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Australian stocks look set for early gains after Wall Street snapped a three-session losing run and a rebound in energy prices continued.
ASX futures rallied 31 points or 0.45 per cent. The S&P/ASX 200 bounced 0.52 per cent yesterday off a three-week low.
Overnight, oil rose to a three-week high. Iron ore added to this week’s recovery.
Another slew of household names reports earnings today, including Woolworths, Nine Entertainment, Flight Centre and Qantas.
Wall Street
Energy stocks led as Wall Street’s main indices rose for the first time in four sessions. Volumes were light ahead of the annual Jackson Hole economic symposium.
The S&P 500 climbed 12 points or 0.29 per cent. The Dow Jones Industrial Average firmed 60 points or 0.18 per cent. The Nasdaq Composite gained 50 points or 0.41 per cent.
A broad rally lifted all 11 sectors as selling pressures abated on the eve of the annual gathering of central bankers in Wyoming. The three-day symposium starts tonight. The main event is tomorrow’s address by Federal Reserve Chair Jerome Powell when the Fed chief is expected to reinforce the central bank’s commitment to crushing inflation.
Trading volumes dwindled ahead of the gathering. Reuters reported 8.9 billion shares were traded overnight compared to an average of 10.9 billion across the previous 20 sessions.
“We’re really in a situation where the markets are betwixt and between,” US Bank Wealth Management’s senior vice president and head of public markets, Lisa Erickson, said.
“It’s really waiting for some more significant news at the end of the week with the Jackson Hole speech and the PCE [inflation data], so what we’re really seeing is just investors, I think, modestly floating up and down with the downward bias,” she added.
A mixed night of economic data saw durable goods flatten last month against expectations, but pending home sales decline less than expected.
Travel stocks rallied after investment bank Jefferies noted ticket prices for cruises had stabilised at higher levels. Norwegian Cruise Line Holdings put on 8.4 per cent, Royal Caribbean 7.65 per cent and Carnival 5.35 per cent. The S&P 500 Airlines Industry Index gained 1.23 per cent.
President Joe Biden announced the federal government will forgive US$10,000 in student loan debts for former college-goers earning less than US$125,000 per year. The move fulfilled a campaign pledge, but could inflame inflation.
Australian outlook
Pre-positioning for Jackson Hole appears largely over, allowing equity markets to stabilise after several days of down-pressure. The S&P/ASX 200 stole a march on Wall Street, bouncing 0.52 per cent yesterday as investors embraced a solid round of domestic earnings.
Energy stocks led here and could shine again today following a rise of 1.2 per cent for the US energy sector.
All 11 US sectors rose, though none by very much. Real estate was next-best, up 0.71 per cent, followed by financials +0.52 per cent and communication services +0.38 per cent.
BHP and Rio Tinto were left behind during a 0.25 per cent rise in basic materials (more below). Tech was bottom of the heap with a slim gain of 0.04 per cent.
A lengthy list of companies reporting today includes Woolworths, Nine Entertainment, Qantas, South32, SkyCity Entertainment, Appen, Eagers Automotive, Flight Centre, Allkem, Whitehaven Coal, St Barbara, Zip Co, Ardent Leisure, Perpetual, Qube, Insignia, Cromwell Property, Charter Hall Group, Costa Group, Judo Capital, Link Administration Holdings, Macquarie Telecom, McPherson’s, Prospa, Platinum Investment, Humm, Peet, Viva Energy, Regis Healthcare, Wisr and Tyro (sources: CommSec, Australian Financial Review).
The domestic economic diary is empty.
The dollar eased 0.22 per cent to 69.06 US cents.
Commodities
Oil rose to a three-week high, supported by a decline in US stockpiles and Saudi threats to reduce production if an Iran nuclear deal brings sanctioned Iranian crude back onto market. Brent crude settled US$1 or 1 per cent ahead at US$101.22 a barrel.
Iron ore edged to its highest in a week following further Chinese support for the struggling real estate sector. After lowering benchmark lending rates, the government announced loans to help developers finish stalled projects.
“Iron ore futures gained following the additional support measures for China’s beleaguered property sector,” ANZ said. “The government is making moves to aid the sector, including offering 200 billion yuan in special loans to complete unfinished projects.”
The most-traded ore contract on the Dalian Commodity Exchange lifted 2.7 per cent to 716 yuan a tonne. The spot price for ore landed in China rose 23 US cents or 0.2 per cent to US$105.15 a tonne.
BHP and Rio Tinto retreated as copper and most other industrial metals reacted to weak US and European economic data. Benchmark copper on the London Metal Exchange sagged 1.4 per cent to US$8,058.25 a tonne. Nickel declined 1.8 per cent, lead 0.1 per cent and tin 0.9 per cent. Aluminium finished flat. Zinc rose 1.1 per cent.
BHP‘s US-traded depositary receipts dropped 1.09 per cent. The miner’s UK listing gave up 0.81 per cent. Rio Tinto shed 3.24 per cent in the US and 2.25 per cent in the UK.
Gold inched higher for a second day despite strength this week in the greenback and US treasury yields. Metal for December delivery settled 30 US cents or less than 0.1 per cent ahead at US$1,761.50 an ounce. The NYSE Arca Gold Bugs Index rallied 1.58 per cent.
“Bullion is showing some interesting signs of a rebound, or at least a stabilization, despite the brilliant performance of the greenback and the fact that 10-year Treasuries yields are still above 3%,” Rupert Rowling, precious metals analyst at Kinesis Money, wrote.
