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Aussie shares were poised to open higher after banks and Big Tech handed Wall Street a strong start to the trading week.

ASX futures rallied 19 points or 0.27 per cent as the S&P 500 bounced almost 1.9 per cent. The Dow put on more than 600 points.

Iron ore briefly surged almost 7 per cent on China’s Dalian Commodity Exchange. Oil, copper and gold advanced. The dollar climbed back above 71 US cents.

Wall Street

US stocks booked strong gains as a positive trading update from JPMorgan Chase fuelled a rally in financials. Friday’s dip-buying continued after President Joe Biden hinted the White House may wind back Trump-era tariffs on Chinese imports.

The S&P 500 jumped 72 points or 1.86 per cent. The Dow Jones Industrial Average advanced 618 points or 1.98 per cent. The Nasdaq Composite gained 181 points or 1.59 per cent.

The financial sector surged 3.23 per cent after JPMorgan raised its calendar-year outlook. The bank told an investor conference it expects net interest income of US$56 billion, up from previous guidance of US$50 billion.

Shares in the bank climbed 6.19 per cent as it emphasised the strength of the US economy and downplayed the risk of recession. Citigroup jumped 6.07 per cent. Bank of America added 5.94 per cent. Wells Fargo gained 5.16 per cent.

Lenders have been under pressure in recent weeks amid fears of bad debts and higher costs. The S&P 500 banks index fell 21.5 per cent this year. Christopher Grisanti, chief equity strategist at MAI Capital Management, told Reuters JPMorgan’s upbeat update showed concerns were overblown.

“Banking businesses are generally pretty good, credit concerns are low, at least for the moment, and the net interest margin remains pretty healthy because short rates haven’t come up all that much yet. So it’s another example of the fact that the market doom and gloom is overstated,” he said.

Hopes of a relief rally this week were stoked by a suggestion from President Biden during a news conference in Japan that his administration was considering reducing tariffs on Chinese goods.

“I am considering it,” he said. “We did not impose any of those tariffs. They were imposed by the last administration and they’re under consideration.”

Big Tech built on the buying momentum that came in late on Friday after the S&P 500 dipped into bear market territory. Apple, Microsoft and Alphabet all advanced.

“Today it would appear the market is less fearful over the inflation factor and the Fed being able to orchestrate a soft landing so to speak,” Chuck Carlson, CEO of Horizon Investment Services, told Reuters. However, “the bias is still to the downside,” he said.

Australian outlook

A tentatively positive start coming up as the threat of a Shanghai-style lockdown in Beijing tempers strong gains in US equities. The ASX gave up most of its gains yesterday after Chinese authorities reported record Covid case numbers in the Chinese capital. This morning’s infection rate update will play a role in how the Asian session evolves.

The S&P/ASX 200 put on as much as 50 points yesterday morning before news of the spike in Chinese case numbers broke. The index finished just three points or less than 0.1 per cent ahead.

“No sooner had its early morning rally stalled just shy of 7200, the market turned lower to close effectively flat for the day. 7 of its 11 sectors were down, of which utilities was the worst performer after it failed to retest Friday’s post-pandemic high,” City Index senior market analyst Matt Simpson said.

China aside, the prospects for the session ahead look promising. The two sectors with the heaviest weighting on the ASX performed well in the US. Financials jumped 3.23 per cent. Materials gained 1.85 per cent.

All 11 sectors advanced. Other notable gains included energy +2.68 per cent and technology +2.37 per cent. The out-of-favour consumer discretionary sector trailled with a rise of 0.64 per cent.

Back home, flash manufacturing and services industry surveys are due at 9 am AEST. Also this morning: ANZ’s weekly consumer confidence survey.

Viva Energy holds its AGM today.

IPOs: Tabcorp spin-off The Lottery Corporation commences trade at 11 am under the ticker code TLC. The new company houses Tabcorp’s lottery and Keno operations.

The dollar climbed 0.66 per cent to 71.08 US cents.


Iron ore surged on China’s Dalian Commodity Exchange after India hiked duties on ore exports in a bid to dampen inflationary pressures. The Indian government lifted tariffs on ore and concentrates to 50 per cent from 30 per cent. Indian ore accounted for approximately 3 per cent of Chinese imports last year, according to Reuters.

The most traded ore futures contract on the DCE put on as much as 6.9 per cent before finishing 4.4 per cent ahead at US$129.65 a tonne.

The mood was more subdued in other ore markets. Singapore futures gained 0.6 per cent. The spot price for ore landed at Tianjin dipped seven US cents or 0.1 per cent to US$134.29 a tonne.

BHP‘s US-traded depositary receipts firmed 2.05 per cent. The miner’s UK listing gained 1.78 per cent. Rio Tinto added 1.71 per cent in the US and 2.07 per cent in the UK.

Oil edged higher as the European Union worked towards a plan to phase out Russian energy imports. The EU’s leading energy official said a proposal to invest in oil infrastructure in Hungary should pave the way to an agreement. Hungary has so far resisted sanction plans, arguing its economy is too reliant on Russian energy.

Brent crude settled 87 US cents or 0.8 per cent ahead at US$113.42 a barrel. US crude edged up one cent to US$110.29.

Gold rose for a third session as the US dollar continued to back off two-decade highs. Metal for June delivery settled US$5.70 or 0.3 per cent higher at US$1,847.80 an ounce. The NYSE Arca Gold Bugs Index inched up 0.43 per cent.

Copper prices rose to their highest in more than two weeks as traders focussed on easing restrictions in Shanghai. Benchmark copper on the London Metal Exchange rallied 1.5 per cent to US$9,588.50 a tonne.

Lead improved 0.5 per cent. Zinc tacked on 2 per cent. Aluminium dipped 0.1 per cent, nickel 0.9 per cent and tin 0.2 per cent.

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