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Aussie shares looked set to open little changed despite further gains in the US as the Nasdaq Composite hit an all-time high.   

ASX futures eased five points or less than 0.1 per cent. The S&P/ASX 200 rallied 107 points or 1.48 per cent yesterday, reversing most of Monday’s loss.

Wall Street

US stocks added to Monday night’s recovery as Federal Reserve Chair Jerome Powell assured lawmakers the bank was in no hurry to raise rates. Tech stocks outperformed as cryptocurrencies recovered from early weakness.

The S&P 500 rallied 22 points or 0.51 per cent, finishing just below record levels. The Nasdaq Composite finished 112 points or 0.79 per cent ahead at a new high. The Dow Jones Industrial Average, which spearheaded Monday’s reversal, rose 69 points or 0.2 per cent.

The market built on tepid early gains as Fed chief Powell doused worries the central bank may crimp the economic recovery by raising rates too soon.

“We will not raise interest rates pre-emptively because we fear the possible onset of inflation. We will wait for evidence of actual inflation or other imbalances,” Powell told a House of Representatives panel.

He said the US was “very, very unlikely” to see 1970s-style inflation. The Fed was “strongly prepared” to use all the monetary tools at its disposal to keep inflation near 2 per cent.

The pendulum swung back towards growth stocks overnight from the cyclicals that outperformed on Monday night. The Russell 1000 Growth Index rose 0.96 per cent, versus a 0.12 per cent uptick in the Value Index.

Facebook, Netflix, Amazon, Apple and Microsoft all gained at least 1 per cent.
Tesla finished 0.46 per cent ahead as Bitcoin turned briefly positive after dipping below US$30,000. The largest of the digital tokens was last off 0.5 per cent at US$32,737.

Australian outlook

Futures action suggests caution this morning about following broadly positive overnight leads. Possible explanations include a recovery in the dollar – a net negative for an export-driven economy – and worrying signs from Sydney’s Covid cluster. The market may need to see Wall Street do more repairwork.

The dollar dipped below 75 US cents at the start of the week, but has healed steadily since then. Overnight, the Aussie climbed 0.27 per cent to 75.52 US cents.

Sydney’s Covid-19 figures took a nasty turn yesterday, raising the prospect of increased restrictions in the nation’s most populous city. The Bondi cluster doubled to 21 cases. Victoria and New Zealand announced fresh travel restrictions.

The two sectors with the biggest weighting on the ASX made cautious gains in the US. Materials rose 0.34 per cent. Financials inched up 0.1 per cent.

Technology was a standout with a rise of 0.89 per cent. Consumer discretionary and communication services – two other sectors with “Big Tech” components – were the night’s other best performers. Utilities and real estate finished lower.

Flash manufacturing and services industry gauges were scheduled for release at 9 am AEST, followed by trade data at 11.30 am. Reserve Bank Assistant Governor Luci Ellis was due to address a business lunch in Adelaide at 1.15 pm.

Codrus Minerals and Tamboran Resources were due to list today, according to ASX data.

Commodities

Iron ore reversed more than half of Monday’s fall. The spot price for ore landed in China bounced $6.15 or 3 per cent to US$212.70 a tonne. On Monday, ore landed at Tianjin fell $10.75 or 4.9 per cent.

BHP’s US-listed stock bounced 1.21 per cent. Its UK-listed stock gained 1.28 per cent. Rio Tinto advanced 1.24 per cent in the US and 1.54 per cent in the UK.

Gold declined for the third time in four sessions. Metal for August delivery settled $5.50 or 0.3 per cent weaker at US$1,777.40 an ounce. The NYSE Arca Gold Bugs Index eased 0.64 per cent.

Industrial metals built on Monday’s rebound. Benchmark copper on the London Metal Exchange firmed 1.3 per cent to US$9,274.60 a tonne. Aluminium gained 0.6 per cent, nickel 1.7 per cent, lead 0.8 per cent, zinc 0.9 per cent and tin 1.5 per cent.

Oil dipped amid reports the OPEC+ oil cartel was considering relaxing production curbs in the next few months. The group is due to meet on July 1. Brent crude settled nine cents or 0.1 per cent lower at US$74.81 a barrel. Earlier, the global benchmark traded above US$75 for the first time since April 2019.

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