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Aussie shares look set to open little changed despite a late up-tick on Wall Street as investors kept a wary eye on stimulus negotiations and a rise in US-China tensions.
ASX SPI200 index futures edged up seven points or 0.1 per cent, signalling a subdued start after yesterday’s setback.
The S&P/ASX 200 slumped 81 points or 1.3 per cent yesterday as a record rise in coronavirus cases in Victoria compounded down-pressure from a tech sell-off in the US. The fall continued a recent pattern of daily reverses. The index has not managed consecutive moves in the same direction in 11 sessions, yet has continued to muddle higher, claiming a four-month closing peak on Tuesday.
A choppy session in the US ended with slim gains after a report of progress in contentious stimulus negotiations provided a late boost. The S&P 500 climbed to a final tally of 19 points or 0.57 per cent. The Dow gained 165 points or 0.44 per cent. The Nasdaq trailled with a rise of 26 points or 0.24 per cent.
Defensive sectors outperformed after the White House opened a new front in its quarrel with China, ordering the closure of a consulate in Houston. Utilities and real estate advanced 1.5 per cent and 1.2 per cent. Health and technology – the two sectors responsible for much of yesterday’s ASX weakness – both rose a little more than 0.8 per cent.
The escalation in Sino-US tensions followed US claims that Chinese hackers had stolen trade secrets and were trying to steal research on COVID-19. The US State Department ordered the consulate to close to protect US intellectual property. China called the order a “political provocation” and threatened retaliation.
Investors awaited developments on Capital Hill, where politicians remained at loggerheads over a new stimulus package to replace benefits set to expire at the end of the month. The market kicked higher in the final hour following a CNBC report that Republicans were moving closer to the Democrat position on unemployment benefits. Both parties appear willing to extend unemployment benefits, but remain far apart on the size of payouts. President Donald Trump warned yesterday that the pandemic would “get worse before it gets better” in the US.
Market heavyweights Microsoft and Tesla reported quarterly earnings after the bell. Microsoft shares fell 2.6 per cent in after-market trade. Tesla surged 5.4 per cent. Earlier, United Airlines dropped 4.2 per cent and Snap 6.2 per cent after both fell short of analyst expectations.
Gold and silver continued to scale multi-year highs as Sino-US tensions fuelled demand for havens. Gold for August delivery settled $21.20 or 1.2 per cent ahead at US$1,865.10 an ounce, its strongest close since September 2011. Silver soared $1.59 or 7.4 per cent to US$23.14 an ounce, its best finish since September 2013.
BHP’s US-listed stock fell 0.24 per cent and its UK-listed stock shed 0.9 per cent. Rio Tinto edged up 0.21 per cent in the US after falling 0.52 per cent in the UK. The spot price for iron ore landed in China rose 75 cents or 0.7 per cent to US$110.40 a dry ton.
An unexpected increase in US crude supplies capped oil. Brent crude settled three cents or less than 0.1 per cent lower at US$44.29 a barrel after the US Energy Administration reported US inventories increased by 4.9 million barrels last week. Analysts had expected a decline of 1.9 million barrels.
The dollar hovered this morning at 71.39 US cents.
