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Aussie shares were poised to open modestly lower following a subdued night on Wall Street after a revenue warning from chipmaker Nvidia undermined an early rally.
The S&P 500 eased for a third session. The Nasdaq Composite also declined. The Dow ticked higher.
ASX futures retreated eight points or 0.12 per cent. The S&P/ASX 200 edged to an eight-week closing high yesterday.
Oil extended its rebound from last week’s six-month low. Iron ore and copper also advanced. Gold regained US$1,800 an ounce. The dollar climbed more than 1 per cent towards 70 US cents.
Wall Street
US stocks closed mixed and well off session highs after Nvidia’s weak outlook revived concerns about consumer demand. Investors took advantage of early strength to reduce their exposure ahead of tomorrow night’s consumer price index (CPI) amid fears a hot result will cement another bumper rate hike next month.
The S&P 500 dipped five points or 0.12 per cent to a third-straight minor loss. The Dow Jones Industrial Average rose 29 points or 0.09 per cent. The Nasdaq Composite shed 13 points or 0.1 per cent.
The market opened firmly higher as traders bought likely winners from the White House House’s massive climate, tax and healthcare package. The Inflation Reduction Act passed the Senate on Sunday. The bill is expected to clear the Democrat-controlled House of Representatives this week.
Electric carmakers Tesla and Rivian booked gains, alongside Ford and General Motors. The bill provides billions in support for production of electric vehicles.
The S&P 500 fell back after running into technical resistance just below the 4,200 level. The index traded as high as 4,187 before fading to 4,140.
“We started out strong partly because of the momentum from environmental stocks that benefited from the tax bill over the weekend,” Jay Hatfield, founder and CEO of Infrastructure Capital Advisors, told MarketWatch.
“And then we stalled out around a resistance point around 4,180. Now, everyone is waiting for CPI, and we’re going to be in a pretty tight trading range until Wednesday.”
Tomorrow night’s consumer price index report is likely to set the tone for the rest of the week. Evidence of a decline in inflationary pressures would allow the Federal Reserve to slow the current aggressive pace of rate increases. A “hot” report would likely seal another huge hike next month.
“The CPI data will help to confirm if the Fed’s tightening efforts have been successful in starting to tame inflation or if continued Fed tightening is needed,” Robert Schein, chief investment officer at Blanke Schein Wealth Management, told Reuters.
Chipmakers weighed after Nvidia surprised the market with a pre-earnings revenue warning. The semiconductor manufacturer said weak demand from gamers meant second-quarter revenues would miss the Wall Street estimate by some distance.
Shares in the firm slumped 6.3 per cent. The Philadelphia SE Semiconductor index fell 1.61 per cent.
Australian outlook
A wait-and-see session in the US offers little momentum for the day ahead. The S&P 500 and ASX 200 have both run into technical resistance in recent sessions. While the ASX 200 has ground its way through 7000, its US counterpart has more work to do to clear the 4200 resistance level.
Progress tonight seems unlikely, with Wednesday’s CPI data casting a long cloud. However, a good result tomorrow could be the catalyst the index needs for a breakout. The alternative, of course, is a retrace, hence the current holding pattern.
Resource stocks kept the ASX 200 on the upswing yesterday and may lead again today following solid gains in iron ore, metals and crude (more below). The US basic materials sector climbed 0.55 per cent overnight. US energy put on 0.49 per cent.
Other pockets of strength were real estate +0.71 per cent, communication services +0.37 per cent, consumer discretionary +0.3 per cent and healthcare +0.23 per cent.
The biggest drags were technology -0.88 per cent and financials -0.18 per cent.
Today’s domestic economic calendar is all about confidence. Besides the regular weekly consumer survey, Westpac releases its monthly consumer sentiment report at 10.30 am AEST and NAB releases its monthly business confidence report at 11.30 am.
Companies reporting earnings today include Megaport, Coronado and REA Group.
A pullback in the greenback allowed the Australian dollar to rebound 1.09 per cent to 69.78 US cents.
Commodities
Iron ore extended last week’s recovery after trade data showed Chinese ore imports improved last month. Buyers were also encouraged by hopes authorities will relax environmental production curbs in the second half of the year.
The spot price for ore landed in China climbed US$1.84 or 1.7 per cent to US$110.95 a tonne.
Copper was also lifted by signs of improved Chinese demand. July imports of the metal were 9.3 per cent ahead of the same time last year. The first seven months of the year saw an increase of 5.8 per cent from the prior corresponding period.
Benchmark copper on the London Metal Exchange rose 1.6 per cent to US$7,986.75 a tonne. Aluminium gained 1.3 per cent. Lead improved 4.4 per cent. Nickel declined 2.4 per cent, zinc 1.2 per cent and tin 0.7 per cent.
BHP and Rio Tinto traded mixed in overseas trade. BHP‘s US-traded depositary receipts dipped 0.04 per cent after the miner’s UK listing drifted down 0.16 per cent. Rio Tinto firmed 0.18 per cent in the US and 0.61 per cent in the UK.
Oil recouped some of last week’s sharp 8.7 per cent decline. Brent crude settled US$1.73 or 1.8 per cent ahead at US$96.65 a barrel.
Gold settled back above US$1,800 an ounce as the greenback and US treasury yields gave back some of Friday’s gains. Gold for December delivery settled US$14 or 0.8 per cent higher at US$1,805.20 an ounce. The NYSE Arca Gold Bugs Index improved 2.61 per cent.
