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Australian shares were set to open higher on the last session of the quarter following two days of heavy selling.

US stocks finished mixed overnight, with gains capped by volatility on bond markets and worries over inflation and the federal debt ceiling.

ASX futures rallied 23 points or 0.32 per cent, signalling early relief from a two-session sell-off that has stripped 188 points or 2.5 per cent from the index. The market yesterday fell to its lowest since early June.

Overnight, gold slid to a six-month low. Oil and industrial metals retreated. Iron ore rose for the fifth time in six sessions. The dollar fell below 72 US cents.

Wall Street

Ructions on bond markets kept equity markets in check as they struggled to build a base following Tuesday’s heavy falls. The S&P 500 and Dow surrendered much of their gains in the final hour. The Nasdaq Composite turned negative as treasury yields waxed and waned.

The S&P 500 finished with a rise of seven points or 0.16 per cent. The Dow Jones Industrial Average held onto 91 points or 0.26 per cent. The Nasdaq Composite faded to a loss of 34 points or 0.24 per cent.

Defensive sectors outperformed as investors favoured havens amid concerns about growth, inflation and a potential government shutdown.

“Investors are concerned about three things: the eventual taper of bond purchases by the Fed, ongoing inflation with Chairman Powell saying it’s going to stick around longer than initially expected, and the debt ceiling issue that congress is grappling with,” Oliver Pursche, senior vice president at Wealthspire Advisors, told Reuters.

The tech sector wilted as swinging treasury yields depressed interest in growth stocks. The ten-year yield rallied from below 1.5 per cent to 1.54 per cent during the session. Amazon dropped 0.45 per cent, Alphabet 1.09 per cent and Nvidia 0.88 per cent.

Federal Reserve Chair Jerome Powell said bottlenecks and supply chain problems fuelling inflationary pressures had got “a little bit worse” in places.

“We see that continuing into next year probably, and holding up inflation longer than we had thought,” he told a European Central Bank event.

The Senate and House of Representatives were preparing to vote on rival bills to raise the federal debt limit. Parties in each chamber were pursuing separate strategies to resolve the stand-off.

“A day like today, to me, the calm doesn’t necessarily represent calm. What it represents to me is we’re waiting to see what happens in Washington,” Shawn Snyder, head of investment strategy at Citi US Wealth Management, told CNBC.

Australian outlook

An unpredictable session coming up, with end-of-month and end-of-quarter window dressing offering a possible lifeline following an unconvincing rally in the US. Institutional portfolio managers have an incentive to put the best possible gloss on their figures before reporting to investors.

September is set to be the Australian market’s first losing month since this time last year. The index has fallen 338 points or 4.5 per cent this month. It would take a big push this session to rescue the quarter: the index has given up 116 points or 1.6 per cent since June 30.

Defensive sectors appear to offer the day’s best prospects following gains in US utilities, REITs, consumer staples and health stocks. US financials inched up 0.08 per cent.

The materials sector was the biggest weight, falling 0.39 per cent. The tech sector dipped 0.1 per cent.

An on-going retreat from risk pushed the dollar below 72 US cents. The Aussie was last down 0.91 per cent at 71.78 US cents.

August building approvals and private-sector credit figures are scheduled for 11.30 am AEST. China releases rival manufacturing gauges at 11 am and 11.45 am.

IPOs: plenty to choose from today. Mitre Mining lists at 11.30 am AEST. This Melbourne explorer’s flagship project is the Mitre Project in the Lachlan Fold Belt on the NSW south coast. Forrestania Resources, listing at 1 pm, is exploring for gold, lithium and nickel in WA. Activeport Group, also listing at 1 pm, makes network management software.

Commodities

Gold miners declined as the yellow metal was crushed by a rising greenback. The US dollar touched its highest level of the year, undermining demand for alternative stores of wealth.

Gold for December delivery settled US$14.60 or 0.8 per cent lower at US$1,722.90 an ounce, its weakest finish since late March. The NYSE Arca Gold Bugs Index dropped 2.48 per cent.

“Gold and silver prices have been hit by a new rebound of the U.S. dollar and by the rise of the 10-year yields,” Carlo Alberto De Casa, analyst at Kinesis Money, said.

BHP and Rio Tinto steadied as iron ore rose for the fifth time in six sessions. The ore spot price bounced US$2.45 or 2.2 per cent to US$114.80 a tonne, recouping almost half of Tuesday’s loss.

BHP‘s US-listed stock inched up 0.11 per cent and its UK-listed stock added 0.81 per cent. Rio Tinto dipped 0.14 per cent in the US after gaining 0.94 per cent in the UK.

The first increase in US crude inventories in eight weeks helped push oil into the red. Brent crude settled 45 US cents or 0.6 per cent lower at US$78.64 a barrel.

Industrial metals declined as power shortages forced factory closures in China, casting a cloud over demand for raw materials. Benchmark copper on the London Metal Exchange dropped 1.2 per cent to US$9,174 a tonne. Aluminium declined 1.1 per cent, nickel 1.2 per cent, lead 1.6 per cent, zinc 0.9 per cent and tin 0.7 per cent.

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