Local sharemarket are set to open flat amid a results deluge from the likes of Woolworths, Nine, Flight Centre and South32.
1. ASX: Futures pointing to a 6-point drop at the open
2. Currencies: The Kiwi dollar was the best performing G-10 currency gaining 0.4%, The Aussie was basically flat on the session holding US$0.7612. The DXY US dollar index gained 0.2%
3. Equities: Dow -0.4%, S&P 500 -0.5%, Nasdaq -0.8%, Stoxx 50 +0.5%, FTSE -0.5%, CAC +0.3%, DAX +0.3%
4. Commodities: Gold lost 1% falling to US$1,324
5. Energy: WTI oil dropped 2.7% after an increase in EIA inventories
6. US: Home sales disappointed market expectations
7. Stocks to watch: BHP's ADR dropped 2.2% overnight
8. Earnings: Flight Centre (FLT), Iluka Resources (ILU), Mesoblast (MSB), Nine Entertainment (NEC), Perpetual (PPT), Retail Food Group (RFG), South32 (S32), Southern Cross Media (SXL), Village Roadshow (VRL), Western Areas (WSA), Woolworths (WOW)
Markets limp towards Yellen's Friday speech
Markets began to lurch slightly lower overnight as traders started positioning in case US Federal Reserve chairman Janet Yellen follows in vice chairman Stanley Fischer's recent hawkish tone in her speech on Friday. This was most evident in the DXY US dollar index's gains overnight. Although some of this was pared back after US existing home sales disappointed market expectations, the DXY US dollar index still closed up 0.2 per cent.
Greenback hits commodities
The Bloomberg commodity index did not fare well in the rising US dollar environment overnight, dropping 1.2 per cent. Copper continued to slide a further 1.7 per cent.
But WTI oil also sold off heavily, losing 2.7 per cent as the US Energy Information Administration inventories followed the American Petroleum Institute numbers, seeing crude oil inventories increase by 2.5 million barrels, largely cancelling out last week's decline. To add fuel to the fire, Iran also said it had not decided on whether it would attend next month's OPEC meeting in Algiers, even though Reuters reported it would yesterday.
Headwinds for emerging markets
Emerging markets certainly appear to be struggling this week as fears of a hawkish turn from the Fed have halted their rallies. Global bond fund allocations towards emerging markets have reached their highest levels in four years according to Morningstar's data. The heightened low-yield environment in the wake of Brexit has seen investors seeking out yield and piling into emerging market carry trades with little consideration for the some of the messy situations these countries find themselves in. Concerns about the police investigating South Africa's finance minister, and worries about Turkey's newly launched major military campaign in Syria have continued to sap sentiment in emerging markets.
Concerns about future Fed policy and the pullback in commodity prices are taking their toll, with the EEM iShares MSCI Emerging Markets ETF losing 2.3% over the past week.
What's happening today
The Asian session looks like it will struggle at the open after a poor close from US markets.
Low volumes and cautious trade are likely to dictate markets in the lead-up to Janet Yellen's speech on Friday.
The ASX is set to open slightly lower, with the materials and energy sectors looking set for a tough day. BHP's ADR dropped 2.2 per cent overnight while CBA's had a relatively muted session.
What happened yesterday
The S&P/ASX 200 inched up 0.1 per cent to 5561.7 and the All Ordinaries added 0.1 per cent to 5653.6.
Despite big movements in individual shares, particularly of companies reporting, the benchmark index once again remained reluctant to break out of the range of between 5480 and 5580 points in which it has been stuck for most of August.
This column was produced in commercial partnership
between Fairfax Media and IG Markets
