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Shares look set to open lower as declines in the US financial and material sectors weigh on the outlook following the Australia Day holiday.
ASX futures eased 22 points or 0.32 per cent, signalling an opening reversal of most of Monday’s 24-point rally.
US stocks faded to narrow losses overnight. Iron ore and copper declined. Gold fell for a fourth straight session. Oil was flat. The dollar rose to 77.5 US cents.
Wall Street
A late dip pulled US stocks into the red following a choppy session dominated by corporate earnings. The S&P 500 eased six points or 0.15 per cent. The Dow Jones Industrial Average shed 23 points or 0.07 per cent. The Nasdaq Composite lost ten points or 0.07 per cent.
Those falls followed a broadly positive start to the week. On Monday night, the S&P 500 rose 0.36 per cent and the Nasdaq Composite 0.69 per cent. The Dow slipped 0.12 per cent.
The busiest week of the quarterly reporting season saw well-received results overnight from Dow heavyweights 3M and Johnson & Johnson. 3M was among the Dow’s best performers, rising 3.3 per cent on strong demand for disposable masks and hand sanitiser. Johnson & Johnson added 2.7 per cent after beating expectations and foreshadowing results from its experimental Covid-19 vaccine “soon”. Former Dow component General Electric was another standout, gaining 2.5 per cent.
Telecom Verizon fell 3.2 per cent after missing phone subscriber targets. AmEx sagged 4.1 per cent as profits were crimped by a decline in turnover as lockdowns kept people at home.
The US Federal Reserve assembled overnight, but is not expected to announce any major policy changes at tonight’s press conference.
“The tone of the Fed is largely expected to remain balanced; while the economic data has deteriorated since December’s meeting… the vaccine process is well underway and US$900 billion of stimulus is being distributed with the prospect of potentially trillions more in aid,” analysts at investment bank Stifel wrote.
Stimulus talks continued. President Joe Biden’s relief package has run into resistance in Congress from politicians who object to the US$1.9 trillion price tag. The White House has discussed potential changes with a bipartisan group, including tightening eligibility for a second round of relief payments.
Australian outlook
A dour return to action seemingly awaits following a fairly directionless couple of sessions in the US. Wall Street inched up a little on Monday night, eased a little overnight.
The problem for today’s outlook is the sectors that have the biggest impact on market direction here – materials and financials – both sank in the US overnight. Materials shed 1.4 per cent and financials 0.8 per cent. Also weak were energy -2.1 per cent and industrials -0.9 per cent.
A rise in US bond yields weighed on utilities and health stocks. Real estate and consumer staples were the pick of the sectors, both gaining at least 0.9 per cent.
The quarterly reporting season ramps up here as the end of the month nears. Reports are scheduled today from Beach Energy, Evolution Mining, Iluka, InvoCare, Northern Star and Sandfire (source: Morningstar).
Monthly business confidence and quarterly inflation figures are due at 11.30 am EST.
The dollar climbed 0.47 per cent to 77.51 US cents.
Commodities
Gold suffered its longest losing run in eight months, falling for a fourth night as the White House’s inflationary spending package faced resistance. Gold for February delivery settled $4.30 or 0.2 per cent lower at US$1,850.90 an ounce. On Monday night, the precious metal eased $1 or less than 0.1 per cent.
Mining giants BHP and Rio Tinto resisted a fall in iron ore and a down-move in US materials. BHP’s US-listed stock added 0.8 per cent and its UK-listed stock 0.79 per cent. Rio Tinto edged up 0.07 per cent in the US and 0.54 per cent in the UK. The spot price for iron ore landed in China slumped $3.85 or 3.2 per cent to US$164.65 a tonne. On Monday, the price dipped 10 cents.
Oil finished mixed but little changed. Brent crude settled three cents or less than 0.1 per cent higher at US$55.91 a barrel after rising 47 cents or 0.9 per cent on Monday night. Overnight, the US benchmark slid 16 cents or 0.3 per cent to US$52.61.
