A good run on the markets in the US overnight was cut short by a mid-trade risk reassessment ahead of the week’s close, as investors weighed the Fed’s big rate cut.
The ASX looks set to follow suit, with futures indicating a 0.8% to 8,190 points when trade begins today.
The trepidation comes ahead of tomorrow's rates decision from the RBA.
US markets mixed
On Wall Street, the Dow Jones index gained 38 points or 0.1%, reaching a new record high, supported by a 6.8% jump in Nike (NYSE:NKE) shares following the announcement that former executive Elliott Hill will return to the company as CEO.
Intel (NASDAQ:INTC) shares also gained 3.3% on news of a takeover approach by Qualcomm (NASDAQ:QCOM).
However, FedEx (NYSE:FDX) tumbled 15.2% after cutting its full-year revenue forecast, causing the Dow Jones Transport index to fall 3.5%.
The S&P 500 dipped 0.2% while the Nasdaq dropped 66 points or 0.4%.
Over the course of the week, all three major indices posted gains, with the Dow up 1.6%, the S&P 500 up 1.4%, and the Nasdaq climbing 1.5%.
European markets declined, with the continent-wide FTSEurofirst 300 index falling 1.5%, led by a 6.8% drop in Mercedes-Benz shares after the company cut its profit margin target for the second time in two months.
In London, the FTSE 100 index fell 1.2%. On the economic front, British retail sales rose by 1% in August, exceeding expectations of a 0.4% increase.
In the bond market, US Treasury yields were mixed, with the 10-year yield holding steady at 3.74% while the two-year yield dipped by 1 point to 3.60%.
Currencies and commodities
The US dollar strengthened against major currencies, including the Euro, Aussie dollar and Japanese yen.
Commodities markets saw mixed results. Brent crude fell by 39 US cents to US$74.49 per barrel, but both Brent and US Nymex crude recorded weekly gains of over 4%.
Gold futures rose 1.2% to US$2,646.20 per ounce, extending gains on expectations of further US rate cuts.
Iron ore futures edged down 0.1% to US$91.93 per tonne, reflecting concerns over China's economic recovery.
Looking ahead, attention will turn to the Reserve Bank of Australia's upcoming monetary policy meeting, with manufacturing and services PMI data also set for release. In the US, investors await the Chicago Fed national activity index and S&P Global PMIs.
Market outlook
- ASX 200 futures: -0.8% to 8,190 points
- Australian dollar: flat at 68.04 US cents
- S&P 500 (Friday): -0.2% to 5,703 points
- Nasdaq (Friday): -0.2% to 19,791 points
- FTSE (Friday): -1.2% at 8,230 points
- EuroStoxx (Friday): -1.5% to 505 points
- Spot gold: +1.4% to $US2,622/ounce
- Brent crude: -2.4% at $US74.49/barrel
- Iron ore (Friday): -1.9% to $US90.90/tonne
- Bitcoin: +0.7% to $US63,283
Source: ABC