A tentative rebound on Wall Street points to a positive start to Australian share trade as global markets start to look beyond tensions in the Middle East.
ASX SPI200 index futures rallied 30 points or 0.4 per cent to 6703 as the dollar retreated and key commodities inched higher.
US stocks opened in the red amid ongoing fall-out from the drone killing of Iran’s top military leader on Friday. The S&P 500 opened half a percentage point lower, but improved steadily through the session to finish 11 points or 0.35 per cent ahead. The Dow turned a 200-point opening deficit into a final gain of 69 points or 0.24 per cent. The Nasdaq added 51 points or 0.56 per cent.
The assassination of Iranian Major General Qassem Soleimani at Baghdad Airport on Friday triggered a classic “flight to safety“: gold, the US dollar and treasuries spiked, while risk assets sold off. Wall Street suffered its worst session in four weeks. Oil hit seven-month highs.
Over the weekend, Iran promised retribution and abandoned its commitment to a nuclear treaty. Iraqi MPs voted to expel foreign troops from their soil. US President Donald Trump warned the US was prepared to strike 52 sites within Iran in the event of revenge attacks on Americans.
“If you were looking for a reason to sell, you got one,” Art Hogan, chief market strategist at National Securities in the US told CNBC. “But the fundamental backdrop hasn’t changed… The market has done exactly what it should do.”
Tech stocks led the overnight recovery, with Facebook, Amazon, Google-parent Alphabet and Netflix all moving strongly. Alphabet was boosted by a broker upgrade.
Brent crude pushed above $US70 a barrel in Australian trade yesterday afternoon before erasing most of its gains. Brent crude for March delivery settled 31 cents ahead at $US68.91 a barrel after trading as high as $US70.74. The S&P 500 energy sector put on 0.78 per cent.
The S&P 500 gold sub-industry index rose 1.03 per cent as gold hit a seven-year high. Gold for February delivery settled $16.40 or 1.1 per cent higher at $US1,568.80 an ounce, the highest settlement since April 2013. The session delivered a ninth straight gain, the longest winning streak in a year.
Gold and oil stocks helped the ASX overcome a rocky start yesterday. The ASX 200 dived 62 points in early action before recovering to a final gain of two points or less than 0.1 per cent.
BHP cushioned the market yesterday, but may prove a headwind today following losses in overseas trade. The Big Australian’s US-listed stock shed 0.11 per cent and its UK-listed stock 1.18 per cent. Rio Tinto gave up 0.63 per cent in the US and 1.64 per cent in the UK. Iron ore traded little changed in China, the spot price rising 10 cents or less than 0.1 per cent to $US94 a dry ton.
Industrial metals held up well against the threat of increased production costs from higher energy prices. Benchmark copper on the London Metal Exchange edged up 0.1 per cent. Aluminium gained 0.5 per cent, nickel 0.5 per cent, tin 0.3 per cent and zinc 0.8 per cent. Lead closed flat.
The dollar eased almost a fifth of a cent overnight to 69.39 US cents.
December job advertising figures are due at 11.30am EST. Wall Street has trade figures, factory orders and services industry activity on tap tonight.