ASX futures are pointing to a flat open as investors turn ever cautious as they adjust to President Donald Trump's governing style. It's not just Australian shares that are stalling, as both Wall Street and European benchmarks are stuttering too.
Malcolm Turnbull reportedly copped Trump's fury at the current state of the world in a call last weekend as the new President seeks to put into policy his "America First" campaign stance. Turnbull is unlikely to be the last to hear Trump's thunder.
Overnight Trump told a group of religious and political leaders that it's time for the US to get tough. ""The world is in trouble - but we're going to straighten it out, OK? That's what I do," he said at the National Prayer Breakfast. "We're gonna straighten it out."
Trump also added: "We're taken advantage of by every nation in the world, virtually. It's not gonna happen anymore."
Whether Trump is staking out negotiating positions or initiating a vast repositioning of the US isn't yet clear, but the uncertainty is. The US central bank signalled as much this week, with its less hawkish policy statement, knocking the wind out of the greenback. That's proven good news for the Aussie which neared US77¢ overnight. It recently was up 1.1 per cent, extending the post trade data surge on Thursday.
Trump's protectionist positioning also is challenging earlier bets that his administration would prioritise a pro-growth agenda: tax cuts, streamlining business regulations and spending big on infrastructure. Overnight House Speaker Paul Ryan said repealing and replacing Obamacare was his top priority, tax reform would have to wait.
Sentiment overnight wasn't helped by disappointing results from Sony as well as Deutsche Bank. In addition, shares in Apple which surged more than 6 per cent the previous session were slightly lower and Facebook fell as concerns about future spending and rising costs offset far better than expected quarterly statistics.
Positive results from Philip Morris and Costco and M&A; moves including Reckitt Benckiser's $US16.7 billion approach to Mead Johnson failed to bolster overall sentiment.
China manufacturing and January's US jobs data top the end of week agenda with local investors preparing for a swath of corporate results the next two weeks. In addition, the RBA will take centre stage with a policy meeting on Tuesday, governor Philip Lowe speaking on Thursday and the bank's quarterly statement on monetary policy on Friday.
Today's Agenda
Local data: AiG performance of services January
Overseas data: China Caixin manufacturing February; Japan BoJ December meeting minutes; Euro zone Markit services PMI January final, Retail sales December; UK Markit/CIPS services PMI January; US non-farm payrolls January, Markit services PMI January, ISM non-manufacturing January, Factory orders December, Durable goods orders December
Market Highlights
SPI futures up 6 points or 0.1% to 5604
AUD +1% to 76.60 US cents (overnight range 75.78 - 76.96)
On Wall St, Dow flat, S&P; 500 flat, Nasdaq -0.1%
In New York, BHP -1.2%; Rio -1.8%, MIC -0.4%
In Europe, Stoxx 50 -0.2%, FTSE +0.5%, CAC flat, DAX -0.3%
Spot gold +0.4% to $US1215.21 an ounce
Brent crude -0.3% to $US56.62 a barrel
Iron ore flat at $US83.34 a tonne
Steam coal +0.1% to $US82.75, Met coal +0.0% to $US168.00
LME aluminium +0.6% to $US1829 a tonne
LME copper -1% to $US5886 a tonne
10-year bond yield: US 2.48%, Germany 0.42%, Australia 2.77%
From Today's Financial Review
Chanticleer: The certainty of Trump uncertainty: Goldman Sachs' Jan Hatzius is taking a rational economic approach to Donald Trump. That might prove to be a mistake.
November rate hike '40pc and rising': The probability the RBA raises interest rates in November is "somewhere in the 40s and rising" according to Goldman Sachs.
Opinion: Why February is tough for shares: The month of February is usually a good one for the sharemarket. But not when it's the year after the US President gets elected.
United States
The S&P; 500 Index zigzagged to a gain of less than two points for a second straight day amid corporate results and deal news.
The S&P; 500 Index fell 0.1 per cent to 2280.84 at 4pm in New York. The index has retreated in five of the past six days, though declines have been limited to 1.1 per cent.
