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A Facebook-fuelled relief rally in the US points to early gains for Australian shares on the last session of a losing month.
ASX futures climbed 50 points or 0.68 per cent. The S&P/ASX 200 bounced 96 points yesterday and would need to recoup more than 140 points today to turn positive for April.
Iron ore and crude rose overnight as the wider market mood turned positive. Gold edged off a two-month low. Most base metals declined. The dollar hovered just below 71 US cents.
Wall Street
US stocks rebounded as a better-than-expected trading update from Facebook owner Meta Platforms encouraged investors to buy battered tech stocks.
The tech-heavy Nasdaq Composite led with a rise of 383 points or 3.06 per cent. The S&P 500 gained 104 points or 2.47 per cent. The Dow Jones Industrial Average put on 614 points or 1.85 per cent.
Meta Platforms surged 17.59 per cent as investors found enough positives in a mixed report to conclude the social media giant was oversold after halving in market value this year. Revenue missed expectations and guidance was weaker than anticipated.
“While the outlook was below expectations it was clearly a relief for investors and better than the worst-case scenario that seemed to be baked into shares headed into the print,” investment firm Wedbush said.
PayPal and chipmaker Qualcomm also beat expectations. Together, the results prompted a broader move back into Big Tech. The Nasdaq Composite was 23 per cent off its high and in a bear market going into last night’s session.
“We’ve been in a significant sell-off here, so sometimes you get these counter-trend moves,” Liz Ann Sonders, chief investment strategist at Charles Schwab, said.
Apple and Amazon both rallied more than 4.5 per cent before releasing earnings. The buoyant mood curdled when the reports dropped after the close of regular trade this morning. Apple shares were lately down 3 per cent in extended trade. Amazon was off 11.6 per cent. The companies are respectively the largest and third-largest companies listed in the US.
Investors largely ignored an unexpected contraction in the economy. First-quarter gross domestic product declined 1.4 per cent through the first quarter, well short of the 1 per cent growth anticipated by economists.
Analysts attributed the decline to a rise in Covid cases, loss of government pandemic relief and a widening trade deficit.
“The economy is still showing some resilience, but the first-quarter GDP report signals the start of more moderate growth this year and next, largely in response to higher interest rates,” Sal Guatieri, senior economist at BMO Capital Markets, said.
Australian outlook
A positive start coming up as the repairwork continues following the Anzac Day long weekend sell-off. However, traders should keep an eye on US futures following a negative reaction to after-market updates from market behemoths Apple and Amazon. Risk appetite will diminish if US futures suggest trouble ahead tonight.
Miners led yesterday’s rebound on the S&P/ASX 200. US action suggests growth and energy stocks may take the lead this session. The US tech sector jumped 4.04 per cent. Energy stocks gained 3.14 per cent.
BHP and Rio Tinto saw mixed fortunes as the US materials sector rallied 1.56 per cent. BHP maintained Wednesday night’s momentum with gains of 1.38 per cent in the US and 0.9 per cent in London. Rio Tinto declined 0.54 per cent in the US and 0.83 per cent in the UK.
All 11 US sectors advanced. Utilities, industrials and financials brought up the rear while still gaining at least 1.1 per cent.
The domestic third-quarter reporting season wraps up today. Among those still to release updates are Origin Energy and a slew of minnows.
Wholesale inflation and private-sector credit data are due at 11.30 am AEST. A shareholder vote on Blackstone’s takeover offer for Crown Resorts originally scheduled for today has been delayed until next month.
IPOs: Maronan Metals lists at 10.30 am AEST. The company owns a base metal project in Queensland that is prospective for copper, gold, silver and lead.
The dollar eased 0.33 per cent overnight to 70.98 US cents.
Commodities
Iron ore rose as many regions in China’s Hebei province lifted Covid restrictions. The most-traded contract on the Dalian commodity exchange climbed 3.53 per cent. The spot price for ore landed at Tianjin edged up nine cents or 0.1 per cent to US$150.61 a tonne.
Oil rallied on reports German resistance to a European Union embargo on Russian crude was weakening. The Wall Street Journal said Germany was prepared to halt Russian imports once it has sourced alternative supplies. German resistance had been a major sticking point for an EU embargo.
Brent crude settled US$2.27 or 2.2 per cent ahead at US$107.59 a barrel. The US benchmark firmed 3.3 per cent to US$105.36.
Gold struggled off a two-month low as a strengthening US dollar continued to dull interest in alternative stores of wealth. Metal for June delivery settled US$2.60 or 0.1 per cent higher at US$1,891.30 an ounce. The NYSE Arca Gold Bugs Index bounced 2.02 per cent.
The rising greenback weighed on the London Metal Exchange. Benchmark copper slid 1.7 per cent to US$9,696 a tonne. Aluminium dropped 2.1 per cent, nickel 1 per cent, lead 1 per cent and zinc 1.9 per cent. Tin edged up 0.1 per cent.
