ASX poised to follow Europe lower

Australian shares are set to open lower, taking their lead from overnight trading in Europe. ASX futures were down 39 points at about 4.45pm. The Australian dollar was little changed.

With both Chinese and US financial markets closed for holidays, global shares drifted lower overnight in lower than usual volume. Metals were mixed. Gold was flat. Oil lifted.

Locally, there is the minutes from this month's policy meeting at the Reserve Bank.

Initially though the focus will be on earnings and it's another busy day: Oil Search, Vocus, Seven West Media, Northstar, Greencross, G8 Education, Investa Office Fund, AV Jennings and this afternoon, BHP Billiton.

In a February 16 report, Citigroup said results so far had been "relatively incident free".

"Of course, there have been a couple of surprise announcements (WES, QBE, MYR) and, because these are mostly interim results, also a few companies hanging on to now more questionable full year guidance (DMP, HSO). But there haven't been many shock results, making front pages, and the "bottom-up" consensus estimate of market earnings growth for FY18 has continued to tick up."

While noting that it was still early in the reporting season, Citi said "the improvement in business conditions reported in surveys isn't across all industries, but half of the companies that have reported so far outside of resources are perceived to be on track from earnings growth of up to 10 per cent, or 10-20 per cent, in FY18, more than last year".

Among the sectors and stocks "doing well or better than they were", other than resources, seem to include diversified financials (MQG, CPU, ASX, AMP), energy utilities, medical products (CSL, RMD), and infrastructure exposures. Citi also said areas where conditions appear tougher include banking, telecommunications, and retailing (only partially reported).

Today's Agenda

Local data: RBA February board meeting minutes

Overseas data: Euro zone ZEW expectations February, Germany ZEW expectations February, consumer confidence February

Market Highlights

SPI futures down 39 points or 0.7% to 5864

AUD flat at 79.12 US cents

Wall St closed for President's Day holiday

In Europe: Stoxx 50 -0.6%, FTSE -0.6%, CAC -0.5%, DAX -0.5%

Spot gold flat to $US1347.08 an ounce

Brent crude +0.9% to $US65.42 a barrel

US oil +1.1% to $US62.36 a barrel

Iron ore flat at $US78.43 a tonne

HK and China markets closed for Lunar New Year holidays

LME aluminium +0.3% to $US2214 a tonne

LME copper -1.6% to $US7118 a tonne

10-year bond yield: US 2.87%, Germany 0.73%, Australia 2.88%

From Today's Financial Review

Fundies vie for US infrastructure pie: Australian fund managers are hoping to woo sceptical US governors and convince them of the benefits of privatised infrastructure as they try to win a slice of Donald Trump's $US1 trillion spend.

Misbehavers are 'outliers': ASX: As tech stocks are suspended and plummet after questionable disclosure, the ASX defends its governance and refutes the need for a secondary board.

Chanticleer: After riding the hype GetSwift must now deliver: Shareholders in software provider GetSwift could be forgiven for feeling ripped off after the company admitted half its contracts are not earning revenue.

United States

Hedge funds and other large speculators turned net short on Nasdaq 100 Index futures for the first time in 21 months, according to weekly data compiled by the Commodity Futures Trading Commission through February 13. In fact, they became the most bearish since 2011. Meanwhile, the tech-heavy index gained 5.6 per cent in the five days through Friday, the most since October 2014.

The US Treasury will pack in auctions totaling $US258 billion this week, including record-sized sales of three- and six-month bills. With little in the way of significant economic data on the schedule, the sales will provide the clearest gauge yet of how steeply borrowing costs may rise.

The Federal Reserve will release minutes on Wednesday (Thursday AEDT) of its Januayr 30-31 meeting, Janet Yellen's last as chair, where officials kept the rate unchanged.

Fed policy makers speaking this week include New York Fed president William Dudley and Atlanta Fed president Raphael Bostic. Cleveland Fed president Loretta Mester is among speakers at the US Monetary Policy Forum in New York City.

Europe

Deutsche Bank AG has started cutting at least 250 jobs globally at its corporate and investment bank as Germany's largest lender seeks to keep a lid on expenses amid a sustained slide in the securities unit, according to people with direct knowledge of the matter. The cuts are still taking place and could widen to more than 500, one person said.

Europe's STOXX 600 has ended the session near its day's lows, down 0.6 per cent, with almost every sector (except for oil & gas) in negative territory.

A poor update from Reckitt Benckiser hit consumer staples, though steel-makers rose after the United States outlined proposals for hefty import curbs.

