Shares drop at the start in broad-based losses, with Aconex leading the way down after a profit warning while QBE is racing ahead on talk of a takeover offer.
The ASX is down 0.7 per cent at 5676.3.
"As Trump enters his second week at the White House, I continue to believe that the US markets are primed for a corrective selloff," said Fat Prophets CEO Angus Gedde.
"US equities have risen strongly since last year's election and much of the good news has already been priced in. Any disappointment could therefore turn the markets around."
The rising backlash against Trump's immigration order, not to mention his threats to place large tariffs on imports, will also create uncertainty, he said.
The big miners and banks are all trading lower, with while QBE is up 4.5 per cent.
And here's the scoreboard from Friday night:
- SPI futures down 11 points or 0.2% to 5650
- AUD +0.2% to 75.47 US cents on Saturday morning AEDT
- On Wall St, Dow flat, S&P 500 flat, Nasdaq +0.1%
- In New York, BHP +0.2%, Rio +1.1%
- In Europe, Stoxx 50 -0.5%, FTSE +0.3%, CAC -0.6%, DAX -0.3%
- Spot gold +0.2% to $US1191.38 an ounce
- Brent crude -1.5% to $US55.41 a barrel
- Iron ore unchanged at $US83.34 a tonne (Chinese new year holiday)
- Thermal coal:-1.1% at $US83.75 a tonne; coking coal flat at $US185.25
- LME aluminium -0.2% to $US1816 a tonne
- LME copper +0.7% to $US5900 a tonne
- 10-year bond yield: US 2.48%; Germany 0.46%; Australia 2.77%
US stocks edged lower for a second consecutive session on Friday as some underwhelming corporate earnings and gross domestic product data offset recent enthusiasm over policy actions by President Donald Trump.
US economic growth slowed more than expected in the fourth quarter, with GDP rising at a 1.9 per cent annual rate, below the 2.2 per cent rise expected by economists and the 3.5 per cent growth pace logged in the third quarter.
Chevron fell 2.4 per cent to $US113.79 after its quarterly profit fell short of analysts' expectations. The stock was the biggest drag on the S&P 500 and the Dow Jones Industrial Average indexes. The S&P energy index, down 0.9 per cent, was the worst performing of the 11 major S&P sectors.
Starbucks curbed gains on the Nasdaq. Its shares dropped 4.0 per cent to $US56.12 after the world's biggest coffee seller trimmed its full-year revenue forecast.
"The market has rallied on expectations of good things to happen in the future but as we are getting the data that is factual of what is going on, it is not as good as people are hoping," said Andrew Slimmon, portfolio manager at Morgan Stanley Investment Management. "Which tells you, this earnings recovery that is expected in 2017, a good chunk of it is already baked into the market."
Even with some disappointing corporate results, fourth-quarter earnings are expected to show growth of 6.8 per cent, which would mark the biggest increase in two years and second straight quarter of growth.
The Dow remained above 20,000 for the third straight day, after breaching the milestone for the first time on Wednesday as the post-election rally reignited.
For the week, the Dow rose 1.3 per cent, the S&P 500 gained 1 per cent and the Nasdaq advanced 1.9 per cent.
The Dow Jones Industrial Average fell 7.13 points, or 0.04 per cent, to 20,093.78, the S&P 500 lost 1.99 points, or 0.09 per cent, to 2,294.69 and the Nasdaq Composite added 5.61 points, or 0.1 per cent, to 5,660.78.
In local corporate news, German insurer Allianz is in informal talks about the potential acquisition of QBE Insurance, German newspaper Handelsblatt is reporting, citing sources.
Allianz chief executive Oliver Baete met with QBE's chief executive John Neal before Christmas and has suggested an offer of $15 per share, which would value the company at $20 billion, the paper said.
QBE shares closed at $12.33 on Friday, and have risen 19 per cent in the last 12 months.
Talks between the groups were friendly but there were no concrete negotiations about a deal yet, the paper said.
Allianz declined to comment, while QBE said there was "no basis" to the story.
"QBE has a clearly articulated strategy ... participation in industry consolidation is not a part of this strategy and there is no basis to speculation either that this strategy is under review or that QBE has received a corporate proposal," it said in a statement.
Baete has said the German insurer is looking for opportunities to make acquisitions but that it is not easy to find attractive targets at a reasonable price.
