Local shares are poised to open sharply higher as Wall Street and base metals rallied overnight. The S&P; 500 and Nasdaq each set fresh records in a broad advance.
Aluminium, copper, nickel, zinc and iron ore all rose overnight, lifting the US listed shares of both BHP Billiton and Rio Tinto. ASX futures are up 37 points at about 8.15am AEDT. The $A is steady as the greenback bounced.
The positive metals sentiment comes ahead of the release of fourth quarter consumer price data as well as December leading index and skilled vacancy reports. And then the market is likely to enter pre-Australia Day mode; the ASX will be closed on Thursday and will reopen on Friday though trading is expected to be subdued until Monday.
Overnight there was a general positive tone to financial markets as investors mostly shrugged at Donald Trump's decision to withdraw the US from the TPP and also with the UK Supreme Court ordering Theresa May to hold a parliamentary vote before she triggers Article 50 to start divorce proceedings with the EU. It should be noted that May earlier this month said she would put the final negotiated departure deal to a vote in both houses of parliament.
The S&P; 500 and Nasdaq set record highs on Tuesday in a broad rally led by gains in financial and technology stocks. The Dow is back within 100 points of the 20,000 mark. Earnings helped underpin the advance as did auto makers which rose after a number of CEOs met with President Donald Trump at the White House where he encouraged them to expand in the US.
Preliminary manufacturing statistics from Markit - for Japan, some European nations and the US - suggest growth has begun the New Year on a solid footing. Markit did however flag potential political risks, especially in Europe ahead of a series of national votes as the year progresses.
Today's Agenda
Local data: Fourth quarter CPI, Westpac leading index December, Skilled vacancies December, BHP Quarterly Production Report
Capital Economics on CPI: "We estimate that headline CPI in Australia remained unchanged at 1.3 per cent in the fourth quarter. While a 5.5 per cent q/q rise in petrol prices in Q4 will have added around 0.4 percentage points to the annual rate of inflation, we expect that this was offset by a smaller increase in alcohol prices than a year earlier and a fall in food prices."
Australian financial markets are closed Thursday
Overseas data: German IFO business climate January
Capital Economics of German data: "We suspect that the German Ifo Business Climate Indicator edged up further in January. While the German composite PMI fell slightly, the PMI future output and orders indices (which are not a part of the headline PMI) rose. The ZEW measure of investor sentiment increased too. So, given that the Ifo is partly forward-looking, we have pencilled in a small rise from 111.0 to 111.5."
Market Highlights
SPI futures up 37 points or 0.7% to 5631
AUD +0.1% to 75.83 US cents
On Wall St, Dow +0.6%, S&P; 500 +0.7%, Nasdaq +0.9%
In New York, Rio +4.4%, BHP +3.2%
In Europe, Stoxx 50 +0.3%, FTSE flat, CAC +0.2%, DAX +0.4%
Spot gold -0.6% to $US1210.80 an ounce
Brent crude +0.3% to $US55.41 a barrel
Iron ore +1.9% to $US82.69 a tonne
LME aluminium +1% to $US1867 a tonne
LME copper +2.6% to $US5943 a tonne
10-year bond yield: US 2.46%; Germany 0.40%; Australia 2.69%
From Today's Financial Review
Let the Hunter (Hall) games begin: The Hunter Hall saga is only going to get messier before there is a resolution.
AMP shuts down venture capital arm: Financial giant AMP has shut its venture capital unit that had planned to invest millions in disruptive digital businesses.
CBA's new blockchain weapon: CBA's head of blockchain says the RBA could help facilitate innovation by issuing a digital version of the Australian dollar.
United States
Don't bet v Obamacare just yet: Some prominent US fund managers are betting that Obamacare may prove far more difficult to replace.
The S&P; 500 and Nasdaq set record highs on Tuesday in a broad rally led by gains in financial and technology stocks.
Based on the latest available data, the Dow Jones Industrial Average was up 113.07 points, or 0.57 per cent, to 19,912.92, the S&P; 500 gained 14.87 points, or 0.7 per cent, to 2280.07 and the Nasdaq Composite added 48.01 points, or 0.86 per cent, to 5600.96.
"We are now in a phase where the policies need to come to fruition to justify the move we have seen in the post-election period," said Bill Northey, chief investment officer at Private Client Group of US Bank.
Materials jumped. The sector was bolstered by DuPont, which reported a better-than-expected quarterly profit.
Europe
Europe's earnings season got off to a rocky start on Tuesday with profit warnings from BT Group and Aryzta sending their shares sharply lower.
The pan-European STOXX 600 index still managed to eke out a 0.2 per cent gain, though, propped up by Italian financials and mining stocks. Italian insurer Generali was the biggest individual gainer, jumping 8.2 per cent on talk Intesa Sanpaolo could make a bid for it.
Euro zone starts year with solid growth: The euro zone started 2017 by maintaining solid economic growth as a weaker currency boosted orders for goods and services.
BT lost a fifth of its market value when an Italian accounting scandal compounded a sudden slowdown in its British government work, forcing the telecoms group to cut forecasts for the next two years.
The leader of Germany's centre-left Social Democrats criticised the austerity policies of Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble, saying they had contributed to the rise of populist parties on the continent.
