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The ASX looked set to open higher ahead of a much-anticipated inflation report after US stocks closed little changed.
ASX futures climbed 17 points or 0.24 per cent, signalling a possible recovery following two straight losses.
The session ahead brings quarterly consumer price index figures that will reveal the strength of inflationary pressures on the economy. Overnight, US stocks closed mixed but broadly flat. Iron ore set a new record. Copper hit a decade high. Oil rose to its strongest level in a week. The dollar and gold retreated.
Wall Street
US stocks marked time ahead of potential market-moving quarterlies this week from the Street’s largest companies. Strong economic data made little impact as investors parsed earnings from Tesla, 3M, GE and UPS.
The S&P 500 dipped less than a point or 0.02 per cent from Monday’s record close. The Dow Jones Industrial Average inched up three points or 0.01 per cent. The Nasdaq Composite shed 49 points or 0.34 per cent.
Nasdaq heavyweight Tesla sank 4.53 per cent after revenues fell short of expectations. Some analysts criticised the result for relying on sales of Bitcoin and environmental credits, rather than cars.
3M dropped 2.6 per cent after warning of rising costs due to supply-chain disruptions. A revenue miss sent General Electric down 0.59 per cent.
UPS was the night’s big winner, surging 10.42 per cent as strong demand from small businesses helped the delivery service raise Q1 revenue by 27 per cent.
Google parent company Alphabet eased 0.82 per cent in regular hours, then jumped 4.65 per cent in extended trade after reporting a 34 per cent jump in quarterly revenue. Microsoft went the other way, inching up 0.16 per cent in regular trade, then diving 3.32 per cent after revenues fell short of some estimates.
Consumer confidence hit a pandemic-era high as businesses continued to reopen and vaccinations became more widely available. The Conference Board’s index reached 121.7, its highest reading since last February. A separate report showed house prices recorded their largest increase in 15 years.
Australian outlook
The S&P/ASX 200 has been in a consolidation pattern since last Monday’s record close. The index tested and rejected lower levels a week ago and again yesterday, suggesting further gains to come.
There was nothing in Wall Street’s overnight action to inspire a strong move today, but commodity markets remained highly supportive. Two big guns reported after the closing bell: Microsoft and Alphabet. Their share prices have moved sharply in opposite directions, so the overall effect on US futures today may be neutral.
The tone for this session could change at 11.30 am AEST when the Reserve Bank releases the consumer price index. The index may either dampen or exacerbate simmering concerns about inflation. A strong reading would resurrect fears the central bank will be forced to raise the cash rate sooner than the current timeline suggests – 2024 at the earliest. A mild reading would push inflation temporarily onto the backburner as a market issue.
Energy was the best of the US sectors, rising 1.26 per cent. Also positive were financials +0.91 per cent and industrials +0.87 per cent. It was all red elsewhere. Health and utilities fell hardest. The materials sector shed 0.22 per cent.
The domestic quarterly reporting season climaxes this week. Coles is due to release Q3 sales results today. Black Canyon and Australasian Gold are scheduled to list today.
The dollar declined 0.31 per cent this morning to 77.69 US cents.
Commodities
Record iron ore prices failed to lift BHP and Rio Tinto in overseas trade. BHP’s US-listed stock fell 1.45 per cent and its UK-listed stock lost 1.71 per cent. Rio Tinto gave up 1.51 per cent in the US and 1.05 per cent in the UK. The spot price for iron ore landed in China improved $2.40 or 1.3 per cent to US$193.85 a tonne.
Copper marked a new decade-high, supported by supply disruptions in Chile and the prospect of shortages. Benchmark copper on the London Metal Exchange advanced 0.9 per cent to US$9,860.50 a tonne. Nickel gained 1.8 per cent, lead 0.6 per cent, zinc 0.2 per cent and tin 0.2 per cent. Aluminium eased 0.4 per cent.
Oil climbed to its strongest level in a week after the OPEC+ oil cartel reaffirmed its April 1 plan to gradually increase production over the next three months. Brent crude settled 77 cents or 1.2 per cent ahead at US$66.42 a barrel.
Gold traded within a tight range ahead of tonight’s US Federal Reserve policy statement. Gold for June delivery settled $1.30 or 0.1 per cent lower at US$1,778.80 an ounce. The NYSE Arca Gold Bugs Index declined 2.26 per cent.
