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The share market has a third day of gains within reach for the first time in more than three weeks after strong bank earnings and retail sales helped seal the Dow’s best weekly rise since June.

ASX futures rallied 30 points or 0.41 per cent. The S&P/ASX 200 has not strung together three wins since September 23.

An explosive session on the London Metal Exchange on Friday saw zinc surge more than 8 per cent. US-traded copper hit an all-time high. Oil touched a seven-year peak in the US. Gold and iron ore eased.

Wall Street

Unexpectedly strong retail sales and bank earnings helped Wall Street’s major indices push back towards record levels.

The Dow Jones Industrial Average rallied 382 points or 1.09 per cent. The S&P 500 gained 33 points or 0.75 per cent. The Nasdaq Composite put on 74 points or 0.5 per cent.

The Dow finished just 0.9 per cent from an all-time high as a new reporting season got off to a strong start. Goldman Sachs was the biggest contributor to Friday’s advance after adding 3.8 per cent. The bank’s investment banking revenue surged 88 per cent last quarter, smashing expectations. Profit increased 63 per cent.

“Goldman Sachs simply crushed third quarter earnings,” Dave Donovan, executive vice president of financial services for Publicis Sapient, told CNBC. 

The result continued a strong run of reports through the first week of the Q3 earnings season. Bank of America, JPMorgan Chase, Citigroup and Morgan Stanley also topped expectations. FactSet data showed 80 per cent of the 41 S&P 500 companies to report so far have beaten earnings targets.

The S&P 500 closed within 1.6 per cent of a record. The Nasdaq Composite, which has proved more susceptible to inflationary worries, ended 3.3 per cent off its old peak.

Also helping sentiment was evidence rising prices have yet to impact consumer spending. Retail sales increased 0.7 per cent last month, defying expectations for a contraction of at least 0.2 per cent.

“The inflation environment and concerns about supply chains have not put a strong dent in retail sales,” Yung-Yu Ma, chief investment strategist at BMO Wealth Management, told CNBC. “Consumers are acclimating to higher prices. So far that hasn’t resulted in a meaningful fall-off in demand.”

Travel stocks rallied after the White House announced restrictions for fully-vaccinated foreign visitors will end on November 8. The S&P 1500 airlines index firmed 0.83 per cent. Theme park operator Walt Disney gained 1.18 per cent. Hotel groups Hyatt and Marriott added 0.92 and 3.11 per cent, respectively.

Australian outlook

The September clouds continue to clear. The S&P/ASX 200 showed signs late last week of breaking out of the eight-week downtrend that had developed since the all-time high in mid-August. The index has 7400 in sight today, a level it has not finished above since September 27.

The banks should perform well after rising yields lifted US financials 1.51 per cent. Industrial metal miners should also fire following an extraordinary session in London (more below).

Consumer discretionary stocks climbed 1.76 per cent on the back of unexpectedly strong US retail sales. Other pockets of strength included industrials +0.96 per cent and technology +0.79 per cent.

One potential stumbling block today is a mid-session economic update from China. Quarterly gross domestic product is expected to have grown a tepid (by Chinese standards) 5 per cent last quarter, down sharply from 7.9 per cent over the prior three months. Growth in industrial production is also expected to slow significantly. A negative surprise when results are released at 1 pm AEDT would have a knock-on effect on Australian suppliers of raw materials.

The Reserve Bank tomorrow releases the minutes from its most recent meeting. Governor Philip Lowe is due to take part in an online panel discussion on Friday about central bank policies and mandates.

Other economic highlights this week include: weekly consumer sentiment (tomorrow); job vacancies (Wednesday); quarterly business confidence (Thursday); and preliminary readings on manufacturing and services activity (Friday).

The annual general meeting season really kicks into gear tomorrow. The vast majority of meetings will be held online. Potential highlights tomorrow include Brambles, Tabcorp, Cochlear, Stockland, Dexus, Fletcher Building, Bapcorp, IDP Education and EBOS Group.

