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Aussie shares have fresh highs in sight following a cautiously positive session in the US ahead of key economic reports.
ASX futures climbed 16 points or 0.22 per cent, signalling further gains following yesterday’s record close. The S&P/ASX 200 climbed 75 points or 1.05 per cent on Wednesday after data showed the economy is larger now than it was before the pandemic.
Overnight, oil rose to a fresh two-year high. Gold firmed at its strongest level since January. Iron ore consolidated above US$200.
Wall Street
US stocks inched higher during a wait-and-see session ahead of major economic reports tonight and tomorrow.
The S&P 500 rose six points or 0.14 per cent to within 0.7 per cent of its old high. The Dow Jones Industrial Average gained 25 points or 0.07 per cent. The Nasdaq Composite added 20 points or 0.14 per cent. The Dow and Nasdaq finished around 1.4 and 3.2 per cent from their previous peaks.
“We’ve got very heavy economic data in the next two days,” John Brady, senior vice president at RJ O’Brien & Associates, told Reuters. “The market is just treading water.”
Tonight brings monthly private-sector jobs data, weekly unemployment benefits claims and a services industry survey. Tomorrow night brings the closely-watched government jobs report and average hourly earnings – a leading indicator for consumer inflation.
Energy was once again the standout sector, rising 1.74 per cent as crude carved out a new two-year high. Brent crude settled $1.10 or 1.6 per cent ahead at US$71.35 a barrel. The US benchmark closed at its strongest since October 2018. The spikes followed incidents in Iran, where a blaze sank a warship, and a state-owned refinery near the capital, Tehran, caught fire.
Oil markets are moving into a seasonally-strong part of the year as Americans take to the road for summer driving holidays. Occidental Petroleum climbed 2.67 per cent, Chevron 1.34 per cent and Marathon Oil 0.94 per cent.
So-called “meme stocks” were on the march again. Cinema group AMC Entertainment more than doubled in value overnight before closing 95.22 per cent ahead. GameStop put on 13.34 per cent. BlackBerry jumped 31.92 per cent.
Federal Reserve official Patrick Harker sounded a note of caution about the central bank’s stimulus spending.
“We’re planning to keep the federal funds rate low for long,” Philadelphia Fed Bank President Harker told a virtual event. “But it may be time to at least think about thinking about tapering our $120 billion in monthly Treasury bond and mortgage-backed securities purchases.”
Australian outlook
A lacklustre night on Wall Street, but no signs of alarm in ASX futures action. If the market has it right, the ASX has enough momentum to coast a little higher this session.
The S&P/ASX 200 broke back through to blue skies yesterday as the heavyweight miners charged. Market leadership this session is less obvious following a negative night for mining stocks. The US materials sector fell 0.94 per cent. US financials were also uninspired, rising a skinny 0.12 per cent.
The energy sector should go well, but does not have the weight to offset down-pressure from the likes of BHP, Rio and Fortescue. BHP’s US-listed stock eased 0.07 per cent overnight and its UK-listed stock shed 0.27 per cent. Rio Tinto gave up 0.64 per cent in the US after closing flat in the UK.
Other US strengths overnight included real estate +1.41 per cent, tech +0.62 per cent and utilities +0.5 per cent. The consumer discretionary sector shed 0.4 per cent and industrials 0.29 per cent.
The start-of-month flood of economic data continues today with April retail sales, trade figures and a construction survey.
Wesfarmers holds a strategy briefing day. Gold miner Torque Metals is scheduled to list.
The dollar eased 0.03 per cent to 77.53 US cents.
Commodities
Gold inched to its highest close since January, aided by a drop in US bond yields. Metal for August delivery settled $4.90 or 0.3 per cent ahead at US$1,909.90 an ounce. The NYSE Arca Gold Bugs Index eased 0.1 per cent.
Iron ore consolidated two days of strong gains. The spot price for ore landed in China inched up 35 cents or 0.2 per cent to US$209.45 a tonne. Prices jumped more than 10 per cent in two previous sessions as Chinese steel prices firmed.
US copper declined for a second session after the US dollar index pushed back above 90. Comex copper declined 1.3 per cent to US$4.59 a pound.
“Investors are getting more cautious, and that is presumably prompting some profit-taking,” ING analyst Wenyu Yao ,wrote.
