International markets set a softer tone for this morning’s open but this has been partly offset by firm commodity prices over night.

BHP Billiton’s result has helped provide a relatively supportive tone for materials stocks this morning. It contained no major surprises with underlying earnings achieving a slight beat on consensus expectations. The period of major write downs now looks to be behind BHP. From here on, it will continue to benefit from productivity gains. The iron ore price remains the key variable for BHP’s outlook. With Chinese inventories now at high levels and seaborne supply expected to ramp up, there looks to be downside risk to current prices. However, the longer current spot prices can hold up, the better for the short term outlook is and today’s news that the spot price has rallied to $US62 should support confidence.

Despite the soft opening, the ASX 200 index remains in relatively neutral mode. Assuming this is maintained throughout the day it will be the fourth consecutive day with only minor changes in the overall level of the market.

Investor focus will again be on company profit results today. While it’s very early days, results have so far been mixed but good enough to support the ASX 200 around current levels. Around half the major companies reporting to date have achieved positive surprises