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Aussie shares were set to retreat from a two-month high following a wait-and-see session in the US and pressure on commodities.

ASX futures eased 36 points or 0.48 per cent, extending their loss as US stocks faded in the final hour of trade.  

The dollar rallied back towards 73.5 US cents. Iron ore, copper and gold declined. Oil markets finished mixed.

Wall Street

US investors sat on their hands at the start of a big week of quarterly earning updates from retailers as a sharp rise in long-term interest rates subdued buying interest.

The S&P 500 gave up early gains to finish unchanged. The Dow Jones Industrial Average shed 12 points or 0.03 per cent. The Nasdaq Composite dipped seven points or 0.04 per cent.

The market rolled over as bond markets sold off. The yield on ten-year US treasuries climbed six basis points to its highest in more than two weeks.

“Today’s price action in the bond market is an indicator of how fluid the inflation story really is,” Charlie Ripley, senior investment strategist for Allianz Investment Management, said. “Although the Fed hasn’t fully signalled where policy will be going forward, markets continue to adjust to where they expect Fed policy to land.”

Traditional defensive sectors outperformed. Energy also strengthened. Lenders marked time despite the rise in rates. Yield-sensitive tech stocks declined.

Tesla continued to fall from record levels after CEO Elon Musk sold $6.9 billion in shares last week. The electric car-maker’s shares shed 1.94 per cent. Chipmaker Nvidia fell 1.1 per cent ahead of reporting earnings later this week.

Retailers are set to dominate this week’s corporate earnings watch, with updates due from Walmart, Home Depot, Target, Macy’s and Lowe’s. Overnight, Tyson Foods rose 3.63 per cent after beating earning and profit expectations.

“If earnings come in softer than expected, you might see a little bit of a pullback in that consumer sector, but if it’s anything like the rest of the third quarter, it seems like earnings should be solid,” SoFi’s head of investment strategy Liz Young said.

Boeing was the biggest contributor to the Dow, rising 5.49 per cent after Emirates announced an order for two freighters, and Saudi Arabian Airlines entered negotiations with the plane-maker to buy wide-body jets.  

Australian outlook

A soft start coming up following an underwhelming US session. No major developments overnight, but collectively enough negatives to knock the ASX off a two-month high. The dollar rose, yields increased, iron ore and copper fell, BHP and Rio Tinto retreated.

The S&P/ASX 200 climbed 27 points or 0.36 per cent yesterday to its best finish in more than two months. The index closed at 7470, a level that has marked the upper end of the benchmark’s ambitions over the last ten weeks. The index has not tested 7500 since September 9. The wait continues.

US materials declined 0.46 per cent as commodity markets responded to yesterday’s weak Chinese property data. The cost of new homes in China fell 0.25 per cent last month, the market’s first setback in more than six years.

Health, consumer discretionary and technology also lost ground. Defensive utilities put on 1.31 per cent, consumer staples 0.48 per cent and real estate 0.48 per cent. The financial sector edged up 0.02 per cent.

The Reserve Bank will be back in the spotlight this session. The minutes from this month’s policy meeting will be released at 11.30 am AEDT. Governor Philip Lowe is due to deliver a speech on inflation at 1.30 pm. Weekly consumer confidence figures are also due.

AGM season resumes with updates from Mirvac, Pilbara Minerals and Lifestyle Communities. Telstra holds an Investor Day.

IPOs: Evolution Energy Minerals lists at 12.30 pm AEDT. The miner’s pitch is: “Sustainable graphite products for the global green economy”. The company intends to mine graphite in Tanzania.

The dollar was lately up 0.18 per cent at 73.45 US cents after trading as high as 73.7 cents.

Commodities

BHP and Rio Tinto remained under pressure in overseas trade as yesterday’s soft Chinese property data weighed on raw materials. The spot price for iron ore landed in China dipped 60 US cents or 0.7 per cent to US$89.15 a tonne. Copper declined 1.1 per cent on Comex to US$4.40 a pound  

BHP‘s US-listed stock dropped 1.45 per cent and its UK-listed stock lost 1.91 per cent. Rio Tinto shed 1.15 per cent in the US and 1.06 per cent in the UK.

Coal miners around the world retreated after leaders at COP26 agreed to “phase down” coal use. Miners from Australia to Indonesia, China, India, Europe and the US declined. Falls included Peabody Energy -8.22 per cent, Shenhua Energy -0.98 per cent and Anglo American -1.42 per cent. US coal prices hit 12-year highs last week as world leaders met to discuss phasing out production.

Gold‘s seven-session winning run ended by a whisker as strengthening yields dampened demand. Gold for December delivery settled US$1.90 or 0.1 per cent lower at US$1,866.60 an ounce. The NYSE Arca Gold Bugs Index inched up 0.13 per cent.

“It’s been quite a run for gold, which has soared as inflation indicators have continued to rise and become more widespread,” Craig Erlam, senior market analyst at Oanda, wrote.

Oil markets closed mixed but with minimal change amid speculation the White House will release US strategic reserves to take heat out of soaring prices. Brent crude settled 12 US cents or 0.2 per cent lower at US$82.05 a barrel. The US benchmark fell as low as US$79.30 before rebounding to settle nine cents or 0.1 per cent higher at US$80.88.

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