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The share market had its sights set on its first rise of the month after a pandemic-era low in claims for unemployment benefits helped lift US stocks to fresh highs.

ASX futures rallied 18 points or 0.24 per cent as the S&P 500 and Nasdaq Composite closed at records.

Oil hit a one-month peak. Iron ore retested nine-month lows. Gold declined for a second day. Copper rebounded from Wednesday’s fall. The dollar firmed above 74 US cents.

Wall Street

The S&P 500 recorded its 54th record close of the year as an 18-month low in  jobless claims soothed lingering concerns about tonight’s August jobs report. The index climbed 13 points or 0.28 per cent.

The Nasdaq Composite advanced 22 points or 0.14 per cent to 15,331, also a record. The Dow Jones Industrial Average added 131 points or 0.37 per cent.

First-time claims for unemployment benefits declined 14,000 last week to 340,000, the lowest since March 2020. The decline was 50 per cent larger than the median estimate among economists polled by The Wall Street Journal. Continuing claims dropped by 160,000 to 2.75 million.

The report sharpened expectations for tonight’s keenly-anticipated August jobs report, which will offer clues to when the Federal Reserve will start to unwind its bond-buying program. The consensus among economists is for jobs growth of around 720,000-750,000, down from the July figure of 943,000.

“With jobless claims hitting a pandemic low, there’s definitely some optimism as we look ahead to the full jobs picture [tonight],” Mike Loewengart, managing director of investment strategy at E-Trade, told CNBC. “We could experience a bit of a tug and a pull — on one hand a solid jobs report is a positive indication of economic recovery, and on the other it backs up the Fed’s case to begin tapering.”

In a speech last week, Fed Chair Jerome Powell emphasised the importance of “substantial further progress” in labour markets before the bank tightens monetary policy. A weak result tonight might delay the “taper”; a strong result may encourage the Fed to pull the trigger at this month’s meeting.

Energy stocks recovered most of their losses through the first three sessions of the week as renewed economic optimism lifted cyclical sectors. Factory orders increased 0.4 per cent in July, ahead of expectations.

Australian outlook

A positive start coming as the market tries to shake off the September blues. A historically weak month has begun with two declines. The S&P/ASX 200 slumped 41 points or 0.55 per cent yesterday, although most of the damage was explained by BHP and CSL going ex-dividend. Dividend payments will continue to flow for the rest of the month, but none will affect the market the way those two heavyweights did.

Cyclical sectors were back in favour in the US overnight. Energy stocks climbed 2.53 per cent, industrials 1.01 per cent and materials 0.6 per cent. The financial sector ticked up 0.28 per cent.

Potential headwinds for the session ahead include a firmer dollar, a downturn in iron ore and caution ahead of tonight’s market-moving US jobs data.

BHP and Rio Tinto rebounded in overseas trade despite pressure on ore (see below). BHP’s US-listed stock put on 0.98 per cent and its UK-listed stock 1.01 per cent. Rio Tinto gained 0.49 per cent in the US and 1.39 per cent in the UK.

The dollar continued to firm, rising 0.51 per cent to 74.02 US cents. The Aussie has now bounced almost three cents in two weeks, a plus for importers, but a negative for exporters and businesses that generate income in US dollars.

Economic data: the Australian Industry Group’s Construction Index for August is due at 8.30 am, followed by ABS retail sales at 11.30 am.

IPOs: Ballymore Resources lists at 11 am AEST. The Queensland explorer has three projects that are prospective for gold, silver, copper, lead and zinc.

Commodities

Iron ore dropped back under US$140 a tonne as China’s crackdown on steel producers continued to depress demand. The spot price for ore landed in China declined US$3.85 or 2.7 per cent to US$139.70 a tonne.

Oil logged its highest close in a month following a sharp fall in US crude stockpiles. Brent crude settled US$1.44 or 2 per cent ahead at US$73.03 a barrel. The US Energy Administration reported a drawdown of 7.2 million barrels last week, almost twice the anticipated decline.

Gold faded to a second straight loss as demand for havens was dented by the night’s economic data. Metal for December delivery settled US$4.50 or 0.3 per cent lower at US$1,811.50 an ounce. The NYSE Arca Gold Bugs Index inched up 0.22 per cent.

Naeem Aslam, chief market analyst at AvaTrade, told MarketWatch the gold market had been “very much lifeless for the past few days as traders aren’t willing to pit big bets ahead” of tonight’s US August jobs report.

Aluminium hit a ten-year high in London trade before fading. Prices have been propelled higher by a supply squeeze following Chinese restrictions on smelters. Benchmark aluminium on the London Metal Exchange finished 0.3 per cent lower at US$2,688 a tonne after earlier reaching $2,734.50, its highest since May 2011.

Copper bounced 0.3 per cent from Wednesday’s 2.1 per cent fall. Nickel improved 0.6 per cent and lead 0.9 per cent. Zinc lost 0.1 per cent and tin 0.3 per cent.

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