Local shares are poised to open flat ahead of the latest gross domestic product report.
What you need2know
SPI futures up 1 pt at 5265
AUD at 73.30 US cents
On Wall St, late, S&P 500 +0.7%, Dow +0.7%, Nasdaq +0.7%
In Europe, Stoxx 50 -08%, FTSE +0.6%, CAC -0.9%, DAX -1.1%
In London, BHP +2%, Rio +0.3%
Spot gold up $US3.51 or 0.3% to $US1068.28/oz at 2.52pm NYC
Brent crude down 33 US cents or 0.7% to $US44.28/bbl at 2.46pm NYC
Iron ore -1.7% to $US42.24
What's on today
Australia GDP, breakfast talk in Perth on Economic Conditions and Prospects by RBA governor Glenn Stevens at Australia-Israel Chamber of Commerce; Euro area inflation; Canada central bank rates decision; US mortgage applications, ADP employment, productivity and labour costs
Stocks in focus
Morgan Stanley has raised its price target to $9.30 a share on IOOF Holdings, from $8.80 previously.
After one of the toughest years on record, the big four banks are winning back market support thanks to their high yields and ability to grow earnings through the business cycle.
Rio Tinto will not follow its rival BHP Billiton by cutting dividends next year but major investor Aberdeen chides both companies.
Currencies
The Australian dollar has surged higher on bets global central banks are in no rush to lift interest rates, extending gains made on Tuesday after the Reserve Bank left its key rate unchanged for a seventh straight month. Since hitting a six-year low of US68.96¢ in September, the currency has been in rally mode. The Aussie could get even better news this morning. The economy rebounded in the September quarter thanks to a surge in exports and surprisingly robust company profits, Wednesday's national accounts will likely show.
Everyone is watching euro this week and we believe that it will test and break 1.05, forecasts Kathy Lien, managing director of FX strategy for BK Asset Management. "Given the recent weakness in the Eurozone economy, low inflation and the risk of a deeper downturn, Mario Draghi could be more aggressive than most investors anticipate. EUR/USD could easily extend its losses if the market ends up underestimating the central bank."
The US dollar slipped from a seven-month high versus the euro on speculation the Federal Reserve's first rate increase in nearly a decade has been priced in, while yields on 10-year Treasury notes slipped on expectations subsequent hikes will be gradual.
Commodities
BHP copper chief Daniel Malchuk said the global miner would lower production costs for the red metal to $US1.08 per pound in its 2017 financial year, from a projected $US1.21 per pound in the year ending June 2016. "Over this period, the release of latent capacity across the portfolio will also help annual group copper production grow to approximately 1.7 million tonnes at very low cost," Malchuk said in a presentation on Tuesday.
Vale, the world's biggest miner of the iron ore, expects to produce 340 million to 350 million metric tons of it in 2016, it said in a filing. That compares with guidance of 376 million tons given in December. Vale was expected to forecast 344 million tons, according to the average of three analyst estimates compiled by Bloomberg.
Crude oil futures fell on bets OPEC will not cut output to stem a supply glut when the world's biggest oil producers meet in Vienna later this week
United States
Wall Street kicked off the last month of the year on a positive note as investors look out for key economic data and policy decisions by central banks. Stocks pared early gains after data showed the US manufacturing sector contracted in November, falling to its worst levels since June 2009.
The Institute for Supply Management (ISM) said its index of national factory activity fell to 48.6, the first time the index went below 50 since November 2012. A reading below 50 indicates contraction in the manufacturing sector. However, other data showed U.S. construction spending rose to a near eight-year high, suggesting the economy remains on firm ground.
All 10 major S&P sectors were higher with the health index's 1.08 per cent rise leading the advancers.
Europe
European equities closed lower, dropping from a three-month high, after US factory data raised concern that the world's largest economy may not be strong enough to withstand higher borrowing costs. The Stoxx Europe 600 Index reversed an earlier gain to end the day down 0.3 per cent. Manufacturing in the US unexpectedly contracted in November at the fastest pace since the last recession. The move came after the Stoxx 600 climbed for a second month in November, taking its rebound from a low in September to 14 per cent through Monday.
"We have had a nice rally in Europe partly based on a weaker euro and partly in reflection of the potential stimulus that we will get from the ECB," said Veronika Pechlaner, an investment manager who helps oversee $US10 billion at Ashburton Investments, part of FirstRand Group. She's based in Jersey, the Channel Islands. "Now that we are getting closer to the news it is getting harder to grind up because it is tempting to take some profits."
Markit Economics said that its Purchasing Managers Index for the euro area rose to 52.8 in November from 52.3 the previous month. All euro area countries, with the exception of Greece, are seeing expansion in their manufacturing sectors. There was also good news on the employment front with Germany's unemployment rate falling to a record low of 6.3 per cent while in Italy unemployment dropped more than expected to reach 11.5 per cent. However, it is unlikely that this improving data will do anything to hold back the European Central Bank's easing plans on Thursday.
HSBC Holdings, Lloyds Banking Group and Barclays pushed the FTSE 100 Index to a four-week high after the Bank of England said all seven major lenders passed stress-test results. Lloyds added 2.4 per cent, Barclays climbed 4.6 per cent, while HSBC, the biggest component of the FTSE 100, advanced 1.8 per cent.
What happened yesterday
Australian shares rallied strongly despite falls on Wall Street, fresh lows in iron ore, disappointing Chinese economic data and the Reserve Bank keeping rates on hold. The market was up from the outset, recording strong early gains that lasted until the end of the session. The benchmark S&P/ASX 200 index surged close to 100 points, or by 1.9 per cent, to 5266.1, while the broader All Ordinaries put on 1.8 per cent to 5312.6.
Among the blue-chips, BHP soared 3.6 per cent to $18.75, recovering some of the heavy losses incurred in previous sessions. Rio Tinto also rode the wave of sentiment, lifting 2.2 per cent to $46.92. Telstra gained 2.4 per cent to $5.49. The banks rose strongly: ANZ 2.3 per cent to $27.79, Commonwealth Bank 2 per cent to $80.99, National Australia Bank 1.8 per cent to $29.91 and Westpac 2 per cent to $32.79.
