Shares are pointing lower after Wall Street succumbed to disappointing earnings and signs consumer confidence is faltering as the coronavirus spreads and politicians squabble over benefit payments.
Trade in index futures suggest the S&P/ASX 200 will open around 26 points or 0.4 per cent lower this morning, extending yesterday's 0.4 per cent fall.
US stocks closed at session lows following an afternoon sell-off. The S&P 500 gave up 21 points or 0.65 per cent as declines in Big Tech outweighed gains for companies that would benefit from economic revival. The Nasdaq slumped 134 points or 1.27 per cent. The Dow shed 205 points or 0.77 per cent.
Tech stocks due to report earnings later this week led the retreat following a string of disappointing updates overnight. Amazon fell 1.8 per cent, Alphabet 1.7 per cent, Apple 1.6 per cent, Facebook 1.5 per cent and Netflix 1.4 per cent. A rotation into recovery plays lifted the S&P 1500 Airlines Index 2.3 per cent and big-name cruiselines by up to 6.3 per cent.
“All of the big momentum tech names are stalling out,” Mark Tepper, CEO of Strategic Wealth Partners, told CNBC. “They’ve carried people’s portfolios and now they’re running out of steam.”
The busiest week of earnings season took a turn for the worse as Dow components McDonald's and 3M released disappointing numbers. The fast food giant's shares dropped 2.5 per cent on news COVID-19 lockdowns overseas and in parts of the US continued to depress revenues. The company declined to offer a forecast. Industrial conglomerate 3M sank 4.8 per cent after missing earnings and revenue expectations.
Data underlined the impact of the spread of COVID-19 on hopes for economic revival. The Conference Board's consumer confidence index sank to 92.6 this month from 98.3 in June. A sub-index that measures expectations for the future fell to a four-month low.
“The data signals that consumers, in the face of rising virus cases and a reversal in labor market gains, are becoming more cautious about the continued healing of the economy,” economists Kathy Bostjancic and Gregory Daco of Oxford Economics wrote.
A market that has been supercharged by stimulus measures awaited tonight's Federal Reserve policy statement and progress towards a new package to replace existing measures that expire this week. A proposal unveiled yesterday by Senate Republicans met opposition from Democrats. House Speaker Nancy Pelosi said Republicans were "not really ready to have a serious negotiation". Commentators said the two sides remained far apart on key components of the next stimulus bill.
The NYSE Arca Gold Bugs index of US goldminers finished 0.4 per cent in the red but well off its lows after the precious metal took investors on a wild ride. Gold swung through a US$75 range before securing a new record-high settlement. Gold for August delivery settled $13.60 or 0.7 per cent ahead at US$1,944.60 an ounce after trading as high as US$1,974.70 and as low as US$1,900.20.
Gold's wild gyrations helped trigger a sharp reverse on the ASX yesterday. The ASX 200 rose 1.2 per cent in early action before crumbling to a loss of 0.4 per cent as the precious metal suffered a violent sell-off and news of fresh problems at Westpac weighed on the big banks.
Gains in BHP and Rio Tinto shielded the market from a deeper loss yesterday, but declined in overnight action. BHP's US-listed stock shed 1.6 per cent and its UK-listed stock 1.64 per cent. Rio Tinto gave up 2.06 per cent in the US and 1.53 per cent in the UK. The spot price for iron ore landed in China edged up 25 cents or 0.2 per cent to US$108.05 a dry ton.
Oil finished at its lowest level in a week ahead of a weekly US inventory update. Brent crude settled 19 cents or 0.4 per cent weaker at US$43.22 a barrel.
Copper was boosted by a drop in stockpiles and positive economic data from China and Germany. Benchmark copper on the London Metal Exchange gained 1 per cent to US$6,490 a tonne. Aluminium added 0.9 per cent, lead 0.7 per cent and zinc 0.5 per cent. Nickel dropped 0.4 per cent and tin 0.1 per cent.
The dollar eased 0.06 per cent to 71.53 US cents.
A busy 24 hours coming up includes quarterly domestic consumer inflation data at 11.30am EST, a slew of quarterly corporate updates, a US Federal Reserve policy statement and a huge night of US company earnings.