US House Speaker Paul Ryan said Republicans in Congress were unlikely to begin tackling tax reform legislation until the summer, after first moving to revamp the nation's healthcare system.
Homeland Security Secretary John Kelly said he hoped to have a wall along the southern US border with Mexico finished within two years, according to an interview with Fox News.
Capital Economics' Andrew Hunter on Friday's January payrolls data: "We forecast a slightly stronger 170,000 increase in non-farm payrolls in January. Base effects mean that the annual growth rate of average hourly earnings probably edged down to 2.8 per cent, from 2.9 per cent, but that is likely to be only a temporary blip, with wage growth generally trending higher this year. We also suspect that the unemployment rate was unchanged at 4.7 per cent in January."
Earnings of S&P; 500 companies are estimated to have risen 7.5 per cent - the best growth in nine quarters, according to Thomson Reuters I/B/E/S.
Europe
Carney braces for Brexit twists: Mark Carney warned that surprises could still be ahead as the UK starts the formal process of leaving the European Union.
European stocks fell for the fourth time in five days as a slew of worse-than-forecast results and tepid forecasts damped the outlook for corporate health.
The Stoxx Europe 600 Index fell 0.3 per cent at the close. Drugmakers led declines as Novo Nordisk slid 7.3 per cent after trimming its 2017 sales projection. Daimler dropped 2.7 per cent after saying profit will rise only "slightly" this year, while Deutsche Bank tumbled 5.2 per cent after its quarterly trading revenue missed analysts' estimates.
Deutsche Bank chief John Cryan said he's aiming to return to profit in 2017 as the German lender cuts costs and settles legal disputes. "We've put an awful lot of our difficulties behind us," Cryan told reporters on Thursday in Frankfurt after releasing fourth-quarter earnings that missed estimates.
Reckitt Benckiser Group is in advanced talks to buy Mead Johnson Nutrition in a $US16.7 billion deal that would take the British consumer goods maker into the baby formula market and boost its business outside of Europe.
Pressure on French presidential candidate Francois Fillon to quit the race mounted as some lawmakers in his own camp urged him to drop his scandal-tainted bid in order to save the conservatives from defeat.
Asia
The benchmark Hang Seng index slid 0.63 per cent by the lunch break to 23,170.70 points, while the China Enterprises Index fell 0.64 per cent, to 9694.03 points.
Macau gaming stocks remained weak after the world's biggest casino hub posted a slower than expected 3.1 per cent rise in gambling revenue in January. Wynn Macau fell 2.3 per cent. MGM China Holdings and Galaxy Entertainment Group slid more than 1 per cent.
China's markets remain shut for the Lunar New Year holiday and will resume trade on Friday.
The Nikkei fell 1.2 per cent to 18,914.58, the lowest closing level since January 24.
The broader Topix shed 1.1 per cent to 1510.41.
Sony said it does not plan to sell its pictures business after suffering a $US1 billion writedown, and instead aims to turn it around by adding sales channels and making more use of movie characters.
Mitsubishi raised its profit forecast and dividend as Japan's biggest trading house rebounds from its first annual loss amid surging prices for coking coal.
Currencies
Germans hate a weak euro: Washington is more interested in a fight than the facts about the exchange rate.
The dollar's worst start to the year in more than a decade is just a blip on its path to further gains, according to Goldman Sachs Asset Management. The money manager is betting on the greenback and a steeper yield curve as a reflationary era takes hold in the US and other countries, said Philip Moffitt, the Asia-Pacific head of fixed income. "It's just a bit of a pause in the new trend," he said.
"You might be very long the dollar, you might be just a bit long the dollar, you might be neutral at times," Moffitt said. "But I can't see a situation where we would wake up and say now is the day to go short in this environment."
The Bank of England made its latest sharp increase to forecasts for British economic growth in 2017 on Thursday, but appeared in no rush to raise interest rates, warning of "twists and turns" on the road out of the European Union.
