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Australian shares were poised to open higher for a second day after European shares and crude rallied while Wall Street was closed for a public holiday.

ASX futures firmed 21 points or 0.29 per cent in late trade.

Brent crude, copper and gold rose. Iron ore and nickel declined. BHP and Rio Tinto rebounded in UK trade. US equity futures turned mixed.   

Wall Street and Europe

US equity futures traded both sides of break-even on light volume over the long weekend. S&P 500 futures were this morning down 2.5 points or 0.05 per cent. Nasdaq futures eased 40 points or 0.25 per cent. Dow futures edged up 37 points or 0.1 per cent.

European stocks rallied following gains on most Asian markets in the wake of yesterday’s Chinese rate cut and mixed economic data. The pan-European Stoxx 600 climbed 0.7 per cent.

Britain’s FTSE 100 put on 0.91 per cent following a takeover offer for GlaxoSmithKline’s consumer healthcare business. Shares in the UK pharmaceutical firm jumped 4.07 per cent after Unilever offered $94.6 billion for the operation. Unilever shares sank 6.97 per cent after it indicated it would pursue the deal despite an initial knockback from GSK’s board.

Scandal-hit Credit Suisse fell 2.26 per cent after Chair Antonio Horta-Osario was forced out following an internal probe into breaches of Covid rules. The breaches included attending the Wimbledon tennis finals when he was supposed to be in quarantine.

Horta-Osario also appeared to have ignored Swiss quarantine rules on at least one visit. The former boss of Lloyds was brought in to help the bank deal with the failures of investment firm Archegos and financier Greensill Capital.

Wall Street resumes trade tonight looking for its first winning week of 2022. The S&P 500 and Dow have fallen for two straight weeks. The Nasdaq is on a three-week losing run.

The corporate earnings season is likely to dominate the week ahead. Dow component company Goldman Sachs reports fourth-quarter earnings tonight. Bank of America, Morgan Stanley, Procter & Gamble and Netflix also report this week.

Australian outlook

The Australian market’s positive start to the week looks set to continue as global markets try to find a bottom following a losing start to the year.

Most Asian markets advanced yesterday. China gained 0.58 per cent. Japan advanced 0.74 per cent. European markets followed suit. The question now is whether Wall Street will complete the set tonight.

The S&P/ASX 200 rallied 23 points or 0.32 per cent yesterday amid hopes Chinese stimulus efforts will increase demand for Australian exports. The People’s Bank of China lowered a key borrowing rate for the first time since April 2020. Economic data confirmed the scale of a slowdown in the Chinese economy.

The dollar continued to hover just above 72 US cents, lately down 0.06 per cent at 72.11 US cents.

On the economic calendar, weekly consumer confidence figures will be released this morning.

IPOs: ChemX Materials lists at 2.30 pm AEDT. The company aims to produce high-purity alumina for batteries and has projects on SA’s Eyre Peninsula.

Commodities

Oil hit its highest level since 2018 as traders bet demand will continue to outstrip supply. Brent crude traded as high as US$86.71, a price last seen in October 2018, before paring its advance to 42 US cents or 0.5 per cent at US$86.48 a barrel.

“The bullish sentiment is continuing as OPEC+ is not providing enough supply to meet strong global demand,” Fujitomi Securities analyst Toshitaka Tazawa told Reuters.

Iron ore retreated after data showed the Chinese economy grew last quarter at the slowest pace in a year and a half. The spot price for ore landed in China declined US$2.75 or 2.2 per cent to US$124 a tonne.

“Consumption remains the weakest link in China’s growth story at the moment and that will by and large continue for much of this year,” Louis Kuijs, head of Asia economics at Oxford Economics, told Reuters.

BHP‘s UK-listed stock bounced 1.43 per cent. Rio Tinto edged up 0.02 per cent in the UK.

Gold was largely in a holding pattern over the US long weekend. Metal for February delivery edged up US$2.50 or 0.14 per cent to US$1,819 an ounce in electronic trade.

Copper shrugged off an increase in inventories at London Metal Exchange registered warehouses. LME copper stocks increased by 6,550 tonnes to 92,850 tonnes.

Benchmark copper on the London Metal Exchange rose 0.2 per cent to US$9,749 a tonne. Aluminium firmed 1 per cent and tin 2.3 per cent. Nickel retreated 0.1 per cent, lead 0.4 per cent and zinc 0.5 per cent.

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