rate increase.
Fiat Chrysler Automobiles NV dragged a gauge of carmakers to one of the biggest losses on the Stoxx Europe 600 Index after a report that the German transport authority accused it of manipulating pollution emissions, which it denies. Bayer AG led chemical stocks lower, sliding 3.9 per cent after disclosing financial terms of its offer to acquire Monsanto Co. amid concern that it might overpay. Oil shares lost as crude retreated for a fourth day.
The Stoxx 600 dropped 0.4 per cent to 336.57 at 2:08 p.m. in London, after earlier gaining as much as 0.4 per cent and falling 0.8 per cent. Shares climbed the most in a month on Friday as investors shrugged off concerns that a Fed interest rate increase as early as June will derail the US economic recovery. Still, the rate outlook remains in focus and investors will look to data this week and comments today from regional Fed chiefs for St. Louis, San Francisco and Philadelphia for indications on the trajectory of borrowing costs.
"The whole market is in a classic sideways path, trading in a very narrow range," said Herbert Perus, head of equities at Raiffeisen Capital Management in Vienna. "There is a lot of discussion about interest rates in the US and the data we will see this week is important -- maybe then we'll have a better idea of what's going on in June, July, or September."
Asia
Asia's benchmark stock index rebounded from four weeks of losses as Chinese and Taiwanese shares gained while Japanese equities pared a steep loss.
The MSCI Asia Pacific Index rose 0.4 per cent to 126.09 as of 4:28 p.m. in Hong Kong, swinging from a drop of as much as 0.6 per cent. The biggest gains were seen in Taiwan, where the Taiex index rallied 2.6 per cent, the most since September, on optimism Apple Inc. orders for the iPhone 7 will be higher than estimated. Japan's Topix index lost 0.4 per cent at the close, after sliding as much as 1.8 per cent, as the yen gained amid clashes between the Group of Seven finance chiefs on whether to intervene in the currency market.
It's been a wild ride for investors in Asia-Pacific equities this year. The regional index began 2016 with a 14 per cent slump through a February low on concern a devaluation of the Chinese yuan would curb global growth and amid prospects for a Federal Reserve rate increase. It then rallied almost 20 per cent through this year's peak in April before retreating again, with the gauge dropping 5.6 per cent in the last four weeks.
"The market has been overly concerned about the global growth slowdown as well as the imminent Fed rate hike," said Norman Chan, chief investment officer at Oreana Private Wealth in Hong Kong. "Both are not going to happen very soon."
What happened yesterday
Australian shares declined as steep falls in commodity futures weighed on miners and energy stocks and banks slipped in a lacklustre session on Monday.
The benchmark S&P/ASX200 index plummeted nearly 1 per cent in the morning and although it briefly bounced back into the black in the afternoon session it finished down 0.6 per cent down at 5318.9. The broader All Ordinaries fell 0.5 per cent to 5384.9.
