Aussie shares were poised to open higher for a fifth session despite a mixed night on Wall Street as US investors weighed first-quarter earnings.
The S&P/ASX 200 was set to start the day 30 points or 0.4 per cent ahead, according to futures action. The Australian benchmark hit its strongest level of the year yesterday before closing four points or less than 0.1 per cent ahead.
Wall Street’s main indices finished mixed as a big earnings miss from Netflix weighed on the Nasdaq. The Dow was lifted by strong results from Procter & Gamble and IBM. The S&P 500 finished broadly flat.
Gold backed off a five-week high. Oil and most industrial metals declined. Iron ore edged higher. The dollar firmed above 74 US cents.
Defensive stocks outperformed as Netflix’s earnings cast a pall over the tech sector. The Dow Jones Industrial Average climbed 250 points or 0.71 per cent.
The tech-heavy Nasdaq Composite slumped 167 points or 1.22 per cent. The S&P 500 finished three points or 0.06 per cent weaker in choppy trade.
Streaming services plunged after Netflix reported its first decline in subscribers in more than a decade. The streaming giant shed 200,000 subscribers and warned it expected to lose another two million this quarter.
The share price tanked 35.12 per cent as analysts rushed to downgrade their outlooks on the stock. Disney dropped 5.56 per cent, Paramount 8.6 per cent and Warner Bros. Discovery 6.04 per cent.
Investors shied away from other tech companies still to report. Amazon gave up 2.6 per cent. Tesla shed 4.96 per cent before regaining almost all in after-market trade after posting a record profit shortly after this morning’s closing bell.
“The Netflixes of the world, the Pelotons of the world are looked at with more scepticism as the market questions the success they have from a fundamental standpoint during the pandemic,” Keith Buchanan, senior portfolio manager at Globalt Investments, told Reuters.
Dow component company IBM bucked the trend, rising 7.1 per cent after topping earnings and revenue expectations. Procter & Gamble climbed 2.66 per cent on an improved revenue forecast.
Buying interest was helped by a retreat in borrowing costs. The yield on ten-year US treasuries backed off Tuesday’s three-year high.
“There seems to be some fatigue around rate hike and inflation discussion,” Sylvia Jablonski, CEO and chief investment officer at Defiance ETFs, told CNBC. “The market has likely priced in the future of rate hikes, inflation is likely nearing a peak and I think there is some positive sentiment around earnings season.”
A predictably choppy US earnings season has yet to dent Australian investor appetite. The S&P/ASX 200 surged to within eight points of an all-time high yesterday and appears eager to go again this morning.
There is nothing on the domestic economic calendar today to undermine momentum across the Easter break. The ASX 200 is on a four-session winning run. While the 7600 level proved a bridge too far yesterday, a close above that resistance level this afternoon would be an important stepping stone to fresh highs.
Bond proxies lifted the Dow overnight in a divided market. Real estate, consumer staples, healthcare and utilities led with gains of 0.8 – 1.8 per cent.
Materials and financials were next best with advances of around 0.7 per cent. Netflix dragged the communication services sector down 4.07 per cent. Tech and consumer discretionary were also weak.
IPOs: a double-header today. RLF AgTech at 11.30 am AEST manufactures and sells plant nutrition products. Pure Resources at 12.30 pm is an explorer with five projects in the Kimberley and Eastern Goldfields of WA.
The dollar climbed 0.77 per cent overnight to 74.5 US cents.
The international oil price fell for a second night after Germany announced it will continue to import Russian oil until the end of the year. Brent crude settled 45 US cents or 0.4 per cent lower at US$106.80 a barrel.
The US benchmark, West Texas Intermediate, crept up 19 US cents or 0.2 per cent to US$102.75 following a decline in US stockpiles.
Iron ore inched higher after Rio Tinto and Brazilian giant Vale announced declines in quarterly production. The spot price for ore landed in China rose eight US cents or 0.1 per cent to US$153.57 a tonne.
Rio Tinto dropped 2.63 per cent in the US and 4.75 per cent in the UK. BHP‘s US-traded depositary receipts retreated 1.23 per cent. The miner’s UK listing eased 2.91 per cent.
Gold continued to pull back from this week’s five-week peak. Metal for June delivery settled US$3.40 or 0.2 per cent lower at US$1,955.60 an ounce. The NYSE Arca Gold Bugs Index climbed 1.18 per cent.
A firmer US dollar and worries about Chinese demand dragged on most industrial metals. Benchmark copper on the London Metal Exchange fell 0.8 per cent to US$10,196 a tonne. Nickel lost 0.7 per cent, lead 1.2 per cent and zinc 2 per cent. Tin was unchanged. Aluminium gained 0.2 per cent,