Aussie shares were poised to open higher for the first time in four sessions after commodity stocks outperformed in a mixed US market.
ASX futures rallied 52 points or 0.72 per cent, signalling relief from a rout that has dragged the S&P/ASX 200 down 359.5 points or almost 4.4 per cent in three sessions.
Miners and energy producers led in the US following gains for iron ore, crude and some metals. The dollar remained under pressure, falling closer to 71 US cents.
US stocks finished mixed and well off session highs as investors weighed a mixed bag of earnings from heavyweights including Microsoft, Alphabet, Visa and Boeing. The main indices finished near intraday lows as sellers faded a mid-session rally.
The S&P 500 clung on for a gain of nine points or 0.21 per cent. The Dow Jones Industrial Average finished 62 points or 0.19 per cent ahead after being up more than 450 points.
The Nasdaq Composite dwindled to a loss of two points or 0.01 per cent. This morning’s close was the tech index’s lowest of the year.
“We’re trying to find a place of stability,” Kari Firestone, chairman and CEO of Aureus Asset Management, told CNBC. “We need to see a few more names come in with really strong, reliable and sustainable earnings so investors can get back on board.”
Microsoft was the best of the tech giants, rising 4.81 per cent as strong forward guidance quelled doubts about the economic outlook. Visa gave the Dow a lift, advancing 6.47 per cent after beating analyst estimates.
Visa’s result helped offset a 7.53 per cent plunge from Boeing to a 17-month low. The aircraft manufacturer’s quarterly loss more than doubled to US$1.24 billion as defence and commercial aircraft spending fell short of expectations.
Weak guidance and an earnings miss drove Google parent company Alphabet down 3.67 per cent. Meta Platforms sank 3.32 per cent ahead of earnings, but was lately up more than 18 per cent in after-hours trade as buyers cheered an earnings beat.
Last night’s mid-session fade was typical of the recent investor tendency to sell rallies, rather than buy dips. The Nasdaq Composite has fallen around 23 per cent from its peak into a bear market. The S&P 500 was more than 13 per cent from its high and in a technical correction.
Relief ahead from three days of brutal selling. Wall Street’s rally was far from convincing, but enough for an Australian market that looks short-term oversold and ripe for a rebound. Whether this morning’s initial gains hold, remains to be seen.
As Robert Pavlik, senior portfolio manager at Dakota Wealth Management, told MarketWatch this morning: “It was poised for a bounce. Whether or not it lasts is the question.”
Pavlik was discussing Wall Street, but the same holds true for the ASX 200. Much of the optimism built into this morning’s futures figures draws from the performance of mining heavyweights BHP and Rio Tinto. BHP‘s US-traded depositary receipts bounced 4.56 per cent overnight after China lifted some Covid restrictions in the steel-making province of Tangshan.
The miner’s UK listing rallied 4.04 per cent. Rio Tinto gained 4.6 per cent in the US and 4.07 per cent in the UK.
Materials and energy were the best of the US sectors, both rising 1.48 per cent. Microsoft’s well-received earnings helped lift the tech sector 1.36 per cent. Industrials and consumer staples also finished higher.
Financials dipped 0.1 per cent. Defensive sectors such as real estate, utilities and health all finished modestly lower.
A big day ahead for quarterly earnings includes updates from Fortescue Metals, Newcrest, IGO, St Barbara, Sandfire Resources and Resolute Mining.
Quarterly import price data are due at 11.30 am AEST.
The dollar continued to lose ground against the greenback, falling 0.25 per cent to 71.24 US cents.
Iron ore prices rose for a second day after Chinese authorities lifted a lockdown in parts of Tangshan. The spot price for ore landed in China edged up 13 cents or 0.1 per cent to US$150.52 a tonne.
Oil was boosted by a drawdown in US gasoline inventories. Brent crude settled 33 US cents or 0.3 per cent higher at US$105.32 a barrel. The US benchmark climbed 0.3 per cent to US$102.02.
Traders kept a wary eye on China, where the threat of broader Covid lockdowns continued to cap buying interest.
“While China has announced a major increase in testing efforts for the capital city, it has not seen the scale of targeted lockdown measures that have more recently been observed in Shanghai,” Robbie Fraser, manager of global research and analytics at Schneider Electric, wrote.
Hopes for Chinese stimulus measures kept a floor under base metals. Authorities earlier this week pledged to increase spending on infrastructure to help offset the impact of lockdowns.
Benchmark aluminium on the London Metal Exchange rose 1.1 per cent to US$3,080.70 a tonne. Nickel gained 0.7 per cent and zinc 0.9 per cent. Copper finished broadly flat. Lead declined 1.7 per cent, tin 1 per cent.
A strengthening greenback helped push gold to its weakest close in two months. Gold for June delivery settled US$15.40 or 0.8 per cent lower at US$1,888.70 an ounce. The NYSE Arca Gold Bugs Index slipped 0.78 per cent.
“With interest rate hikes all but guaranteed by the U.S. central bank in May and June and highly likely in July too, gold’s lack of yield has seen it fall out of favor by investors,” Rupert Rowling, market analyst at Kinesis Money, wrote.