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The share market looked ready to add to three weeks of gains at this morning’s open following a record close on the Dow and a rebound in mining stocks.

Futures action suggested the S&P/ASX 200 would open 30 points or 0.4 per cent ahead.  

The Dow edged to a new closing high as US investors favoured blue chips over tech stocks. Australian mining giants BHP and Rio Tinto bounced in overseas trade as iron ore and crude rallied.

Wall Street

The major indices finished mixed on Friday as disappointing earnings and the threat of reduced support for the economy dragged on the S&P 500 and Nasdaq Composite. The Dow overcame a morning wobble to secure its first record close since mid-August. The blue-chip average gained 74 points or 0.21 per cent.

The S&P 500 eased five points or 0.11 per cent. The Nasdaq Composite slumped 126 points or 0.82 per cent following earnings misses from Snap and Intel.

Snap tumbled 26.59 per cent after warning privacy changes to Apple’s operating system blew a hole in its advertising revenues. The changes made it harder for advertisers to track mobile users and target their advertising. Snap also said companies had pulled back on advertising spending because of supply-chain issues.

The warning triggered losses in other ad-reliant companies, including Facebook -5.05 per cent and Twitter -4.83 per cent. Intel shed 11.68 per cent as a chip shortage affected sales and revenues.

“Consumers want to open their wallets and buy things but they can’t if goods are stuck on container ships. And advertisers aren’t going to advertise things they can’t sell,” Sean Sun, portfolio manager at Thornburg Investment Management, told Reuters.

The market added to initial losses after Federal Reserve Chair Jerome Powell told a conference “it’s time to taper” the central bank’s asset-buying program. Powell said it was too early to raise rates, but the economy was strong enough for the central bank to reduce the emergency asset-purchase program introduced at the start of the pandemic.

The S&P 500’s loss was the first in eight sessions. Despite the setback, the index recorded a third straight weekly gain, along with the Dow and Nasdaq. The S&P 500 added roughly 1.6 per cent, the Dow 1.1 per cent and the Nasdaq 1.3 per cent.

Australian outlook

The mood on global equity markets remains constructive despite Friday’s mixed finish in the US. Fresh highs on Wall Street will act as a magnet for Australian benchmarks as the economy regains speed after lockdown. The S&P/ASX 200 has more than 200 points to make up before it reaches its old mid-August peak.

The market lost momentum towards the end of last week, but looks likely to test one-month highs this session. The banks should lead after the US financial sector outperformed on Friday. BHP and Rio Tinto rallied in European and US trade as iron ore rebounded.

Inflation data and corporate earnings look likely to set the tone this week as the economic calendar thins towards the end of the month. Wednesday’s quarterly consumer price index is expected to come in at a “hot” 0.8 per cent. A surprise in either direction would have implications for central bank policy.

RBA Deputy Governor Guy Debelle is due to testify before the Senate Economics Legislation Committee on Thursday. Retail sales and producer price figures are due on Friday.

Another huge week of virtual AGMs is coming up. Today brings updates from Nick Scali and Argo Investments. Tomorrow’s highlights include Regis Healthcare, Redbubble, Bega Cheese, Polynovo and Pinnacle Investment Management Group.

Wednesday: Woolworths, Whitehaven Coal, Blackmores, St Barbara, Chorus, Netwealth and Codan. Thursday: Star Entertainment, South32, JB Hi-Fi, Corporate Travel Management, Challenger, Reece, Boral and Tassal Group. Friday: SkyCity Entertainment, GWA, GUD and Carsales.com.

The quarterly reporting season climaxes this week. Among the bigger names reporting are: Evolution Mining, Northern Star, Ramelius Resources, Paladin Energy (Tuesday); Galaxy Resources, Sandfire (Wednesday); Fortescue Metals, Newcrest, IGO (Thursday); and Origin Energy and Western Areas (Friday). (Source: Morningstar)

Earnings are also likely to set the tone in the US, at least until Thursday night’s GDP report. This is Big Tech week, with third-quarter updates due from the likes of Apple, Alphabet, Microsoft, Amazon and Facebook.

IPOs: a busy week kicks off with Eastern Metals at 11 am AEDT today. Eastern is a base and precious metals explorer with projects in NSW and the NT.

The rest of the week currently looks like this: C29 Metals, GQG Partners and RemSense Technologies (Tuesday); Star Minerals (Wednesday); Aurum Resources, Green Technology Metals (Thursday); and Cooper Metals (Friday). Note listings are frequently subject to delays or cancellations.

The dollar bounced 0.15 per cent this morning to 74.64 US cents.

Commodities

Oil marked its longest-ever run of weekly gains in the US with a ninth straight advance. West Texas Intermediate crude rallied US$1.26 or 1.5 per cent on Friday to US$83.76 a barrel. For the week, the front-month contract put on 2.6 per cent.

The international benchmark, Brent crude, settled 92 US cents or 1.1 per cent ahead at US$85.53 a barrel. For the week, Brent gained 0.9 per cent.

“Oil continued its three-month rally of almost 30% as COVID peaked and the U.S. opened up travel to vaccinated travellers,” Jay Hatfield, chief executive officer at Infrastructure Capital Advisors, told MarketWatch. “We expect oil to continue its rally as we head into November and colder weather triggers more demand for heating oil, and the holidays drive incremental gasoline demand.” 

BHP and Rio Tinto rose in overseas trade as iron ore trimmed a losing week. The spot price for ore landed in China bounced US$2.85 or 2.4 per cent to US$120.35 a tonne. For the week, the ore price shed 4.1 per cent.

BHP‘s US-listed stock gained 1.41 per cent and its UK-listed stock 0.65 per cent. Rio Tinto added 0.52 per cent in the US and 0.51 per cent in the UK.

Gold pared gains after Fed Chair Powell talked down inflation worries. Gold for December delivery settled US$14.40 or 0.8 per cent higher at US$1,796.30 an ounce after trading as high as US$1,815.50. The NYSE Arca Gold Bugs Index firmed 0.73 per cent.

Copper added to its loss for the week after an initial rally ran out of steam. Benchmark copper on the London Metal Exchange declined 2.2 per cent to US$9,857 a tonne. US-traded copper fell 1.3 per cent to US$4.498 a pound for a weekly loss of 4.9 per cent.

Aluminium shed 1.5 per cent on the LME and nickel 0.8 per cent. Lead gained 1.4 per cent, zinc 0.7 per cent and tin 0.5 per cent.

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