Canada, Mexico and even South Korea are potential candidates for exchange-rate criticism, according to William Cline, a senior fellow at the Peterson Institute for International Economics in Washington. That's because those nations are some of the US's biggest trading partners, according to a PIIE study.
The Canadian dollar and Mexican peso were both overvalued by 0.3 per cent, while the euro, which is used by Germany, was 0.8 per cent overvalued, the study showed. The Chinese yuan was 0.7 per cent overvalued. Cline found a "modest" undervaluation of the Japanese yen at 3.3 per cent, while the Korean won was undervalued by 6 per cent.
Commodities
Nickel prices hit three-week highs after the Philippines ordered the closure of 21 mines, mainly nickel producers that account for about half of output in the world's top ore supplier.
Benchmark nickel on the London Metal Exchange closed up 1.4 per cent at $US10,395 a tonne, having earlier touched $US10,500, the strongest since January 11.
Three-month copper ended down 1 per cent at $US5886 a tonne, near a two-month high of $US6007 hit on Wednesday on buying triggered by supply concerns.
Aluminium finished up 0.6 per cent at $US1829, zinc slipped 1 per cent to close at $US2851, lead ceded 0.3 per cent to $US2340 and tin dipped 0.1 per cent at $US19,840.
Rio coal mines attract interest: Rio Tinto Group has received approaches for its Hail Creek and Kestrel mines, including a potential sale.
Hard coking coal averaged $US266.59 a tonne in the last quarter, the highest in data from The Steel Index going back to 2013. Prices were unchanged at $US169.70 a tonne on Wednesday and have dropped 25 per cent this year.
Brazilian iron ore exports volumes increased by 15.45 per cent year-on-year in January, according to Metal Bulletin, citing figures released by the country's foreign trade ministry, MDIC, this week.
State-owned Saudi Arabian Oil Co, or Saudi Aramco, boosted its official pricing for Arab Light crude to Asia by 30 cents to 15 cents a barrel more than the regional benchmark. The company had been expected to increase pricing for the grade to a premium of 10 cents more than the Oman-Dubai benchmark, according to the median estimate in a Bloomberg survey of six refiners and traders.
World food prices rose to a near two-year high in January and look set to be higher and more volatile in 2017, the United Nations food agency saidy. Food prices on the Food and Agriculture Organisation's (FAO) index have fallen for five straight years due to ample supply, a slowing global economy and a strong US dollar. But in January, the index, which measures monthly price changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 173.8 points, a high not seen since February 2015.
Russia plans to ban temporarily imports of beef and beef products from New Zealand from February 6 after finding the feed additive ractopamine in some samples, Russia's agriculture safety watchdog said in a statement. The watchdog, known as Rosselkhoznadzor in Russian, said it was also considering banning fish imports from New Zealand due to traces of mercury in some supplies.
Australian Sharemarket
Foreign investors jump back into Australian banks: Overseas buying "largely underpinned" the blockbuster bank share price gains of recent months, analysts say.
Shares took a turn for the worse on Thursday with utilities and technology stocks dragging the bourse south after lunch, while the Australian dollar shot over US76¢ on positive trade data.
The ASX failed to follow markets around the region higher after the US Federal Reserve kept interest rates on hold at the end of its two-day meeting on Thursday morning (Australian time).
The benchmark S&P;/ASX 200 Index and the broader All Ordinaries Index each slid 0.1 per cent to 5645 and 5696 points respectively.
"Shares remain vulnerable over the short term, as they have become technically overbought following the big expectations of a Trump boost to the economy," said Shane Oliver, head of investment strategy at AMP Capital.
Street Talk
Zip pitches at up to 25x P/E: Zip Industries' pitching day has finally arrived.
Industry players rev up for LeasePlan auction: The Australian and New Zealand arm of Dutch fleet company LeasePlan will be placed on the sale block.
German giant Fresenius wins over Cura Day Hospitals: German medical equipment and services giant Fresenius is set to take a 70 per cent stake in Australia's largest day hospital group.
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
