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Aussie shares looked set to open narrowly higher following a mixed session on Wall Street ahead of tonight’s July US jobs report.
Declines in energy stocks weighed on the Dow and S&P 500 as oil plumbed a fresh six-month low. The Nasdaq Composite logged its highest close since May.
Gold booked its best finish in a month. Fears of a global recession weighed on iron ore, but most industrial metals rebounded.
ASX futures edged up six points or 0.09 per cent. Barring a sell-off this afternoon, the S&P/ASX 200 is on track for a third straight weekly advance.
Wall Street
Wall Street’s main indices finished mixed as an up-tick in claims for unemployment benefits pointed to a slowdown in labour markets ahead of tonight’s monthly jobs update.
The S&P 500 jagged in and out of positive territory before closing three points or 0.08 per cent lower. The Dow Jones Industrial Average retreated 86 points or 0.26 per cent. The Nasdaq Composite rallied 52 points or 0.41 per cent.
“I would certainly consider today one of those wait-and-see days while we wait for the most important piece of data that comes out this week,” Art Hogan, chief market strategist at B. Riley Financial, said.
Tonight’s employment figures are expected to show the economy added around 250,000 jobs last month, down from 372,000 in June. The report is this week’s most significant in terms of the outlook for interest rates. A strong result might tip the balance in favour of a larger hike next month.
Claims for unemployment benefits have been trending steadily higher in recent months in a sign increased rates were starting to bite. First-time claims for benefits rose 6,000 last week to 260,000. The number of weekly claims was well below 200,000 at the height of the pandemic rebound in April.
The energy sector suffered its biggest hit in a month, falling 3.59 per cent as crude oil fell to levels seen before Russia’s invasion of Ukraine. Exxon Mobil sagged 4.21 per cent. Chevron lost 2.72 per cent.
Crude prices have declined sharply since data this week showed US stockpiles were increasing at a time when seasonal demand was supposed to be strong. The US is in the midst of its summer holiday “driving season”. Overnight, the Bank of England warned Britain was facing its worst recession since the 1990s.
“Demand concerns are now the dominant influence on the global energy market and even though supply worries will persist with the Russia-Ukraine war, we will need to see evidence of demand stabilizing for the oil market to begin to find a near-term bottom,” analysts at Sevens Report Research wrote.
Brent crude settled US$2.66 or 2.8 per cent lower at US$94.12 a barrel. The US benchmark, West Texas Intermediate, closed below US$90 for the first time since February. WTI dropped US$2.12 or 2.3 per cent to US$88.54.
The Nasdaq was lifted by gains in Amazon +2.19 per cent, Meta Platforms +1.05 per cent and Advanced Micro Devices +5.93 per cent.
Australian outlook
A three-week rebound in the S&P/ASX 200 has lost momentum over the last few sessions. The index put in its best work on Monday and has added nothing since.
Tuesday brought a five-point gain, Wednesday a 22-point setback and yesterday the loss of a single point. The index is likely to slop about this 6950/7000 level until it finds the momentum to break through or retrace. Unfortunately, overnight events seem unlikely to provide much direction, meaning another day of sideways action.
Big Tech provided most of the upward momentum on Wall Street. The three sectors dominated by those companies gained between 0.18 and 0.54 per cent. Industrials put on 0.31 per cent.
Energy was the biggest drag, falling 3.59 per cent. Basic materials inched up 0.05 per cent. Financials declined 0.34 per cent.
The Australian Industry Group posts the Performance of Services Index at 8.30 am AEST. The Reserve Bank releases a quarterly Statement on Monetary Policy at 11.30 am.
WPP AUNZ reports half-year results today.
IPOs: this week’s only new listing (a late addition) takes place at 1 pm. Summit Minerals is a battery metals explorer with several projects in WA and one in NSW.
The dollar firmed 0.47 per cent to 69.7 US cents.
Commodities
Gold settled at its highest level since June 30, with buyers encouraged by retraces in the US dollar and treasury yields. Metal for December delivery climbed US$30.50 or 1.7 per cent to US$1,806.90 an ounce. The NYSE Arca Gold Bugs Index jumped 3.11 per cent.
“I think the downturn in gold has been overdone,” George Milling-Stanley, chief gold strategist at State Street Global Advisors, told MarketWatch.
“We dropped $100 in very short order, as if the U.S. already was in a recession, or on the verge of one, and there was no way of escaping it.”
A retreat in the greenback and the departure of US House Speaker Nancy Pelosi from Taiwan without incident helped copper rise for the first time in four sessions. Benchmark copper on the London Metal Exchange bounced 0.6 per cent to US$7,720.20 a tonne.
Aluminium rallied 1.2 per cent, lead 1 per cent, zinc 5.5 per cent and tin 1.2 per cent. Nickel dipped 0.6 per cent.
Iron ore remained under pressure amid ongoing concerns about China’s struggling property market and the prospects for recession in Europe. Citi analysts warned the European Union economy was likely to deteriorate “over the next 6-9 months”.
The spot price for ore landed in China dropped US$3.88 or 3.5 per cent to US$106.50 a tonne. The most-traded ore contract on the Dalian Commodity Exchange fell 4.8 per cent to 756.5 yuan.
BHP‘s US-traded depositary receipts eased 0.23 per cent. The miner’s UK listing improved 0.62 per cent. Rio Tinto put on 0.24 per cent in the US and 0.66 per cent in the UK.
