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Aussie shares looked set to open little changed after key commodities fell and US equity indices finished mixed as a relief rally lost momentum.

ASX futures dipped eight points or 0.11 per cent, signalling a calmer start after three days of heavy selling. The S&P/ASX 200 has given up more than 300 points or 4.25 per cent since Friday.

Overnight, the S&P 500 and Nasdaq Composite eked out gains in choppy action. The Dow fell for a fourth session.

Iron ore shed as much as 7 per cent in Chinese trade before trimming its loss. US oil dropped below US$100 a barrel. Gold booked its weakest close in three months.

Wall Street

US stocks struggled to hold early gains as equity markets tried to a build a base after a three-day sell-off drove the S&P 500 to its weakest level in more than a year. Growth stocks led ahead of tonight’s much-anticipated inflation update.

The S&P 500 seesawed before closing with a gain of ten points or 0.25 per cent. The Nasdaq Composite fared best with a rise of 114 points or 0.98 per cent. The Dow Jones Industrial Average closed 85 points or 0.26 per cent in the red after being up as much as 500 points and down around 350 points.

“We’re in a market where you just can’t hold on to any rallies,” Paul Hickey, co-founder of Bespoke Investment Group told CNBC. “It’s not surprising given the overall trends we’ve seen over the last several days.”

Battered tech stocks outperformed as long-term interest rates backed off three-year highs. The yield on ten-year US treasuries dropped back below 3 per cent for the first time in three sessions.

Intel gained 2.18 per cent, Microsoft 1.86 per cent, Alphabet 1.67 per cent and Apple 1.61 per cent.

Bank stocks retreated with long-term interest rates. JPMorgan Chase gave up 2.44 per cent, Wells Fargo 2 per cent and Bank of America 1.68 per cent.

Equities have fallen to multi-month/year lows this week as signs of a lockdown-fuelled slowdown in China added to market worries. Investors were already dealing with headwinds that included soaring inflation, rising rates, quantitative tightening, a war in Ukraine and supply-chain pressures.

“At this point, it’s just fear-based selling,” Jake Dollarhide, CEO of Longbow Asset Management, told Reuters.

Some analysts believe tonight’s US consumer price index could mark a turning point if it confirms inflation has finally topped out after hitting a four-decade high.

“Investors are looking for signs of a potential ‘peak’ in the inflationary pressures we have encountered over the last several months – and if they get a hint of anything close, the markets could be set to stage a strong rally in our view,” analysts at Janney Montgomery Scott wrote.

Australian outlook

Traders will hope for a calmer session today after three days of heavy selling drove the S&P/ASX 200 down to levels last seen in late January. The Australian benchmark more than halved its initial loss yesterday as rising US futures encouraged hopes of an overnight relief rally.

Wall Street did not deliver the kind of sharp rebound many traders wanted, but any gain in these challenging conditions will be welcome. A consolidation session seems likely as traders await a US inflation report tonight with the weight to set the market tone for the next few sessions.

Tech and energy were the pick of the US sectors. Tech stocks bounced 1.58 per cent. Energy rallied 0.93 per cent despite further pressure on crude prices.

Rate-sensitive financials fell 0.8 per cent with a decline in market rates. The materials sector lost 0.59 per cent as a strengthening greenback squeezed commodity prices. The night’s worst performers were real estate -2.29 per cent and utilities -1.24 per cent.

BHP and Rio Tinto attracted a bid in New York despite weakness in London and Sydney. BHP‘s US-traded depositary receipts bounced 0.61 per cent after its UK listing fell 0.83 per cent. Rio Tinto gained 0.2 per cent in the US and lost 0.48 per cent in the UK.

Back home, Westpac’s May consumer sentiment survey is due at 10.30 am AEST. China releases monthly inflation figures at 11.30 am.

Companies holding AGMs today include GPT Group, Grange Resources and Unibail-Rodamco-Westfield.

IPOs: the listing of Southern Cross Gold originally scheduled for today has been postponed, new date to be announced.

The dollar traded at levels last seen in June 2020. The Aussie was lately down 0.21 per cent at 69.39 US cents.

Commodities

A persistently strong US dollar and worries about shrinking Chinese demand kept commodity markets under pressure.

Iron ore plunged almost 7 per cent on the Dalian Commodity Exchange before a partial recovery. The slump came amid reports of weak demand as steel-makers struggle with slim profit margins.

The most-active ore futures contract fell for a third day to its weakest since mid-March and finished 4.1 per cent lower at US$112.71 a tonne. The spot price for ore landed in China dropped US$1.72 or 1.3 per cent to US$130.27 a tonne.

US oil fell back under US$100 a barrel for the first time in almost two weeks. West Texas Intermediate sank US$3.33 or 3.2 per cent to US$99.76. The international benchmark, Brent crude, settled US$3.48 or 3.3 per cent lower at US$102.46 a barrel.

Energy prices have fallen amid signs the European Union will struggle  to get all 27 member states to agree on an embargo on Russian crude.

“It looks as if the latest sanction package will need to be watered down in order to be approved by all members. Already, there are reports that the EU has dropped part of the proposal which would have banned EU-owned tankers from shipping Russian oil to destinations outside the EU,” Warren Patterson, head of commodities strategy at ING, wrote.

Gold fell to a three-month low as the relentless rise of the greenback continued to undermine demand for alternative assets. Metal for June delivery settled US$17.60 or almost 1 per cent weaker at US$1,841 an ounce.

Lukman Otunuga, senior research analyst at FXTM, said gold faced “headwinds in the form of an appreciating dollar, rising Treasury yields and Fed rate hike bets”.

Silver slid 1.8 per cent to its lowest close since July 2020. The NYSE Arca Gold Bugs Index declined 1.2 per cent.

Copper dipped after Chinese customs data showed copper imports declined 4 per cent in April from the month before. Demand shrank as Covid restrictions limited factory production.

Benchmark copper on the London Metal Exchange eased 0.1 per cent to US$9,235.75 a tonne. Lead dropped 1.9 per cent, zinc 0.4 per cent and tin 4.3 per cent. Aluminium finished flat. Nickel bounced 0.8 per cent.

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