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The last full week of the corporate earnings season looked set for a positive start following a strong end to a losing week on Wall Street.

ASX futures rallied 35 points or 0.47 per cent, signalling an early rebound from the domestic market’s worst week since January. The S&P/ASX 200 fell 2.2 per cent last week from record levels as falling commodity prices underlined concerns the spread of the delta Covid variant was slowing global growth.

On Friday, oil declined for a seventh session. Iron ore, gold and copper rebounded. The dollar touched its lowest level since November.

Highlights on this week’s earnings calendar include Wesfarmers, Woolworths, Qantas and many of the major tech companies (more below).

Wall Street

US stocks trimmed weekly losses fuelled by concerns the Federal Reserve was preparing to reduce support at a time when data showed the economy was already slowing.  

The S&P 500 bounced 36 points or 0.81 per cent. The Dow Jones Industrial Average put on 226 points or 0.65 per cent. The Nasdaq Composite added 173 points or 1.19 per cent.

The recovery cut the S&P 500’s fall for the week to around 0.6 per cent. The Dow gave up 1.1 per cent and the Nasdaq 0.7 per cent.

The minutes from the latest Fed meeting released mid-week showed a majority of policymakers thought the economy would be strong enough to withstand a reduction in stimulus before year-end.

“With Fed tapering coming while delta variant keeps spreading, the transition away from liquidity/policy regime to more mid-cycle markets means we may experience a bumpier ride ahead,” Barclay equity strategists wrote. “Market narrative may thus turn more cautious, as concerns about peaking growth rates, delta variant and policy mistake may prove headwinds, at a time when seasonality and technicals are unfavorable.”

Growth stocks and bond proxies outperformed as US treasury yields retreated. The yield on ten-year US government bonds peaked in March and has fallen steadily since in a sign of growing doubts over the flagging recovery.

The tech stocks that fared best at the height of the pandemic have come back into vogue. The sector rallied 1.3 per cent on Friday. Chip stocks, Microsoft, Apple, Facebook and Alphabet advanced.

Other top-performing sectors were traditional defensives: utilities +1.22 per cent and communication services +0.96 per cent.

With the second-quarter US reporting season mostly complete, attention switches this week to a gathering of central bankers. The annual economic symposium normally held in Jackson Hole, Wyoming, goes virtual this year.

The event starts on Thursday, with policymakers under pressure to soothe market jitters over plans to unwind support. Fed Chair Jerome Powell speaks on Friday.  

Australian outlook

Equity investors will hope the weekend acted as a circuit-breaker from last week’s downhill glide. The S&P/ASX 200 declined every day last week to a total loss of 168 points or 2.2 per cent.

Investors looking for an entry point will note most of the falls came over the first two sessions. The market showed signs of steadying from Wednesday, but heavy down-pressure from BHP and other miners stifled attempted rallies. The ASX 200 bounced 47 points on Friday before fading to a loss of four points.  

BHP rebounded in overseas trade at the end of the week. The miner’s US-listed stock rose 1.21 per cent and its UK-listed stock gained 0.92 per cent. Rio Tinto edged up 0.14 per cent in the US and 0.65 per cent in the UK.

While tech and bond proxies led Friday’s rally, all 11 US sectors improved. Materials gained 0.64 per cent, financials 0.62 per cent and industrials 0.24 per cent. The energy sector edged up 0.28 per cent despite a 9 per cent plunge in crude prices last week.

The dollar skidded more than two and a half cents last week as investors favoured the perceived security of the greenback. The Aussie fell from 73.7 cents on Monday to a low of 71.06 cents at the end of the week. The currency recovered 0.31 per cent this morning to 71.36 US cents in a possible sign of improving risk appetite.

The last full week of earnings season brings reports from several Top 20 companies, as well as leading tech firms Afterpay, Appen and WiseTech. The week kicks off with reports today from Ampol, Charter Hall Group, Austal, Chorus, Sonic Healthcare, NIB Holdings and G8 Education.

Tuesday‘s line-up includes Ansell, Oil Search, Estia Health, Alumina, Scentre Group, Reece, Kogan and Monadelphous. 

Wednesday: WiseTech, Afterpay, Z1p Co, Iluka, Worley, Adbri, Medibank, Ridley, Growthpoint and Nine Entertainment.

Thursday: Woolworths, Qantas, Appen, Ardent Leisure, Link Administration, Flight Centre, Polynovo, Whitehaven Coal, A2 Milk, Cromwell Property, IOOF, Blackmores and Ramsay Health Care.

Friday: Wesfarmers, BWX, Mayne Pharma and Coventry Group (source for all listings: CommSec). 

Economic reports: the July retail sales report on Friday looks the most likely market-mover during a light week for data. Today brings preliminary reads on manufacturing and services industry activity this month. Quarterly construction figures are due on Wednesday and private-capital expenditure on Thursday. 

IPOs: the pipeline for new listings dried up last week, but builds to a trickle this week. Three companies are currently scheduled to debut:  Culpeo Minerals, Kuniko (Tuesday); and Clarity Pharmaceuticals (Wednesday). 

Commodities

Oil‘s losing run extended into a seventh session as worries about the demand hit from Covid handed crude its worst week in nine months. Brent crude settled US$1.27 or 1.9 per cent lower at US$65.18 a barrel.

“Concerns about the delta variant loom large on the near term demand outlook for all commodities, including oil,” Peter McNally, a global sector lead at Third Bridge, told MarketWatch.

Traders fret that zero-Covid policies in China, Australia and other parts of Asia will crush fuel demand. China has tightened restrictions at ports and limited flights in and out of the country to suppress outbreaks.  

“It’s hard for prices to find support with this kind of uncertainty,” John Kilduff, partner at Again Capital, told Reuters. “They are acting severely for minimal outbreaks, which is a direct threat for the demand profile there.”

Iron ore rebounded from Thursday’s double-digit plunge. The ore spot price bounced 5.9 per cent to US$140.44 a tonne, according to Fastmarkets.

Copper also staged a partial recovery. US-traded copper rose 2.4 per cent to US$4.14 a pound on Comex. The rally trimmed the metal’s weekly loss to 5.8 per cent.  

“Negative factors haven’t gone away, but the question is whether they have been fully priced in or if there more to go,” a copper trader told Reuters. “On positioning, it looks like most longs have been cut or reversed into shorts.”

Gold squeezed out its first rise in four sessions. Metal for December delivery settled 90 US cents or less than 0.1 per cent higher at US$1,784 an ounce. The NYSE Arca Gold Bugs Index finished little changed, up 0.08 per cent.

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