Local shares are poised for a quiet open after a hectic week, as investors reassess positions at the end of the earnings season and as the focus turns to the strength of the US economy.
What you need2know
SPI futures up 12pts to 5246 on Saturday
AUD at 71.71 US cents, 87.27 Japanese yen, 64.12 Euro cents and 46.52
On Wall St, S&P 500 flat, Dow flat, Nasdaq +0.3%
In Europe, Stoxx 50 +0.2%, FTSE +0.9%, CAC +0.4%, DAX +0.2%
Spot gold up $US8.60 or 0.8% to $US1133.60 an ounce
Brent crude up $US2.49 or 5.2% to $US50.05 a barrel
What's on today
Australia business indicators for June quarter, private sector credit, inflation gauge
Stocks in focus
Deutsche Bank says the message from results season seems to be that earnings momentum is not weak (the June half beat/miss ratio of 50 per cent is around average). "But the prevalence of downgrades to forecasts (for two-thirds of companies) suggests that momentum isn't particularly strong either. The share price reaction for much of August looked overdone, but relative performance has perked up."
Bell Potter upgraded Vocus Communications to "hold" from "sell" and moved the price target to $5.50 a share from $5.75 previously.
Deutsche Bank has a "buy" recommendation on Flight Centre and a target price of $46 a share. "While it was disappointing to see profit decline, the result was within the guidance range that preceded the recent downgrade and the situation is not nearly as dire as what management's commentary and the sharp share price decline implied only two months ago. The outlook seems to have improved and the guidance range suggests the group is now sufficiently diverse to deliver reasonable earnings growth despite subdued Australia leisure demand."
Currencies
Macquarie Wealth Management says: "The depreciation of the $A towards our end-2015 target of $US0.69 will help regain some non-mining momentum once volatility subsides. But we remain of the view that the RBA is likely to ease rates in November, when it downgrades its growth and inflation outlook in the quarterly Statement on Monetary Policy."
Fed Vice Chairman Stanley Fischer said the recent volatility in global markets could quickly ease and possibly pave the way for the first US rate hike in nearly a decade.
The greenback gained versus all its Group-of-10 peers except the yen last week. "The dollar looks very attractive to me, both against euro and yen," Richard Franulovich, chief currency strategist for the northern hemisphere at Westpac Banking in New York, said by phone. "Fischer's commentary suggests the odds are actually higher" for a September rate increase, he said.
Commodities
ANZ cut base metal price forecasts to reflect current spot prices. "However, without the supply overhang that other markets have, we expect base metals to recover once the heavy selling across global markets subsides." Copper target Dec 2015 cut 10 per cent to $US5400 a tonne, average 2015 cut 5.5 per cent to $5603, average 2016 cut 4.2 per cent to $6100, average 2017 cut 0.05 per cent to $US6350.
World No.1 copper producer Codelco increased output in the first-half of 2015 compared to a year ago, although a slide in the copper price eroded profits. Codelco produced 831,000 tonnes of copper from its fully owned projects in the first six months of 2015, up 5.5 per cent on 2014, boosted by new projects like Ministro Hales.
World oil prices roared back to $US50 a barrel in the second day of a frenetic short-covering rally on Friday, with violence in Yemen, a storm in the Gulf and refinery outages helping extend the biggest two-day rally in six years. Brent, the global oil benchmark, gained 10 per cent on the week; US crude's front-month contract rose 12 per cent. "A severely oversold and shorted oil market is creating a bid for covering," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
United States
US stocks ended little changed, with the Standard & Poor's 500 Index on track for its worst month since May 2012, as equities found some respite from the wide swings prevalent earlier this week.
For the week, the Dow gained 1.1 per cent, the S&P rose 0.9 per cent and the Nasdaq added 2.6 per cent.
The S&P remains down more than 5 per cent from when the market began to sell off on August 18. The turmoil has prompted several strategists to cut their end-of-year forecasts for indexes.
Credit Suisse, for example, cut its year-end target for the S&P 500 to 2100 from 2200 on Friday.
Europe
After wild swings over the past few days, European stocks ended up posting their first weekly gain since China devalued its currency.
The Stoxx Europe 600 Index rose 0.3 per cent at the close of trading, adding most of those gains in the final settlement period. An advance of 0.3 per cent in the first few minutes of trading gave way to losses of as much as 1 per cent as the session progressed, before the gauge moved higher. The stocks index had daily moves of 1.7 per cent or more in the past seven days as China's currency devaluation rattled markets. Despite the volatility, the Stoxx 600 ended the week 0.6 per cent higher.
Italy's FTSE MIB Index tumbled the most among western-European markets, dragged lower by a 5.6 per cent decline in Salvatore Ferragamo. The luxury shoemaker posted first-half revenue that missed estimates.
Former Greek Prime Minister Alexis Tsipras' leftist Syriza will emerge as the biggest party in next month's election but without the majority it was hoping for, the first opinion polls since he resigned showed on Friday.
What happened on Friday
The benchmark S&P/ASX 200 index and the All Ordinaries index both closed 0.6 per cent higher for the day and 0.9 per cent higher for the week, at 5263.6 and 5274.7 respectively.
