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The last week of a generally positive earnings season looks set for a cautious start despite a record close in the US as data pointed to a burgeoning economic revival.
ASX SPI200 index futures eased 11 points or 0.2 per cent ahead of reports today from Fortescue Metals, Super Retail Group, NIB Health Funds, Monash IVF Group, St Barbara, Senex Energy and Amaysim.
Earnings season
Roughly two-thirds of the S&P/ASX 200 have now reported, with another 41 companies scheduled to report this week. Bleak predictions of a disastrous season have not come to pass, with the index grinding steadily higher this month, despite a modest 0.2 per cent setback last week. For the month, the index is up 183 points or around 3.1 per cent.
Highlights as the season winds down include Scentre Group, Stockland and Seven West Media tomorrow; Seven Group and Ampol on Wednesday; Woolworths, Afterpay and Nine Entertainment on Thursday; and Boral on Friday.
Wall Street
The S&P 500 and Nasdaq eked out new records on Friday amid signs of improvement in US business activity and house prices.
The S&P 500 rose 12 points or 0.34 per cent, boosted by a huge rise in Apple. The consumer tech colossus jumped 5.15 per cent to an all-time high, extending its four-week tally to 32 per cent.
The Nasdaq Composite climbed 49 points or 0.42 per cent. The Dow Jones Industrial Average put on 191 points or 0.69 per cent.
Moving the market
Optimism over the US economy was boosted by news manufacturing activity accelerated to its highest level in 19 months. The August flash manufacturing reading rose to 53.6 from 50.9 in July. Activity in the services sector was the strongest in 17 months, improving from 50 in July to 54.8 this month.
“It’s not surprising to see a pickup in manufacturing as the economy has started to reopen, even though pockets of the country have pulled back on their reopenings,” Lindsey Bell, chief investment strategist at Ally Invest in the US, told Reuters. “It’s an encouraging sign and it supports the upside we have seen in the markets.”
A separate report showed house sales surged 24.7 per cent in July, the biggest increase on record. House prices hit a new peak.
Market gains have been limited in recent sessions by a stalemate in Washington over further support for the economy. First-time claims for jobless benefits climbed back above a million last week following the expiry at the end of July of the original coronavirus relief package. Democrats and Republicans have been unable to strike a compromise on the level of support for the unemployed.
Sectors
The big winners from the pandemic have been mega-cap technology companies whose business models have prospered in a stay-at-home economy. On Friday, the tech sector led once again, rising 1.2 per cent, ahead of consumer discretionary +0.3 per cent and industrials +0.3 per cent.
At the other end, the energy sector fell 0.6 per cent, materials 0.5 per cent and financials 0.3 per cent.
Commodities
Energy traders will keep a wary eye on the oil price this morning as storms menace the Gulf of Mexico. Reports this morning suggested up to 57 per cent of oil production in the Gulf had shut down as tropical storms Laura and Marco reached the area. Brent crude settled 55 cents or 1.2 per cent lower on Friday at US$44.35 a barrel.
BHP and Rio Tinto retreated with US miners. BHP’s US-listed stock declined 2.21 per cent and its UK-listed stock 0.37 per cent. Rio Tinto lost 1.01 per cent in the US after gaining 0.47 per cent in the UK. The spot price for iron ore landed in China eased $1.75 or 1.4 per cent to US$126.65 a dry ton.
Gold suffered back-to-back weekly declines for the first time since March despite a tick higher on Friday. Gold for December delivery settled 50 cents or less than 0.1 per cent ahead at US$1,947 an ounce, losing 0.1 per cent for the week. The yellow metal came under pressure last week as the US dollar gained.
The dollar edged up 0.06 per cent this morning to 71.65 US cents.
