Wall St edges lower as oil drop weighs on energy shares

The ASX is set to defy lacklustre global leads and open higher, despite falling oil prices that weighed on US stocks.

US stocks fell slightly as traders awaited a speech from Fed chair Janet Yellen. Picture: AP Photo/Richard Drew.

US stocks slipped overnight, led by losses in energy shares.

European shares also drifted lower as traders waited for a key speech from US Federal Reserve chair Janet Yellen later this week, which could offer clues as to the timing of interest rate hikes.

The Australian share market is set to defy the lacklustre global leads and rise this morning, with ASX futures up five points at 6.25am (AEST).

Major US stock indexes haven’t covered much ground in recent weeks. The S&P 500 notched its 31st consecutive session without a move of 1 per cent or more in either direction, the longest such stretch in two years. The index hit its 11th record of the year last Monday but has since pulled back.

“It’s the epitome of the dog days of summer,” said Kent Engelke, managing director at Capitol Securities Management. “We are all just sitting on our hands.”

The Dow Jones Industrial Average slipped 23 points, or 0.1 per cent, to 18529. The S&P 500 fell less than 0.1 per cent and the Nasdaq Composite rose 0.1 per cent.

Energy shares’ moves have been more pronounced, tracking recent swings in oil prices. The S&P 500’s energy sector lost 0.9 per cent. Shares of Marathon Oil fell 6.9 per cent. Halliburton lost 3.8 per cent.

US crude oil snapped a seven-session winning streak to close down 3 per cent at $US47.05 a barrel, its biggest drop since Aug. 1.

Fears that oil’s recent rally could prompt more production weighed on prices. A stronger dollar, which rose on expectations of higher US interest rates, also knocked dollar-denominated commodities.

The Federal Reserve’s plans and its impact on the dollar remain “the pulse of much of the market’s focus,” said Neil Dwane, global strategist at Allianz Global Investors. “If you think the dollar is strengthening, you’re bearish on commodities and on many emerging markets, which have funded themselves in dollars,” he said.

Fed Vice Chairman Stanley Fischer on Sunday struck an optimistic note on the economy’s short-term outlook, calling inflation within “hailing distance” of the bank’s 2 per cent target and noting economic growth is expected to pick up in the coming quarters.

The WSJ Dollar Index, which measures the US currency against 16 others, gained 0.1 per cent.

With corporate earnings season winding down, markets have been fluctuating on mixed signals from Fed officials.

Investors are searching for things to trade off of, and “there isn’t much out there,” said Peter Costa, president of trading firm Empire Executions Inc. Most “are waiting for when [Fed Chair Janet] Yellen speaks Friday, to see if they can read anything between the lines.”

Dr Yellen is slated to speak later this week at the central bank’s annual retreat in Jackson Hole, Wyo.

Elsewhere, the Stoxx Europe 600 rose 0.1 per cent. The yen’s relative weakness helped Japan’s Nikkei Stock Average eke out a 0.3 per cent gain. The dollar recently rose 0.1 per cent against the yen to Yen100.325.

Dow Jones