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The S&P 500 briefly traded above its record close overnight, setting up the ASX for a strong start ahead of July jobs data and a slew of company reports.
Australian stocks look primed for an early assault on their highest level since the March market meltdown after US stocks shrugged off a stalemate in stimulus negotiations to rise for the eighth time in nine sessions. The S&P 500 passed its February record close of 3,386 before finishing just short at 3,380 for a gain of 47 points 1.4 per cent.
SPI200 index futures rallied 42 points or 0.7 per cent, positioning the local market for its highest open in five months. The S&P/ASX 200 eased 0.1 per cent yesterday to 6132 after two days of solid gains lifted the index to within a few points of the June post-meltdown peak of 6199.
How today’s session plays out will depend to a large extent on the 11.30 am EST July employment update. Economists predict total employment will increase by around 30,000. Today is also the heaviest day of the week for corporate earnings, with reports scheduled from AMP, Telstra, AGL Energy, Woodside Petroleum, QBE, Goodman Group, Breville, Treasury Wine Estate and Evolution Mining.
Wall Street’s brief flirtation with value stocks was forgotten overnight as traders piled back into the market leaders. The Nasdaq jumped 229 points or 2.13 per cent as Apple gained 3.3 per cent, Microsoft 2.9 per cent, Amazon 2.7 per cent, Netflix 1.8 per cent and Facebook 1.5 per cent.
The blue-chip value plays of the Dow trailled as the Industrial Average rose 290 points or 1.05 per cent. Boeing dropped 2.6 per cent and Dow Inc 0.5 per cent. Caterpillar and Exxon Mobil were both flat.
“There’s a big debate happening in the market right now,” Yousef Abbasi, global market strategist at StoneX in the US, told CNBC. “Does the tech outperformance continue? Or does hope around a vaccine, a better-than-expected Q2 earnings season and the hope the strong economic data continues to hold up start to justify the idea that some froth should probably come out of tech?”
The market gave back a fraction of its gains after House Speaker Nancy Pelosi said the Democrats and the White House were still “miles apart” on a new coronavirus relief package to replace measures that expired last month. Democrat negotiators have not met with their Trump administration counterparts since Friday. Pelosi said she was not willing to resume discussions until the gap narrowed between the Republican Party’s US$1 trillion proposal and the US$3 trillion package favoured by the Dems.
The technology sector was the night’s clear winner, rising 2.3 per cent. Next best were health and consumer discretionary, both up 1.7 per cent. The financial sector was the only one of the 11 sectors to decline, falling 0.3 per cent. Thirty-three companies on the S&P 500 made 52-week highs.
Gold stocks steadied as the metal rebounded in volatile trade. Gold for December delivery fell as low as US$1,874.20 an ounce before settling $2.70 or 0.1 per cent ahead at US$1,949. The NYSE Arca Gold Bugs Index of miners edged up 0.1 per cent. Silver closed 0.3 per cent lower at US$25.98.
Precious metals tanked this week after a rebound in US government bond yields and the US dollar triggered a sharp rotation out of alternative stores of wealth. Metals steadied overnight as the US dollar index ticked lower and bond yields backed off their highs.
Oil climbed to a five-month high after US crude stockpiles fell for a third straight week. Brent crude settled 93 cents or 2.1 per cent ahead at US$45.43 a barrel, reversing the previous session’s 1.1 per cent fall.
The big iron ore miners helped drag the ASX lower yesterday, but rallied in overseas trade. BHP’s US-listed stock put on 1.11 per cent and its UK-listed stock 2.09 per cent. Rio Tinto added 1.58 per cent in the US and 2.28 per cent in the UK. The spot price for iron ore landed in China edged up 75 cents or 0.6 per cent to US$122.20 a dry ton.
Copper was the standout on the London Metal Exchange, rising 0.8 per cent to US$6,434.50 a tonne. Aluminium closed flat. Nickel lost 0.6 per cent, lead 0.2 per cent, zinc 0.5 per cent and tin 0.7 per cent.
The dollar advanced 0.28 per cent to 71.62 US cents.
