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The Australian share market was set to play catch-up with overseas gains after diminishing concerns about inflation helped Wall Street log a fourth straight weekly advance.
The main indices in the US rallied between 1.3 and 2.1 per cent on Friday. The S&P 500 logged its longest run of weekly wins since November.
Gold also scored a fourth week of gains. Oil, iron ore and copper retreated. The dollar held above 71 US cents.
ASX futures advanced 39 points or 0.56 per cent. The S&P/ASX 200 fell 38.5 points or 0.54 per cent on Friday as investors booked profits after four weeks of gains.
The domestic reporting season hits its stride this week with updates from heavyweights BHP, CSL, Santos, Transurban, JB Hi-Fi, Newcrest and dozens of others.
Wall Street
US stocks ended a strong week with another up-leg on Friday amid growing hopes inflation has peaked and a new bull market has commenced.
A broad rally lifted the S&P 500 73 points or 1.73 per cent. All 11 sectors advanced.
The Dow Jones Industrial Average put on 424 points or 1.27 per cent. The Nasdaq Composite led with a rise of 267 points or 2.09 per cent, thanks to strength in Apple and a rebound in chipmakers.
Market sentiment was boosted by signs consumers were less fearful about the future. The University of Michigan’s preliminary August consumer sentiment index improved to 55.1 from 51.5 in July. Sentiment slumped to a record-low of 50 in June.
The S&P 500 has regained more than half of its losses since its January all-time high. The rally accelerated last week on news consumer prices levelled off last month and producer prices unexpectedly declined. The data suggested inflationary pressures were easing after hitting a four-decade high.
“I wouldn’t declare victory over this bear market yet. There’s likely some bad news still out there. But there’s a very good chance we’ve seen the bottom,” Tim Ghriskey, chief investment strategist at Inverness Counsel, told Reuters.
Growth stocks outperformed as bond yields retreated. High-growth names get revalued by the market when the cost of borrowing declines. Vanguard’s S&P 500 Growth Index Fund rallied 2.06 per cent, versus a gain of 1.43 per cent for the Value Index Fund.
Apple put on 2.14 per cent on reports iPhone suppliers had been told to ramp up production. Micron and Nvidia bounced back from selling pressure earlier in the week following soft forecasts.
The S&P 500 put on 3.25 per cent for the week. The Dow added 2.92 per cent and the Nasdaq Composite 3.8 per cent.
Australian outlook
Friday’s market wobble looks likely to be reversed early this session after Wall Street continued to recover from this year’s bear market. Regaining 50 per cent of this year’s S&P 500 loss is considered by some traders an important technical buying signal.
The S&P/ASX 200 is also well on its way to recouping this year’s losses. The Australian benchmark cleared the 50 per cent recovery mark of 7016 last week.
All 11 US sectors rose on Friday, led by 2 per cent-plus advances in the growth sectors dominated by Big Tech.
Basic materials firmed 1.88 per cent, real estate 1.72 per cent and financials 1.63 per cent. Energy brought up the rear with a gain of 0.8 per cent.
Market attention is likely to turn inward over the next two weeks as the domestic full-year earnings season hits top gear. Companies reporting today include JB Hi-Fi, Bendigo Bank, BlueScope Steel, Beach Energy, GWA Group, Argo Investments and GPT Group (half-year).
Other potential highlights this week include: BHP, Goodman Group, James Hardie (Tuesday); CSL, Santos, Brambles (Wednesday); Transurban, Origin Energy (Thursday); and Newcrest, Stockland, Cochlear and AGL Energy (Friday). (Source: CommSec.)
Lithium miners provided most of the index’s best performers last week for a second week. Lake Resources soared 48.4 per cent, Core Lithium 14.4 per cent and Liontown Resources 13 per cent. Takeover interest from BHP boosted OZ Minerals 35.8 per cent. Coal miner Coronado jumped 20.7 per cent.
The July employment report on Thursday looms as this week’s most likely domestic market-moving economic release. Economists expect the jobless rate to hold steady at 3.5 per cent as the economy creates around 26,500 jobs.
Other releases this week include: the minutes from this month’s RBA meeting, weekly consumer confidence (Tuesday); June quarter wage price index (Wednesday); and average weekly earnings (Thursday).
On Wall Street, Wednesday night looks to carry the greatest risk with the release of July retail sales figures and the minutes from the last Federal Reserve meeting. The rest of the schedule this week is fairly light.
Companies trading ex-dividend this week include Scentre Group (today), Computershare, GQG (Tuesday), Commonwealth Bank (Wednesday) and QBE (Thursday).
IPOs: a desperately thin month shows no sign of improvement. There are zero listings pencilled in for the week ahead.
The dollar backed down 0.18 per cent this morning to 71.13 US cents.
Commodities
Gold rounded off its longest weekly win run of the year with another up-leg supported by a falling greenback and a retreat in US yields. Gold for December delivery settled US$8.30 or 0.5 per cent ahead at US$1,815.50 an ounce. The NYSE Arca Gold Bugs Index bounced 2.39 per cent.
“Gold will continue advancing as long as the recent trends in the dollar and real rates continue,” BCA Research analysts wrote.
Oil retreated on news a supply disruption in the Gulf of Mexico would be quickly repaired. A damaged pipeline connecting offshore rigs to the mainland was fixed on Friday night, according to officials.
Brent crude settled 76 US cents or 0.8 per cent lower at US$98.84 a barrel. The US benchmark eased 2.4 per cent to US$92.09.
Despite Friday’s setback, both crude benchmarks rose last week. Brent crude bounced 4.1 per cent. West Texas Intermediate crude improved 3.5 per cent.
Iron ore drifted lower as traders fretted about steel production curbs and a property slump in China.
“The iron ore market remains on shaky ground. There is a long way to go before the property sector will see any meaningful rebound,” ANZ senior commodity strategist Daniel Hynes said.
“Environmental constraints are also likely to reduce China’s crude steel output, so we have lowered our steel production assumptions and now expect a second consecutive year of contraction.”
The spot price for ore landed in China declined US$1.15 or 1 per cent to US$109.86 a tonne. The most-traded contract on the Dalian Commodity Exchange dropped 0.6 per cent to US$108.42.
The constructive market mood in the US helped BHP‘s US-traded depositary receipts rise 0.74 per cent after its UK stock fell 0.51 per cent. Rio Tinto added 0.37 per cent in the US and 0.58 per cent in the UK.
Industrial metals retreated after a decline in lending by Chinese banks signalled weak demand. Benchmark copper on the London Metal Exchange fell 1 per cent to US$8,085 a tonne. Aluminium slid 3.4 per cent, nickel 2.6 per cent, lead 0.8 per cent, zinc 2.5 per cent and tin 0.7 per cent.