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The main focus over the weekend has been Trump's immigration policy and it won't necessarily surprise to see some heat coming out of the US dollar in early FX trade, with USD/JPY currently down 39 points (or 0.3%), IG's Chris Weston notes:
Whether the markets start to price in a stronger Trump risk premium is yet to be seen, but the S&P 500 rallying 1% last week in the face of various protectionist measures suggest this premium is not yet in the market. The US volatility index (or the 'VIX') closed at a meagre 10.58% and traders are simply saying they have absolutely no concerns here and that portfolio hedging (through the use of 'put' optionality) is just not in demand. Although this is also a view that traders do not see any real range expansion (in price) over the coming 30 days. There is a record short position held in VIX futures and one questions if the market does get a little flustered that the VIX could be headed high, predominantly on a position adjustment – This is one market for the radar, with a number of Trump's non-economic/anti- globalisation policies looking very concerning.
Aside from US politics traders have largely been talking about the US Q4 GDP numbers on Friday and granted we have seen a strong slide in annualised growth from 3.5% in Q4 to 1.9% in Q4, but bizarrely one partially attributes that to soybeans! Soybeans account for 1% of US exports, but when net exports subtract 1.7ppt from the Q4 print and soybeans exports fell close to 100% this huge volatility largely contributed to the 4.3% drop in Q4 exports. Perhaps the fact the USD stayed firm and the US 10-year treasury only lost a couple of basis points on the session is that business and residential investment and personal consummation have stayed firm. Durable goods orders were largely better than forecast too.
Aside from political headlines this week, keep an eye on Thursday's US manufacturing ISM and FOMC meet and of course Friday's non-farm payrolls. US earnings continue to roll in with 25% of the S&P 500 market cap due to report. So far, of the 35% of companies who have reported 73.5% have beaten on earnings line, 51% on sales, with an aggregate 4.4% EPS growth.
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In an ordinary world, a US Federal Reserve meeting, US jobs data and a hefty number of earnings reports next week would provide investors with welcome distraction from speculation about the US president's policy plans.
But the current world is less than ordinary. In the second week after Donald Trump's inauguration, issues such as his controversial immigration policies will likely keep his voice ringing louder in investors' ears than the words of Fed Chair Janet Yellen.
Wall Street has already bet on solid economic data, strong earnings and the pace of Fed interest rate hikes, but investors are still uncertain how to bet on the president.
On Friday Trump ordered a 120-day hold on allowing refugees into the country, an indefinite ban on refugees from Syria and a 90-day bar on citizens from Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen.
The action has sparked confusion and anger after immigrants and refugees were kept off flights and left stranded in airports and was met with international criticism, outrage from civil rights activists and legal challenges.
"I don't see how markets could look on this favourably," David Kotok, chairman and chief investment officer of Cumberland Advisors, said late Saturday. "International tensions are raised. Obstacles to peaceful exchanges are abruptly announced. And litigation commences."
Kotok said stocks may react negatively as the market is ripe for a correction, and for "current market prices to be justified, the Trump agenda must unfold perfectly."
While stocks have risen since the November 8 election on hopes for tax cuts, lighter regulation and fiscal stimulus, investors are waiting for evidence Trump has the willingness and ability to follow through on his pro-business campaign promises.
On top of this, add to the uncertainty the fear of his threats to slap massive tariffs on imports and his comments on China's currency policy.
"Wall Street's already figured out that the recovery is in place, that the Fed is going to start getting aggressive. What they haven't figured out yet is, exactly who is Donald Trump," said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.
Fed fund futures show bets of a 96-per cent chance the Fed leaves rates unchanged when it ends its two-day meeting on Wednesday.
Investors will watch for hints of policymakers' plans for the rest of 2017. If their language indicates faster-than-expected hikes, "the equity rally could pause as investors recalibrate," said Paul Christopher, head global market strategist at Wells Fargo Investment Institute.
But investors don't see the Fed rocking the boat next week, at least until it has some clarity on Trump's policies.
Good morning and welcome to the Markets Live blog for Monday.
Your editor today is Jens Meyer - please send any tips, suggestions, feedback, jokes, criticism, praise etc to jmeyer@fairfaxmedia.com.au
This blog is not intended as investment advice.
Fairfax Media with wires.
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