The share market has a green light for fresh gains after Wall Street shrugged off a surge in inflation and a vaccine setback.
The S&P 500 hit a new record and the Nasdaq Composite added more than 1 per cent. Oil and metals rallied as the US dollar retreated.
ASX futures climbed 19 points or 0.27 per cent, signalling the market will open within touching distance of last week's 13-month high.
US stocks finished mixed but broadly higher as inflation rebounded and US regulators halted the rollout of the Johnson & Johnson Covid vaccine over clotting issues.
The S&P 500 rose 14 points or 0.33 per cent to a record close. The Nasdaq Composite rallied 146 points or 1.05 per cent as the vaccine halt encouraged a rotation from "reopening plays" back into tech giants that outperformed during the pandemic. The Dow Jones Industrial Average fell 68 points or 0.2 per cent.
The US Food and Drug Administration requested a temporary halt to the use of Johnson & Johnson's Covid vaccine to investigate reports of blood clotting. Six women between 18 and 48 experienced issues that left one dead and another in critical condition. The FDA said clots were "extremely rare" and it expected the pause to last "a matter of days".
Johnson & Johnson shares sank 1.34 per cent. Moderna and Pfizer, which make rival vaccines, gained 7.4 and 0.51 per cent, respectively.
Bond and equity markets shook off an expected bump in inflation. The consumer price index climbed 0.6 per cent last month and 2.6 per cent year over year. Core inflation rose 0.3 per cent for the month and 1.6 per cent for the year.
Growth stocks outperformed as bond yields declined. The yield on ten-year US treasuries sank almost five basis points to 1.62 per cent. The Russell 1000 Growth Index advanced 1.08 per cent, versus a 0.26 per cent decline in the Value Index.
“Underneath the surface, the market is assuming a defensive posture today led by mega-cap Tech and the bond proxies - Utilities and Real Estate,” Chris Hussey, a managing director at Goldman Sachs, wrote.
The S&P/ASX 200 looks set to open near Thursday's record high after consolidating for three sessions. Whether the market has enough momentum to test the old high remains to be seen. Investors may wait to see how a new US earnings season shapes up before adding to positions. The US Q1 season gets underway tonight with reports from Goldman Sachs, Wells Fargo and JPMorgan Chase.
As Chris Hussey noted, the US action had a defensive bent. Bond proxies should shine today if Australian yields follow the US lead - and they normally do. US utilities climbed 1.22 per cent, real estate 0.63 per cent and health 0.44 per cent.
Tech stocks should also flourish as the decline in borrowing costs makes valuations more attractive. US tech gained 0.95 per cent.
However, a fall in yields will weigh on lenders that benefit from higher rates through margin opportunities. The US financial sector fell 0.92 per cent. Miners were also soft - US materials eased 0.19 per cent - but BHP and Rio Tinto advanced (more below).
The Johnson & Johnson vaccine news should have minimal impact here. The government has not purchased any because of its similarity to the AstraZeneca shot. However, reopening plays - travel agents, airlines, etc - may suffer collateral damage from the dent to sentiment amid the general tendency of Australian trade to mimic the US.
Nothing on the economic calendar today is likely to change the current themes. The results of a monthly survey on the household impacts of Covid are due this morning.
The dollar climbed 0.21 per cent overnight to 76.43 US cents as the greenback retreated.
Gold rebounded as the US dollar and bond yields declined and investors hedged against inflation. Metal for June delivery settled $14.90 or 0.9 per cent ahead at US$1,747.60 an ounce. The NYSE Arca Gold Bugs Index rose 1.88 per cent.
Oil was boosted by an upbeat forecast from OPEC and strong Chinese trade data. Brent crude settled 39 cents or 0.6 per cent ahead at US$63.67 a barrel. The US benchmark advanced 0.8 per cent to a two-week high.
BHP and Rio Tinto rallied in overseas action despite a soft session here yesterday. BHP's US-listed stock added 0.36 per cent and its UK-listed stock 0.92 per cent. Rio Tinto put on 0.7 per cent in the US and 0.99 per cent in the UK. The spot price for iron ore landed in China dipped 65 cents or 0.4 per cent to US$172.35 a tonne.
Copper rallied after customs data showed China imported 25 per cent more last month than the same period last year. Benchmark copper on the London Metal Exchange rose 0.4 per cent to US$8,901.50 a tonne. Aluminium improved 1.5 per cent, nickel 0.2 per cent, lead 0.5 per cent, zinc 1 per cent and tin 0.7 per cent.