Asia
Japanese stocks declined, with the benchmark Topix index dropping to a six-week low. "As Trump's protectionist stance strengthens, the yen is gaining and investors are avoiding taking risk," said Kiyoshi Ishigane, chief strategist at Mitsubishi UFJ Kokusai Asset Management.
The Topix slid 0.6 per cent to 1506.33, the lowest close since December 7. The Nikkei 225 ended 0.6 per cent lower at 18,787.99. Banks led declines on the benchmark as Japanese government bond yields fell amid a shift by investors toward haven assets; Mitsubishi UFJ Financial -2.7 per cent, Mizuho Financial -2.5 per cent, Sumitomo Mitsui Financial -2.1 per cent.
China's main share index ended at a fresh two-week high on Tuesday, but pared some of its earlier gains as small-cap stocks weighed. Trading remained thin as investors were reluctant to stake out fresh positions ahead of the country's biggest holiday starting this week.
The blue-chip CSI300 index was unchanged at 3364.45 points, while the Shanghai Composite Index gained 0.2 per cent to 3142.55 points.
Sentiment was also affected by renewed debt worries after Beijing reported a significantly larger fiscal deficit in 2016.
Currencies
The US dollar firmed against the yen and euro, after several days of losses. "When you take the spotlight more toward Europe and Britain and Brexit, you start looking at the dollar as a better long-term option," said Juan Perez, currency trader at Tempus Consulting in Washington.
"Interest rate differentials are providing modest dollar/yen support with the two-year US-Japan yield spread pushing back toward 140 basis points," said Eric Theoret, currency strategist, at Scotiabank in Toronto.
The euro, which had looked as if it was headed toward parity with the dollar at the end of 2016, has recovered above $US1.07 and hit seven-week highs of $US1.0774 in early Asian trading on Tuesday. By late morning New York trading though, the euro was down marginally at $US1.0754.
Sterling slipped 0.5 per cent to $US1.2465 after Britain's Supreme Court ruled that the government would need approval from Britain's parliament before formally triggering the country's departure from the European Union.
Preconditions for stable inflation in the euro zone are in place so the European Central Bank should soon start to discuss an exit from its stimulus program, Executive Board member Sabine Lautenschlaeger said.
Commodities
Unionised workers at BHP Billiton-owned Escondida, the world's biggest copper mine, said they rejected the company's latest wage offer and asked its workers to vote for a strike and prepare themselves for an extended conflict. The Escondida workers' union, which represents about 2500 labourers at the Chilean mine, has been in collective wage talks with the company since December to replace the current contract which expires at the end of January.
Iron ore prices rose $US1.56 or 1.9 per cent to $US82.69 per tonne cfr China despite a near-stagnant physical market with support coming from higher futures, according to Metal Bulletin.
Opinion: Rio completes retreat from thermal coal: Rio Tinto's long and surprisingly remunerative retirement from the thermal coal sector is all but complete.
Aluminium climbed to a 20-month peak after reports of potential capacity cuts in China while zinc touched a five-week high as funds remained bullish on the sector and the dollar weakened.
Three-month aluminium on the London Metal Exchange closed with a 1 per cent gain at $US1867 a tonne, having earlier touched $US1883, its strongest since May 2015.
Traders cited a Bloomberg story saying that China is drawing up plans that would halt about 3.3 million tonnes of operational aluminium capacity during the winter to combat air pollution. China's top environment watchdog delivered verbal warnings last month to Chalco, the nation's top aluminium producer, for failing to deal with pollution appropriately, state news agency Xinhua had reported.
LME zinc finished 1.3 per cent higher at $US2827 a tonne, having earlier touched $US2829.50, its highest since December 15.
Copper hit its highest in nearly seven weeks, climbing 2.6 per cent to end at $US5943, its highest since December 7.
Lead closed 1.5 per cent up at $US2392, the highest since December 13. Nickel added 0.8 per cent to $US9790 and tin was up 1.4 per cent at $US20,400.
Oil and gas company Saudi Aramco has invited banks to pitch for an advisory position on what is expected to be the world's biggest initial public offering, sources familiar with the matter told Reuters. Morgan Stanley and HSBC are among banks that have received the request for proposals, one of the sources told Reuters.
Australian Sharemarket
The Australian sharemarket took news of America pulling out of the Trans Pacific Partnership in stride on Tuesday, rising strongly on the back of rallying iron ore futures and some upbeat company news.
The benchmark S&P;/ASX200 rose 0.7 per cent to 5651.6, while the broader All Ordinaries added 0.7 per cent to 5707.5.
'Earnings bonanza' to fuel strong growth for Australian shares in 2017: The Australian sharemarket is forecast to rise this year at its fastest pace since 2013, fuelled by a recovery in Australian company earnings.
Street Talk
IPO pitches don't have the same Velocity: It's no secret bankers and fund managers are crawling all over Virgin Australia's Velocity Frequent Flyer.
Switzer Asset Management, Contango kick off listed managed fund: Switzer Asset Management is ramping up plans for a listed dividend growth fund, sources told Street Talk.
Emeco chief says creditor support for revamped merger 'secure' ahead of vote: Emeco chief executive Ian Testrow says the mining equipment rental group has secured the bondholder support needed to push through a revamped three-way merger.
with Reuters, Bloomberg, AAP
Comments? Questions? Let us know what you think of Before the Bell. You can reach Timothy Moore at timothy.moore@fairfaxmedia.com.au
