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Aussie shares looked set for their strongest open in more than a week following Wall Street’s first advance in three sessions.

ASX futures climbed 20 points or 0.3 per cent as US stocks reversed early falls.

Wall Street

Bargain-hunters stepped in as Wall Street’s losing week threatened to extend into a third session. The Dow Jones Industrial Average fell as much as 348 points before reversing to a gain of 199 points or 0.62 per cent.

“We believe the action today may be pushing stocks into moderately oversold territory on a short-term basis once again,” wealth manager Janney Montgomery Scott told clients before the rebound.

The S&P 500 finished 20 points or 0.52 per cent ahead. The Nasdaq Composite added 16 points or 0.12 per cent.

The early weakness followed unexpectedly strong data on claims for unemployment benefits. First-time claims dived to 684,000 last week, well below the median 735,000 expected by economists polled by Dow Jones. The lowest tally of the pandemic era appeared to fuel concerns that the Federal Reserve may curtail its stimulus spending earlier than market predictions indicate.

“The signs of strength from today’s jobless claims read may actually have a perverse effect on the broader market,” Mike Loewengart, managing director of investment strategy at E-Trade, said.Meaning that if we continue to see the labour market make strides, this could translate into pressure on equities and on the Fed to reassess its accommodative stance.”

Social media companies retreated as their CEOs prepared to appear before  a congressional hearing on extremism and misinformation on their platforms. Twitter dropped 1.5 per cent and Facebook 1.2 per cent. Google parent company Alphabet finished flat.

Cyclical stocks – so-called “reopening plays” – continued to outperform growth stocks. Airlines, cruise companies and other travel/tourism stocks rebounded.

The Russell 1000 Value Index rallied 1.2 per cent, versus a 0.1 per cent decline in the Growth Index. The growth stock-heavy Nasdaq has underperformed the other major indices this year, trading broadly flat for the year while the S&P 500 has gained 3 per cent. The S&P/ASX 200 has kept pace with the S&P 500, adding around 3 per cent so far for 2021.

Australian outlook

An unexpectedly strong week looks to have more to give. The S&P/ASX 200 has risen on three out of four sessions this week despite weak leads from the US and Asia for much of the week.

Cyclical stocks led the US advance. Industrials gained 1.6 per cent and materials 1.4 per cent. Financials added 1.6 per cent.

Bond proxies were also strong as yields continued to retreat from 14-month highs. Utilities and consumer staples gained 1 per cent, real estate 0.8 per cent.

Energy stocks shrugged off a sharp decline in crude, rising 0.3 per cent. The tech sector dipped 0.1 per cent.

The dollar slid 0.11 per cent to 75.79 US cents.

Commodities

Oil‘s volatile week continued as revived demand worries outweighed a temporary blockage in the Suez Canal, where a container ship remained stuck. Reports suggested the Ever Given could be moved by Monday. Brent crude settled $2.46 or 3.8 per cent lower at US$61.95 a barrel.

Gold unwound Wednesday’s advance. Metal for April delivery settled $8.10 or 0.5 per cent weaker at US$1,725.10 an ounce. The NYSE Arca Gold Bugs Index fell 1 per cent.

Mining giants BHP and Rio Tinto traded mixed in overseas action. BHP’s US-listed stock dropped 0.49 per cent and its UK-listed stock lost 1.68 per cent. Rio Tinto gained 0.36 per cent in the US after losing 1.35 per cent in the UK. The spot price for iron ore landed in China inched up 65 cents or 0.4 per cent to US$160.20 a tonne.

Copper dropped below US$4 a pound for the first time in more than two weeks. The price eased 2.1 per cent to US$3.98.

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