Local shares are poised to open flat, with investors firmly focused on Tuesday's Reserve Bank policy meeting.
What you need2know
SPI futures down 2pts to 5611
AUD at 72.76 US cents, 90.36 Japanese yen, 66.48 Euro cents and 46.75 British pence
On Wall St, S&P 500 -0.3%, Dow -0.5%, Nasdaq -0.3%
In Europe, Stoxx 50 +1%, FTSE -0.1%, CAC 0.8%, DAX +1.2%
Spot gold down $US9.42 or 0.9% to $US1086.38 an ounce
Iron ore jumps 4.2% to $US55.63 per ton
Brent crude down $US2.62 or 5% to $US49.59 a barrel
What's on today
Australia international trade balance, retail sales, Reserve Bank of Australia board meeting on rates announcement; US factory orders.
"We expect the [Reserve Bank of Australia] board will decide to keep rates on hold," says Bill Evans, Westpac's chief economist. "Markets are in full agreement with this view with only a negligible probability of a rate cut being priced in. It is a different story for November with market pricing oscillating between 60 per cent and 80 per cent probability of a cut by then.
Stocks in focus
Citi currently has "neutral" ratings across the banking sector. Major bank order of preference – NAB, ANZ, CBA & WBC. For the regional banks we favour BOQ over BEN.
Bell Potter cut Vocus Communications to a "sell" on valuation and has a $5.75 price target on the provider of integrated wholesale and corporate telecommunications services in Australia and New Zealand. "The downgrade is based on valuation, but we also see some downside risk with the upcoming FY15 result given the slowing growth in the core businesses evident in the 1HFY15 result and also the distraction of the Amcom acquisition in 2HFY15."
Currencies
Ex-trader Tom Hayes was sentenced to 14 years in jail by a London court on Monday after being found guilty of conspiring to rig Libor benchmark interest rates following a seven-year global investigation.
Commodities
Brent oil dropped below $US50 a barrel for the first time since January as Iran vowed to boost production immediately after sanctions are lifted and manufacturing in China slowed. Futures in London fell as much as 5.2 per cent, extending July's 18 per cent drop. Iran can raise output by 500,000 barrels a day within a week of sanctions ending, the state-run Islamic Republic News Agency reported.
Hedge funds reduced bullish bets on US oil to the lowest level in five years. The net-long position in WTI contracted 7 per cent in the week ended July 28, US Commodity Futures Trading Commission data show. Money managers cut their bullish stance on Brent during the same period by 37,527 contracts, the most in a year, according to data on Monday from ICE.
Trading of iron ore derivatives on China's Dalian Commodity Exchange advanced to a record last month amid increased volatility. Volumes surged 54 per cent in July from a month earlier to 32.4 million contracts, or 3.2 billion metric tons, according to bourse data. The previous record was in May, when 24.9 million contracts traded. Volumes more than tripled from a year earlier.
United States
Wall Street ended lower on Monday as tumbling oil prices dragged energy shares to a three-year low and factory data from China raised concerns about the world's second-biggest economy. Energy stocks were the biggest losers among the main S&P sectors, paced by Exxon Mobil and Chevron.
A report from market research firm Canalys showed Apple lost some smartphone market share in China in the second quarter. Its stock fell 2.36 per cent, weighing most on the Nasdaq and the S&P 500.
The Institute for Supply Management said its national factory activity index fell to 52.7 last month from 53.5 in June. A reading above 50 indicates expansion in manufacturing. A gauge of new orders received by factories rose to a seven-month high, while inventories continued to decline.
US auto sales rose 5.3 per cent to 1.51 million vehicles, above the 3 per cent rise expected by analysts, according to Autodata Corp. That translates to an annualised sale rate of 17.55 million vehicles in July and keeps the auto industry on pace for its best year since 2000.
Europe
Greece's stock market closed with heavy losses on Monday after a five-week shutdown brought on by fears that the country was about to be dumped from the euro zone. Bank shares plummeted 30 per cent before loss limits kicked in to stop investors selling any more. The main Athens stock index ended down 16.2 per cent, recovering slightly after plunging nearly 23 per cent at the open.
The UK government is selling a £2 billion stake in Royal Bank of Scotland Group, its first disposal since the lender received the world's largest bank bailout. The sale of a 5.2 per cent stake to money managers will cut the taxpayer's holding to about 73 per cent.
US federal prosecutors are investigating billions of dollars of trades Deutsche Bank made on behalf of Russian clients as recently as this year, according to people with knowledge of the situation.
What happened yesterday
Falling commodity prices and a poor overseas lead weighed on Australian shares on Monday, with light trading volumes throughout the day due to a bank holiday in New South Wales. Apart from a brief spike after the opening bell, the market traded in the red for the whole session. The benchmark S&P/ASX 200 index fell 0.3 per cent, or by 20 points, to 5679.3 while the All Ordinaries dropped 17 points to 5664.3.
