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A downbeat week leaned towards a lacklustre conclusion following a mixed finish on Wall Street as investors weighed corporate earnings, lingering rates worries and a seasonal uptick in Covid cases.
ASX futures edged up eight points or 0.11 per cent. The S&P/ASX 200 is 64 points in the red for the week following solid falls through Tuesday and Wednesday. The market steadied yesterday, inching up nine points or 0.13 per cent.
Overnight, the S&P 500 and Nasdaq rose as Apple hit an all-time high. The Dow was held down by an earnings miss from Cisco Systems.
Iron ore imported into China fell to an 18-month low. Oil and copper rebounded. Gold eased from a five-month peak.
Wall Street
US stocks finished mixed but well off session lows in choppy trade. The S&P 500 overcame early weakness to advance 16 points or 0.34 per cent. The Nasdaq Composite gained 72 points or 0.45 per cent. The Dow Jones Industrial Average trimmed its loss to 60 points or 0.17 per cent.
A record high in Apple and a 4.14 per cent jump in Amazon glossed over broader underlying weakness, according to the founder of Vital Knowledge Media, Adam Crisafulli.
“For a second consecutive session the underlying price action is a lot weaker than the headline indices make it seem with a handful of large stocks masking selling elsewhere,” Crisafulli said.
“It seems the same worries are before are still present – COVID, the debt ceiling, Fed staffing uncertainty, the Fed will tighten too soon, the Fed isn’t tightening fast enough. Actual news is relatively bullish.”
Chipmakers rallied after Nvidia issued a strong quarterly forecast and earnings update. Nvidia shares gained 8.25 per cent. The Philadelphia Semiconductor Index put on 1.79 per cent.
Retailers were also strong as Macy’s and Kohl’s continued a week of well-received earnings updates. Both chains beat profit and revenue expectations. Other retailers, including Gap, Bath & Body Works, JD.com and Victoria’s Secret, also rallied on earnings news.
Claims for unemployment benefits declined to a 20-month low, but not by as much as expected. First-time claims fell by 1,000 to 268,000 last week. Economists expected a larger decline to around 260,000.
Cisco slumped 5.51 per cent to steer the Dow lower after supply-chain issues weighed on its quarterly revenue forecast.
Cyclical stocks were held back by signs of a seasonal increase in Covid-19 cases. Daily tallies have risen in more than half the states in the US. The national daily average has increased by 14 per cent in the last week to 83,000 cases a day.
Australian outlook
The local market looks set for a second straight losing week, thanks to pressure through the middle of the week as first, the miners, then the banks, sold off. The ASX 200 steadied yesterday with an up-tick of nine points but there does not appear to be enough in the overnight leads to make a serious dent in the weekly deficit.
Strength in the banks has helped the market ride out a collapse in iron ore over the last few months. This week’s poorly-received update from Commonwealth Bank suggests the other pillar of the market is also wobbling.
Mining behemoths BHP and Rio Tinto closed near multi-month lows here yesterday, and weakened in overseas trade. While BHP’s US-listed stock eased a mere 0.01 per cent, its UK-listed stock gave up 1.14 per cent. Rio Tinto shed 1.25 per cent in the US and 1.74 per cent in the UK.
US retail earnings pushed consumer discretionary to the top of the sectors, up 1.49 per cent. Big Tech helped the I.T. sector rise 1.02 per cent. Health and real estate gained less than 0.1 per cent.
The rest of the sectors were red. Materials sank 0.44 per cent, financials 0.48 per cent and industrials 0.27 per cent.
A huge week of AGMs wraps up today with meetings for shareholders in WiseTech, NextDC, Nanosonics, PEXA, Accent and Monash IVF Group.
IPOs: the week ends with a triple-header. Cadence Opportunities Fund at 10.30 am AEDT is an actively-traded fund managed by Cadence Asset Management. Cooper Metals at 12 pm is a copper-gold explorer with three projects in Queensland and WA. Ventia Services Group at 1 pm operates, maintains and manages infrastructure and is part-owned by Cimic.
The dollar recovered from six-week lows, rising 0.1 per cent to 72.75 US cents.
Commodities
Iron ore sank to its lowest since May 2020 amid reports of Chinese steel mills moving to care and maintenance as demand collapses. The spot price for ore landed at Tianjin slid US$2.75 or 3.1 per cent to US$87.20 a tonne. The most-traded contract on the Dalian Commodity Exchange fell 5.1 per cent.
“The price of iron ore has not yet bottomed out,” analysts at Zhongzhou Futures wrote. “The profit of some steel mills turned negative, and the steel mills switched from administrative restriction of production to active maintenance.”
Oil bounced off six-week lows as traders bought the dip in the wake of reports of a coordinated international release of strategic reserves to cool prices. Brent crude settled 96 US cents or 1.2 per cent higher at US$81.24 a barrel.
Gold eased back from its highest close since June despite a retreat in the dollar and treasury yields. Gold for December delivery settled US$8.80 or 0.5 per cent lower at US$1,861.40 an ounce. The NYSE Arca Gold Bugs Index dropped 1.73 per cent.
“Gold prices have been soaring for the last number of weeks and it is natural for traders to book some profit,” Naeem Aslam, chief market analyst at AvaTrade, told MarketWatch.
Copper was boosted by a pandemic-era low in claims for jobless benefits in the US and by strong US factory data. December copper climbed 0.9 per cent to US$4.305 a pound on Comex.
