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ASX Today: ASX caps off worst week since GFC with more losses
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Aussie shares look set to open higher after US stocks eased ahead of inflation and corporate earning updates later this week.  

ASX futures rallied 15 points or 0.22 per cent, signalling a positive start after two days of gentle retreat. The S&P/ASX 200 dipped 21 points or 0.3 per cent yesterday as US futures fell.

Wall Street

US stocks closed in the red but off session lows as investors awaited confirmation of the strength of inflationary pressures and the scale of the rebound in corporate profits this year. A late upsurge helped the S&P 500 close less than a point or 0.02 per cent lower.

The Dow Jones Industrial Average shed 55 points or 0.16 per cent. The Nasdaq Composite gave up 50 points or 0.36 per cent.

Volatility has collapsed over the last few sessions as investors await fresh catalysts with the major US indices near all-time highs. The VIX or Volatility Index is trading at its lowest level since the start of the pandemic. The S&P 500 has moved less than 1 per cent in either direction in five sessions.

“Amid new highs it’s not surprising for the market to be moving somewhat in a holding pattern of late,” Chris Larkin, managing director of trading and investing at E-Trade, said.

Tonight's March Consumer Price Index is a potential market-mover. A strong reading could reignite the ructions in the bond market that spilled into equities last month. Investors also have high expectations for the first-quarter earnings season, which starts in earnest tomorrow night with reports from Dow components Goldman Sachs and JPMorgan Chase, plus Wells Fargo. Citigroup, Bank of America and Delta Air report on Thursday. Morgan Stanley reports on Friday.

“Investors are now going to pay close attention to earnings season, because this is the time where they are expecting guidance from companies, where valuations start to matter again,” said Ed Moya, senior market analyst at Oanda, told Reuters. “There’s this nervousness that we’re going to see that we can’t just buy everything, as that was the trade for the last few months.”

This season's earnings are expected to show a strong recovery from last year's Covid-affected Q1.

"We anticipate S&P 500 Index earnings per share will grow by more than 30% this year with cyclical sectors such as industrials, consumer discretionary, materials, and financials leading the way," analysts at Wells Fargo said.

Australian outlook

The ASX got a touch of the jitters yesterday afternoon as US futures sank following a TV interview with Federal Reserve Chair Jerome Powell. In the event, overnight US losses were more contained than futures indicated, setting up the ASX for a tentative rebound at today's open.

The S&P/ASX 200 hit a 13-month high last Thursday, but has backed off over the last two sessions. ThinkMarkets analyst Carl Capolingua suggested the retreat may offer under-invested market participants a chance to get on-board.

"We're set up pretty well here. We've broken above key chart resistance at 6938, and we've got some really supportive fundamental factors behind us... Possibly the biggest risk for investors right now is not being invested. That's causing the cash to be put to work, and prices are going to move higher in the near term. For that reason, I think you can keep buying these little pull backs," he said.

Overnight moves in the US were modest. Consumer discretionary and real estate were the pick of the sectors with gains of more than 0.5 per cent. Financials put on 0.4 per cent and industrials and materials 0.3 per cent. Tech stocks slid 0.5 per cent and energy companies 0.9 per cent.

March business confidence figures are due at 11.30 am AEST. Chinese trade figures are also scheduled this session.

The dollar edged up 0.01 per cent to 76.22 US cents.

Commodities

Oil was boosted by reports of an attack on Saudi oil facilities.  Houthi rebels from Yemen reportedly launched a drone and ballistic missile assault on Saudi Aramco facilities in Jeddah and Jubail. Brent crude settled 33 cents ahead at US$63.28 a barrel.

Gold sank to its lowest level in a week as US bond yields climbed ahead of tonight's inflation report. Gold for June delivery settled $12.10 or 0.7 per cent lower at US$1,732.70 an ounce. The NYSE Arca Gold Bugs Index dropped 2.4 per cent.

Overnight moves in BHP and Rio Tinto mirrored yesterday's Australian retreats. BHP's US-listed stock dropped 1 per cent and its UK-listed stock 1.49 per cent. Rio Tinto fell 0.57 per cent in the US and 0.32 per cent in the UK. The spot price for iron ore landed in China edged up 65 cents or 0.4 per cent to US$173 a tonne.

Industrial metals retreated after China's Premier discussed regulating materials markets to curb surging prices. Benchmark copper on the London Metal Exchange fell 0.8 per cent to US$8,864.25 a tonne. Aluminium and lead dipped 0.1 per cent, nickel 3 per cent, zinc 2.6 per cent and tin 1.7 per cent.

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