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Futures data suggests mild pressure on Australian stocks despite advances in European stocks and US equity futures overnight.

As Wall Street closed for Thanksgiving, ASX futures eased seven points or less than 0.1 per cent in thin trade. 

BHP and Rio Tinto declined in UK trade as iron ore fell back towards US$100 a tonne. Copper rose to a one-month high. The dollar dropped below 72 US cents.

European markets

With Wall Street shuttered, futures traders turned to European equities and commodity markets for direction. Defensive stocks helped Europe’s main benchmark rise off three-week lows. The pan-European Stoxx 600 rallied 0.42 per cent to its first gain in five sessions.

“European markets have enjoyed a relatively upbeat day today, with the lack of US involvement reducing volatility into the close,” Joshua Mahony, senior market analyst at IG, said.

European stocks have struggled this week after Austria entered lockdown and other countries tightened restrictions to contain a fourth wave of Covid-19. Italy’s government announced fresh measures for unvaccinated Italians on Wednesday night. France made masks compulsory again indoors.

Overnight, investors turned to traditional havens in uncertain times. The utilities sector climbed 1.8 per cent to lead sector gains. Healthcare was also strong.

Tech stocks rallied for the first time in six sessions as a global rally in rates paused. The yield on most European government bonds eased by two-three basis points. The yield on ten-year US treasuries was lately down three basis points.  

Germany’s DAX climbed 0.25 per cent despite mildly disappointing economic growth figures. Third-quarter GDP grew 1.7 per cent. A consumer sentiment survey showed the recent rise in Covid cases had dented morale. The Gfk sentiment barometer fell to -1.6 this month from 1 in October.

France’s CAC 40 put on 0.48 per cent. Spain’s IBEX 35 added 0.56 per cent. Britain’s FTSE 100 gained 0.33 per cent.

US futures remained in positive territory this morning, but off overnight highs. S&P 500 futures were ahead seven points or 0.15 per cent after being up almost 0.4 per cent. Dow futures were ahead 0.14 per cent and Nasdaq futures 0.24 per cent.

Australian outlook

An uncertain start coming up, with futures movements generally proving an unreliable guide to Australian action after US holidays. The only certainty is trading volumes will be depressed by the lack of US participation. Volatility can become elevated in thinly-traded sessions, but the market would likely need a black swan event or a clearer sense of direction than it has at present to trigger a major move either way.

The S&P/ASX 200 squeezed out a gain of eight points or 0.1 per cent yesterday, but has gone more or less nowhere this week. Yesterday’s close left the benchmark 11 points or a little over 0.1 per cent above last Friday’s close.

Defensive sectors attracted a bid in Europe as a rally in bond yields paused. A similar shift in Australian yields would support growth stocks (tech) and proxy sectors such as healthcare, real estate and utilities.

Lenders prefer higher yields, so any decline in yields is a negative. The major miners loom as potential drags after Chinese authorities imposed fresh pollution curbs (more below).

A strengthening greenback pushed the dollar back below 72 US cents overnight. The Aussie was lately down 0.18 per cent at 71.88 US cents.

There are annual general meetings today for shareholders in Sandfire Resources, Uniti Group, Centuria Capital and Westgold.

IPOs: another meditech lists today. Artrya, debuting at 12.30 pm AEDT, develops software for analysing scans for diagnosing heart disease. The listing of Parabellum Resources has been pushed back to Monday.

Monthly retail sales figures are scheduled for 11.30 am AEDT.

Commodities

A week-long rally in iron ore stalled after a major Chinese steel hub introduced tighter environmental controls. Tangshan’s government placed the city on the second-highest level of emergency measures, dashing hopes steel mills were free to ramp up production following the expiry of recent curbs.

“The new measures took effect from Wednesday afternoon and were announced just days after the mills and other industrial enterprises had emerged from the last round of curbs just last Sunday,” Mysteel said.

The spot price for ore landed in China fell US$3.35 or 3.2 per cent to US$100.10 a tonne. BHP declined 0.3 per cent in London trade. Rio Tinto shed 1.06 per cent.

Oil marked time as traders waited to see how the OPEC+ oil cartel reacts to a US-led attempt to cool prices by releasing strategic reserves. OPEC+ policymakers (the Organization of the Petroleum Exporting Countries and allies) will meet on December 1 to consider a response. Brent crude settled three US cents or 0.04 per cent lower at US$82.22 a barrel.

“Given the holiday in the U.S. and with volumes light, I think the market is digesting the releases we’ve seen announced, and wondering what reaction we might see from OPEC+,” Andrew Lipow, president of Lipow Oil Associates, told Reuters.

Gold markets were subdued as the US holiday drained liquidity. The continuous gold contract was last up US$3.80 or 0.21 per cent in electronic trade at US$1,788.10 an ounce.

Copper touched its highest level in a month in London trade, supported by optimism Chinese authorities were acting to ease a liquidity crisis in the property sector. Chengdu loosened restrictions to give developers early access to funds from presold properties held in escrow.

Benchmark copper on the London Metal Exchange rose as high as US$9,920 before trimming its gain to 0.4 per cent at US$9,872 a tonne.

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