Interesting also that BlackRock has upgraded US equities to "overweight" while moving Europe to "neutral", saying that while Europe's earnings momentum is robust, it is lagging other regions.

Asia

Japan's Nikkei share average finished 2 per cent high on Monday, as exporters gained following a pullback in the yen, while market heavyweights such as Fanuc and Fast Retailing helped boost the benchmark index.

The Nikkei advanced to 22,149.21 points, its highest close since February 5.

The broader Topix rose 2.2 per cent to 1775.15, but volume was thin, with only 1.29 billion shares changing hands, the lowest since late December due to market holidays in the United States and Greater China. Turnover also dropped 14 per cent to the lowest since late December to 2.3 trillion yen.

The dollar was little changed at 106.330 yen after sliding on Friday to 105.545, its lowest since November 2016. Recent gains in the yen has put a dampener on exporter stocks, with investors concerned a sustained uptick in the Japanese currency could hurt profits.

Industrial robot maker Fanuc Corp gained 3.7 per cent and clothing chain Fast Retailing advanced 2.5 per cent, contributing a combined 77 points to the Nikkei.

Automakers rose, with Toyota Motor up 2.4 per cent and Subaru Corp advancing 2.3 per cent.

Currencies

Euro zone ministers on Monday chose Spanish Economy Minister Luis de Guindos to succeed European Central Bank Vice President Vitor Constancio at the end of May, they said in a statement.

Greek government bond yields dipped on Monday after a ratings upgrade from Fitch highlighted improving sentiment towards the country, while Italian bonds came under pressure from jitters ahead of next month's election.

Fitch upgraded Greece's long-term rating to "B" from "B-" and kept its outlook positive despite its debts.

Fitch said general government debt sustainability would improve on sustained economic growth and reduced political risks .

That marks the second ratings upgrade this year. S&P Global Ratings last month raised Greek ratings for the first time in two years on improvements in the finances and fiscal outlook.

Latvia's government bonds were hit after one of the country's biggest banks was accused of breaching Western sanctions on North Korea and its central bank governor was detained by the country's anti-corruption agency.

Commodities

Copper fell on Monday as a firmer US dollar prompted some profit taking in the metal after its biggest weekly rise in more than a year, while aluminium rose as the United States said it was considering import tariffs on the metal.

"Financial markets have had quite a volatile month, and that has also been the case for copper," Danske Bank analyst Jens Pedersen said. "Today it could simply be a case of the dollar strengthening a bit, and that weighing on base metals."

"We are heading for another round of manufacturing PMIs this week, which is a gauge of how industrial activity is doing - whether it is still moving ahead at a relatively strong pace, which should cap downside for copper and other base metals, or whether it is close to a peak. That is what the market is looking at right now."

London Metal Exchange copper closed down 1.6 per cent at $US7118 a tonne. Volumes were exceptionally light across base metals.

Rio Tinto's epicentre quietly moves south: Rio Tinto's roving chief executive Jean-Sebastien Jacques has quietly moved the executive epicentre of the mining giant away from its swanky London offices.

The value of global mining and metals deals hit a four-year high in 2017, according to accountancy firm EY, as financial distress abated and companies sold off non-core assets.

Mining and metals deals totalled $US51 billion last year, up 15 per cent from 2016 and dominated by coal and steel transactions, although the volume of transactions fell 6 per cent.

Australian Sharemarket

Australian shares advanced firmly on Monday, with investors welcoming earnings from a diverse range of companies in what's shaping up to be a solid reporting season.

The S&P/ASX 200 index ended the day up 37 points, or 0.6 per cent, at 5941 while the All Ordinaries index climbed 39 points, or 0.7 per cent, to 6044.

Australia's current earnings season is one of the strongest in the last 15 years, based on the proportion of companies with profit expectation upgrades from analysts compared to downgrades, according to Credit Suisse.

While analysts have have downgraded EPS forecasts for the year ending June by 0.3 per cent for the S&P/ASX 200 Index, 28 per cent of companies in the benchmark have had upgrades of more than 1 per cent versus 23 percent with downgrades, Credit Suisse analysts Hasan Tevfik and Peter Liu wrote in a note dated February 16.

Excluding poor results at Commonwealth Bank of Australia, Fletcher Building Ltd and Wesfarmers Ltd, analysts' profit outlook for the S&P/ASX 200 would be 0.6 per cent higher, they wrote.

An additional $500 million in dividends are expected to be paid out in the 12 months to June 30, while there's about $820 million of more share buybacks, led by Dexus, Mirvac Group and South32, according to Tevfik and Liu.