Local Markets Commentary

The Australian market looks set for a slight improvement at the open on the final trading day of the week, with ASX futures up 7 points.

The shine came off the major lenders’ rebound in late trade yesterday as the South Australian Government made a shock announcement in its Budget to impose its own bank levy.

The SA levy is forecast to raise $370 million over the next four years from Commonwealth Bank, National Australia Bank, ANZ Bank, Westpac and Macquarie. Westpac owns Bank of South Australia and will be most affected.

In overnight commodities trade, oil snapped out of its rout, bouncing from November lows, though there remains concern that crude could plunge below US$40 in the near term.

Gold futures extending gains after halting a five-day slide on Wednesday as crude slumped, fuelling concerns that reflation will remain lacklustre. Investors remain focused on inventories that work against OPEC-led efforts to reduce a glut.

Iron ore dipped then ended flat, and aluminium prices held near six-week lows as the market focused on rising supplies and exports from China, lower output costs and higher inventories.

The $A dipped 0.1% against the greenback, then ended almost flat at US75.38c, at 8.30am AEST.

Overseas Market Commentary

Major European and US equities markets posted mainly modest gains overnight. The weakness in the oil price is renewing fears about central bankers’ ability to boost inflation.

US stocks pared gains in late trading to end the day little changed as financial shares slumped ahead of the results of the Fed’s stress tests overnight.

The S&P 500 Index traded in a narrow band as the bank slump was offset by a rally in health-care stocks.

The Senate Republicans' proposal to replace Obamacare would provide an extra $US50 billion over four years to stabilise insurance exchanges, boosting health insurers. The Nasdaq's biotech ETF pushed its four-day rally to 10 per cent.

Euro zone consumer confidence jumped much more than expected in June, rising to -1.3 points from

-3.3 points in May, a flash estimate from the European Union's statistics office Eurostat showed.

European equities ended the session little changed as energy companies pared losses amid a rebound in oil prices. Pharmaceutical stocks widened their advance by 2%, tracking a rally in US peers, after Senate Republican leaders revealed a draft of health-care plan.

Hong Kong stocks changed little yesterday as investors digested the potential impact of MSCI's decision to include more mainland China stocks in a key benchmark index.

By contrast, China's blue-chips extended gains to hit a new 18-month high.

However most of the gains were wiped out in late trade as investors took profits and as weakness in small-caps dampened sentiment.

Japan's Nikkei share average erased early modest gains on Thursday and edged down, as a stronger yen took its toll on market sentiment.