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Stocks look set for an early rebound following a record high on the Nasdaq Composite as the technology sector outperformed the broader US market.
ASX SPI200 index futures rose 31 points or 0.5 per cent, signalling a positive start to trade after yesterday’s retreat. The S&P/ASX 200 shed 50 points or 0.8 per cent as a disappointing earnings report from Bendigo & Adelaide Bank, the nation’s fifth largest bank, added to pressure on the financial sector following a poorly-received update from CBA last week.
The domestic earnings season hots up today with reports from mining heavyweight BHP, health giant Cochlear, supermarket Coles and engineering group Monadelphous. Westpac was due to provide a quarterly update. The minutes from the July Reserve Bank policy meeting are also due.
The trend after the first week of the reporting full-year season has been for results to beat low expectations but for companies either to decline to offer guidance or to massage expectations lower, according to commentary from Macquarie and UBS. BHP‘s US-listed stock gained 1.74 per cent overnight and its UK-listed stock 1.39 per cent ahead of this morning’s report.
Tech stocks dragged on the local index yesterday but may offer support this session following gains in the US. The Nasdaq climbed 110 points or 1 per cent as broker upgrades lifted computer chipmaker Nvidia and electric car manufacturer Tesla. Amazon, Microsoft and Alphabet also recorded gains.
The broader S&P 500 edged up nine points or 0.27 per cent but once again fell short of its February record high. The index traded above its former closing peak last Wednesday, but has struggled to make a decisive break higher with negotiations for a new coronavirus relief package at a stalemate.
“Several attempts last week to break through to a new high failed,” wrote Mark Hackett, chief of investment research at Nationwide in the US. “With earnings season largely over and fiscal stimulus unlikely for at least a month, markets lack a catalyst to help markets overcome technical resistance.”
The Dow Jones Industrial Average missed the upswing, falling 86 points or 0.31 per cent as gains in retailers were outweighed by declines in financials and Boeing.
The battlelines between the Democratic Party and the White House appeared to deepen after House Speaker Nancy Pelosi announced she would summon politicians back to Washington to vote on funding the Postal Service. The move is in response to claims the White House was denying funds to the service to slow mail voting during the presidential election in November. The original US coronavirus stimulus package expired at the end of July.
“The lack of a stimulus package is rightly causing some concern,” Liz Ann Sonders, chief investment strategist at Charles Schwab, told CNBC. “During the recovery phase, there was a greater boost to consumption from the unemployed cohort than there was from the employed cohort.”
The financial sector fell 1.5 per cent, energy 0.6 per cent and industrials 0.5 per cent. Consumer discretionary was the best of the sectors with a rise of 1.2 per cent as Walmart, Target, Home Depot and Lowe’s advanced.
Rio Tinto rebounded in overseas trade as iron ore inched higher. Rio gained 1.41 per cent in the US and 1.66 per cent in the UK. The spot price for iron ore landed in China edged up 15 cents or 0.1 per cent to US$121.90 a dry ton.
Gold had its best session in four months, helped by declines in the US dollar and US government bond yields. Gold for December delivery settled $49.80 or 2.5 per cent higher at US$1,998.70 an ounce. The dollar and percentage gains were the precious metal’s strongest since April 22. Silver surged 6 per cent to US$27.67.
Oil reversed early weakness after Reuters reported record compliance among OPEC+ member states with the cartel’s production limits. Brent crude settled 57 cents or 1.3 per cent ahead at US$45.37 a barrel. The cartel meets tomorrow to discuss lowering production caps.
Nickel was boosted by strong demand from Chinese steelmakers and reported disruptions at the Philippines, the world’s largest exporter. Benchmark nickel on the London Metal Exchange climbed 1.6 per cent to US$14,542.50 a tonne. Copper gained 1.1 per cent, aluminium 0.5 per cent, lead 0.9 per cent and zinc 3.2 per cent. Tin fell 1.7 per cent.
The dollar gained its highest level in more than a week, rising 0.6 per cent to 72.13 US cents.
