The new financial year looked likely to open near where the old year ended following a mixed close on Wall Street.
ASX futures eased six points or 0.08 per cent as the S&P 500 scored a fifth straight record close. The Dow gained more than 200 points. The Nasdaq Composite slipped as cyclicals outpaced growth stocks.
Oil, gold, copper and iron ore rallied. The dollar slipped below 75 US cents.
US stocks continued a run of mixed returns this week as investors await tomorrow night’s monthly employment report. Strong private payrolls data encouraged a gentle rotation from growth stocks back to cyclicals.
The S&P 500 has been making new highs for a week, but the size of the advances has been shrinking: 0.58 per cent last Thursday, 0.33 per cent on Friday, 0.23 per cent Monday and 0.03 per cent Tuesday. Overnight, the index broke the trend – barely – with a rise of six points or 0.13 per cent.
The Dow Jones Industrial Average was the pick of the three major indices, adding 210 points or 0.61 per cent. The Nasdaq Composite trailled with a fall of 24 points or 0.17 per cent.
Buying interest in cyclicals was boosted by news the private sector added 692,000 employees last month, topping the economists’ consensus of 600,000. The hospitality sector rebounded as the economy continued to regain traction.
“The services jobs was very strong in the ADP report, which is consistent with the reopening in the US,” John Ragard, senior portfolio manager, small cap equity at Spouting Rock Asset Management, told Investing.com. “Airlines are hiring more pilots, hotel occupancy and hotel rates are increasing.”
A separate report showed pending home sales surged to their highest since 2005. However, mortgage applications contracted in a potential sign soaring prices were starting to undercut demand.
The major indices all recorded their fifth positive quarter since the pandemic rebound began. The S&P 500 has gained around 14 per cent for the year so far, the Dow 12 per cent and the Nasdaq Composite 12 per cent.
The S&P 500 scored a fifth straight monthly advance. The Dow’s four-month winning run ended as traders favoured growth stocks over cyclicals last month.
“It’s been a good quarter,” Robert Pavlik, senior portfolio manager at Dakota Wealth, told Reuters. “As of last night’s close, the S&P has gained more than 14% year-to-date, topping the Dow and the Nasdaq. That indicates that the stock market is having a broad rally.”
A subdued start coming up as traders wait to see how much, if any, of recent buying has been institutional end-of-financial-year window dressing. The market has shown signs of renewed buying interest over the last two sessions but failed to hold its gains yesterday. The S&P/ASX 200 climbed 69 points to an eight-session high before slashing its final tally to a skinny 12 points or 0.16 per cent as the old fiscal year wrapped up.
Covid-19 lockdowns continued to expand yesterday. Alice Springs joined Greater Sydney, Greater Darwin, Perth, Peel and swathes of Queensland in lockdown. Almost half the country is now under some sort of restriction. Daily case numbers continue to affect market sentiment. New South Wales reports its latest figures at 11 am AEST each day.
Energy was the best of the US sectors overnight, rising 1.31 per cent as oil traders showed minimal concern about tonight’s OPEC+ meeting. Industrials gained 0.84 per cent, financials 0.47 per cent and materials 0.24 per cent.
Real estate -0.76 per cent and communication services -0.23 per cent were the biggest drags. The tech sector dipped 0.1 per cent.
The new month starts with reports on manufacturing and trade.
Today brings the largest float of the year to date: PEXA Group, an online property transfer firm valued at around $3 billion. Major shareholders included CBA, Link Administration and Morgan Stanley. Also listing today is Australian Rare Earths.
The dollar declined 0.21 per cent to 74.97 US cents.
A sixth straight weekly drawdown in US crude stockpiles helped oil advance. Brent crude settled 34 cents or 0.5 per cent ahead at US$74.62 a barrel.
Iron ore recouped most of Tuesday’s loss after China’s manufacturing purchasing managers’ index showed factory activity remained strong despite elevated prices for raw materials. The index dipped from 51 to 50.9 last month. Readings above 50 indicate expanding activity. The spot price for ore landed in China bounced US$4.30 or 2 per cent to US$218.40 a tonne.
A subdued night for the nation’s mining majors saw BHP’s US-listed stock edge up 0.01 per cent after its UK-listed stock fell 1.02 per cent. Rio Tinto shed 0.85 per cent in the US and 1.31 per cent in the UK.
Gold trimmed a losing month despite a rising greenback. Gold for August delivery settled 0.5 per cent ahead at US$1,771.60 an ounce. The yellow metal lost 7 per cent for the month, paring its rise for the quarter to around 5 per cent.
US-traded copper improved 0.6 per cent on Comex to US$4.289 a pound.