Wednesday’s AGMs include: Flight Centre, Origin Energy, Super Retail Group, Deterra, Adairs, Service Stream, Mystate and Audinate. Thursday: Wesfarmers, Transurban, Crown Resorts, Endeavour Group, Healius, APA Group, Charter Hall Long WALE, Magellan, Perpetual and Orora. Friday: IAG, McMillan Shakespeare, Cleanaway Waste, Steadfast, Sunrise Energy and Equity Trustees. (Source: Australian Shareholders’ Association.)    

IPOs: Nickel sulphide explorer NickelSearch is scheduled to list today at noon AEDT. The company has land in WA on the Ravensthorpe greenstone belt.

The starting grid for the rest of the week’s new listings currently looks like this: Activeport Group, Dragonfly Biosciences and RAM Essential Services Property Fund (Wednesday); and Aurum Resources, iTech Minerals and Lykos Metals (Thursday). Note that listings are frequently subject to delays and cancellations. 

The dollar climbed 0.68 per cent to 74.17 US cents.

Commodities

Copper hit an all-time high in the US as warehouse inventories continued to plunge. Copper for December delivery touched US$4.781 per pound on the Comex market in New York before finishing 2.1 per cent ahead at US$4.73 for a weekly gain of 11 per cent.

Benchmark copper on the London Metal Exchange jumped 4 per cent to US$10,538 a tonne, close to a record US$10,747.50 hit in May. Prices have surged as warehouse inventories on the LME fell to levels last seen in 1974. Buying has been fierce amid worries power shortages will crimp production.

Benchmark copper on the London Metal Exchange jumped 4 per cent to US$10,538 a tonne, close to a record US$10,747.50 hit in May. Prices have surged as warehouse inventories on the LME fell to levels last seen in 1974. Drawdowns have been severe amid worries power shortages will crimp production.

“High power costs are also inflationary and this is boosting demand from investors for copper and other physical commodities as a hedge,” Saxo Bank analyst Ole Hansen said. “It looks like we’ve got clear air ahead of us to that May peak.”

The same forces lifted zinc 8.2 per cent on the LME, nickel 3.9 per cent, lead 2 per cent, aluminium 1.6 per cent and tin 1.5 per cent.

Oil hit a fresh seven-year peak in the US. West Texas Intermediate settled 97 cents or 1.2 per cent ahead at US$82.28 a barrel.

The international benchmark, Brent crude, secured an eighth straight weekly rise for the first time since 1999. Brent settled 86 US cents or 1 per cent higher at US$84.86 a barrel.

“A massive shortage of coal and natural gas in Asia and Europe has left the power plants reluctantly having to choose crude oil over natural gas — a pattern not seen for at least a decade,” Manish Raj, chief financial officer at Velandera Energy Partners, told MarketWatch. 

Coking coal had its best week in more than a month, rising 5.6 per cent on the Dalian exchange, according to Reuters. Coke climbed 8.1 per cent for its strongest weekly performance since 2018.

Iron ore slipped to a second straight loss after the World Steel Association predicted Chinese demand would contract 1 per cent this year. The Association downgraded its outlook from a previous forecast for growth of 3 per cent. The spot price for ore landed in China fell 55 US cents or 0.4 per cent to US$125.45 a tonne.

Rio Tinto declined in overseas trade after downgrading its ore shipping forecast on Friday. The miner’s US-listed stock shed 0.93 per cent and its UK-listed stock 1.43 per cent. BHP eased 0.29 per cent in the US and 0.14 per cent in the UK.

Gold trimmed its biggest weekly tally in six weeks as Bitcoin and treasury yields advanced. Gold for December delivery settled US$29.60 or 1.7 per cent lower at US$1,768.30 an ounce. For the week, the yellow metal gained 0.6 per cent. On Friday, the NYSE Arca Gold Bugs Index dropped 0.89 per cent.

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