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The share market’s three-session winning run faces early pressure following a mixed close on Wall Street amid evidence rising energy costs and supply chain issues were impacting global manufacturing.

Strength in tech stocks helped the Nasdaq and S&P 500 overcome early weakness. The Dow trimmed its loss to 0.1 per cent.

ASX futures declined 20 points or 0.27 per cent. The local market ended yesterday’s session at its highest in three weeks.

Overnight, oil finished mixed, while copper, iron ore and gold retreated.

Wall Street

Consumer and tech stocks helped fuel a turnaround after weak factory reports out of China and the US added to concerns about global growth.

The S&P 500 improved steadily to a final tally of 15 points or 0.34 per cent and a fourth day of gains. The Nasdaq Composite led with a rise of 124 points or 0.84 per cent. The Dow Jones Industrial Average trimmed its loss to 36 points or 0.1 per cent.

The major indices opened deep in the red following yesterday’s disappointing Chinese GDP and industrial production reports. The Chinese economy grew 4.9 per cent last quarter, shy of the 5.2 per cent predicted by economists surveyed by Reuters. Industrial production – a key driver of growth – also came in short at 3.1 per cent, versus expectations for growth of 3.9 per cent.

Worries about stuttering growth were sharpened by weak US industrial data. Production declined 1.28 per cent last month, the biggest drop since February. August figures were also revised downwards from an increase of 0.4 per cent to a contraction of 0.1 per cent.

“Semiconductor shortages, labor availability, and delays in port offloads and ocean traffic continue to be a drag on manufacturing production,” investment bank Jefferies wrote.

Buyers took advantage of the early weakness amid optimism over a new corporate reporting season. FactSet data showed 80 per cent of S&P 500 companies that have reported so far have beaten earnings expectations. This week brings reports from Tesla, Netflix, Johnson & Johnson and IBM.

“It feels like a little bit of FOMO (fear of missing out) is going on, mixed with this wall of cash on the sidelines,” John Augustine, chief investment officer at Huntington National Bank, told Reuters.

The tech sector gathered momentum as long-term interest rates came off early highs. The US ten-year yield pushed briefly above 1.6 per cent before trimming its rise to a basis point at 1.587 per cent. Energy prices – another headwind – also eased as the session wore on.

Australian outlook

The market looks set to take a breather following three days of gains. The S&P/ASX 200 has created a welcome buffer between yesterday’s close and the four-month lows of earlier in the month. Market sentiment would need to deteriorate significantly for a retest.

Wall Street opened weak, but quickly found buyers willing to buy the dip. The old highs look increasingly within reach, leaving the ASX with some catching up to do, but perhaps not yet.

The best-performing sectors in the US overnight were consumer discretionary +1.2 per cent and technology +0.85 per cent. The pillars of the Australian market – financials and materials – closed flat, which accounts for much of today’s soft futures figure.

Bond proxies finished lower, even as US yields gave up most of their rise. Utilities dropped 0.97 per cent, health 0.72 per cent and consumer staples 0.47 per cent.

The minutes from this month’s Reserve Bank meeting, due at 11.30 am AEDT, are not expected to be market-moving. The central bank has laid out a timeline for reducing its asset-buying program and signalled it does not expect to raise official rates until 2024 at the earliest. Weekly consumer sentiment figures are also due this morning.

The Annual General Meeting Season moves up a gear today. Potential highlights include Brambles, Tabcorp, Cochlear, Stockland, Dexus, Fletcher Building, Bapcorp and IDP Education.

The dollar eased 0.13 per cent overnight to 74.15 US cents.

Commodities

Oil finished mixed after touching multi-year highs. The international benchmark, Brent crude, settled 53 US cents or 0.6 per cent lower at US$84.33 a barrel after hitting a three-year peak at US$86.04. West Texas Intermediate reached a seven-year high at US$83.87 before trimming its advance to 16 cents or 0.2 per cent at US$82.44.

“We’re already seeing that the high prices of energy are slowing economies in places like China, so I think we do have to be on guard for signs of demand destruction — especially if prices continue their meteoric rise,” Phil Flynn, senior market analyst at The Price Futures Group, told MarketWatch.

Iron ore retreated for a third session following yesterday’s weak Chinese factory data. The spot price for ore landed in China dipped US$1.30 or 1 per cent to US$124.15 a tonne.

BHP‘s US-listed stock rose 0.92 per cent after its UK-listed stock dipped 0.08 per cent. Rio Tinto dropped 0.35 per cent in the US and 0.71 per cent in the UK.

Gold logged a second straight loss as strength in Bitcoin and bond yields dulled demand. Gold for December delivery settled US$2.60 or 0.2 per cent lower at US$1,765.70 an ounce. The NYSE Arca Gold Bugs Index shed 1.21 per cent.

Copper retreated in US trade after hitting an all-time high on Friday. December copper eased 0.1 per cent on the Comex market to US$4.726 a pound.

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