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ASX Today: ASX caps off worst week since GFC with more losses

Index futures point to a flat start to Australian trade as caution lingers after Friday's heavy loss and the weekend passed without a breakthrough in negotiations for a new US stimulus package.

The ASX SPI200 eased a single point or less than 0.1 per cent despite a late, late recovery in US stocks.

Optimism over the dawn of a new month was dampened by a bloody end to July. The S&P/ASX 200 plunged 123 points or 2 per cent on Friday to its heaviest loss in five weeks.

US stocks wallowed underwater for much of Friday's session before rallying as stellar gains for market-leading tech companies outweighed weakness in stocks more strongly tied to economic revival. The Nasdaq outperformed with a rise of 157 points or 1.49 per cent, thanks to a record high in Apple and gains in Facebook and Amazon. The S&P 500 put on 25 points or 0.77 per cent. The Dow was down 300 points mid-session and only turned positive in the last half-hour, closing 115 points or 0.44 per cent ahead. Just ten of the Industrial Average's thirty component companies advanced.

The big tech names lit up the US quarterly earnings season with results that showed the coronavirus pandemic barely slowed their profit growth. Apple surged 10.4 per cent to an all-time high, overtaking Saudi Aramco as the world's most valuable company. Facebook put on 8.2 per cent after breezing past analysts' earnings and revenue expectations. Amazon also smashed forecasts, gaining 3.7 per cent.

Google parent company Alphabet was an exception among the tech leaders, falling 3.3 per cent. The company reported the first revenue decline in its history after advertisers reined in spending during the pandemic. Outside the tech space, companies struggled to meet forecasts. Caterpillar slumped 2.8 per cent, Chevron 2.7 per cent and Ford 2.1 per cent.

Investor appetite for 'recovery plays' was hampered by a fall in consumer sentiment and indications negotiations over a new US$1 trillion stimulus package had stalled. White House Chief of Staff Mark Meadows this morning said he was not optimistic legislators will reach a quick accord on a new package to replace measures that expired on Friday.

"I'm not optimistic that there will be a solution in the very near term," he told CBS's 'Face the Nation'. “We continue to see really a stonewalling of any piecemeal type of legislation that happens on Capitol Hill.”

US consumers grew more pessimistic last month as coronavirus cases surged. A gauge of consumer sentiment assessed by the University of Michigan deteriorated to 72.5  last month from 78.1 in June.

Gold's best month in four years ended with the precious metal at a new closing high. Gold for December delivery settled $19.10 or 1 per cent ahead at US$1,985.90 an ounce, its tenth rise in 11 sessions. The precious metal gained 10.3 per cent last month, its biggest percentage gain since February 2016, according to FactSet.

Oil edged higher late in the session with equities. Brent crude settled 27 cents or 0.6 per cent ahead at US$43.52 a barrel.

BHP and Rio Tinto pared Friday's falls as the trading cycle rolled through Europe into the US. After losing 2.85 per cent here, BHP lost 1.05 per cent in the UK and 0.58 per cent in the US. Rio Tinto shed 2.39 per cent here on Friday, 1.29 per cent in the UK and finished flat in the US. The spot price for iron ore landed in China was unchanged at US$111.45 a dry ton.

Industrial metals finished mixed at the end of another month of price recovery. Benchmark copper on the London Metal Exchange eased 0.3 per cent to US$6,422 a tonne. Aluminium slipped 0.5 per cent. Nickel gained 0.4 per cent, lead 0.3 per cent, zinc 1.3 per cent and tin 0.5 per cent.

The dollar dipped 0.18 per cent this morning to 71.29 US cents.

The domestic earnings season gathers pace this week. BWP Trust reports tomorrow, ResMed on Wednesday, News Corp, REA Group and Nick Scali on Thursday, and IAG and AngloGold on Friday.


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