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Futures trade points to a cautiously positive start to the Australian session following another subdued night on Wall Street as investors awaited fresh catalysts.

US stocks closed mixed but little changed. The night’s excitement was again largely confined to the retail end of the market, where the ‘Reddit army’ pushed meme stocks to significant gains.

ASX futures rose 10 points or 0.14 per cent. Iron ore firmed almost 4 per cent. Oil scaled a new two-year high. Gold’s latest foray above US$1,900 stuttered.

Wall Street

US stocks remained in a holding pattern ahead of tomorrow night’s much-anticipated consumer inflation report. The S&P 500 overcame a morning dip to finish less than a point or 0.02 per cent higher.

The Dow Jones Industrial Average shed 30 points or 0.09 per cent. The Nasdaq Composite rose 43 points or 0.31 per cent as falling bond yields ensured growth stocks narrowly outperformed value sectors.

“Investors are taking a break,” Oliver Pursche, senior vice president at Wealthspire Advisors, told Reuters. “There are no material news events to drive the market, data is coming in as expected and we’re sitting near all-time highs.”

“The market is likely to stay range-bound until earnings season cranks up in July,” he added. “Barring unexpected events, I would expect stocks to move sideways for the next three to four weeks.”

The market has lost momentum just below record levels as it enters a seasonally weak time of year. The S&P 500 and Dow remained within 1 per cent of last month’s peaks. June is the start of the northern hemisphere holiday season. This year might be particularly slow as the end of lockdowns encourage traders to take unused leave.

With pros on the sidelines, US retail investors have had a field day this week. Medicare insurance start-up Clover Health briefly doubled in value overnight after attracting interest on Reddit message boards because of the size of its short interest. The stock finished around 86 per cent higher following a 32 per cent rise on Monday. The Wendy’s restaurant chain also caught the wave, rising 25.85 per cent.  

US regulators announced on Monday they were keeping an eye on the meme stock phenomenon. The Securities and Exchange Commission said it was monitoring the volatility for “manipulative trading, or other misconduct”.

US bond yields declined even as data showed a record number of job openings in April, underlining building pressure on wages as companies struggle to find workers. Vacant positions increased to 9.3 million from 8.3 million in March. The number of “quits” – seen as mostly people leaving for more attractive offers – also rose considerably. The yield on ten-year US treasuries retreated almost three basis points to 1.543 per cent.

Australian outlook

Wall Street has been more or less on holiday this week, but the ASX has had enough momentum to keep coasting higher. The S&P/ASX 200 has set new highs for the last five sessions, even if final gains each day have been modest.

The index nudged up 11 points or 0.15 per cent yesterday. Promising signs Victoria will reopen on schedule tomorrow night lifted travel and tourism stocks. Acting Premier James Merlino said the state remained “on track” to ease restrictions.

One possible red flag for the session ahead: reports following the close of US trade this morning suggested negotiations over the White House’s infrastructure spending bill had broken down. Any negative impact on US futures may impact Australian buying interest.

The best returns in the US overnight came from the consumer discretionary sector +0.96 per cent, energy +0.88 per cent and real estate +0.51 per cent. Materials inched up 0.16 per cent. Financials dipped 0.2 per cent.

RBA Assistant Governor Christopher Kent is due to address a summit at 9.30 am. Westpac releases its monthly consumer sentiment report at 10.30 am AEST. China releases inflation figures at 11.30 am. Coles holds an investor day.

The dollar retreated 0.22 per cent overnight to 77.39 US cents.

Commodities

BHP and Rio Tinto rebounded in US and European trade as iron ore firmed above US$200 a tonne. The spot price for ore landed in China rose $7.55 or 3.7 per cent to US$210.40.

BHP‘s US-listed stock advanced 1.58 per cent and its UK-listed stock added 1.45 per cent. Rio Tinto gained 0.56 per cent in the US and 0.83 per cent in the UK.

Oil set a new two-year high after the US Energy Information Administration raised its price forecast. Brent crude settled 73 cents or 1 per cent ahead at US$72.22 a barrel, its highest finish since May 2019. The EIA raised its Brent crude price forecast by 4.7 per cent to an average US$65.19 this year.

Gold failed to hold onto US$1,900, retreating for the first time in three sessions. Metal for August delivery settled $4.40 or 0.2 per cent lower at US$1,894.40 an ounce. The NYSE Arca Gold Bugs Index dropped 1.65 per cent.

Copper edged higher, but volumes were reportedly low. Copper traded on Comex, rose almost 0.7 per cent to US$4.56 a pound.  

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