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A tech-led recovery on Wall Street points to modest opening gains here after US investors shrugged off bleak economic data.
ASX SPI200 index futures edged up 10 points or 0.2 per cent to 6082, signalling a positive start after yesterday’s setback. The S&P/ASX 200 turned negative for the week after skidding 0.8 per cent amid earnings disappointments from the energy sector and profit-taking in the high-flying health sector.
Earnings
Healthcare will be back in the spotlight this morning with full-year financial reports due from Healius and Mayne Pharma. The sector has been one of this week’s standouts following upbeat updates from CSL and Cochlear.
Reports are also due today from insurers Suncorp and MyState, skincare wholesaler BWX and online marketplace Redbubble.
Wall Street
The divisions in a bifurcated US market were underlined once again overnight: Big Tech marched higher, leaving behind companies that depend most on a healthy economy.
The Nasdaq easily outstripped the heavyweights of Dow, climbing 118 points or 1.06 per cent to its 35th record close of the year. Microsoft and the ‘FAANG’ leadership group (Facebook, Apple, Amazon, Netflix and Google parent company Alphabet) all advanced more than 1.1 per cent as investors fell back on this year’s playbook when economic data disappoints.
The Dow Jones Industrial Average edged up a tepid 47 points or 0.17 per cent as gains in Apple, Microsoft and Intel were largely offset by declines in recovery plays such as Dow Inc, Chevron. Exxon Mobil and Caterpillar. The S&P 500 fared slightly better, rising 11 points or 0.32 per cent.
Moving the market
The market opened underwater after a rise in first-time claims for unemployment benefits highlighted uncertainties about the pace of the economic revival. First-time claims climbed back above one million to 1.106 million, denting hopes that the jobs market was healing after a brief break in a 20-week run of tallies above the million mark.
Stocks fell on Wednesday after the Federal Reserve warned that the health crisis would “weigh heavily on economic activity, employment, and inflation in the near term”. The Fed called on government to do more after Congress broke up for the northern summer without agreeing on a new coronavirus relief package to replace measures that expired last month.
“The winners in this market are the companies that are most divorced from the underlying economy,” CNBC’s Jim Cramer said earlier this week. “The actual economy is in precarious shape, especially now that the government’s stimulus package has run out and Congress went home for the summer rather than trying to come up with a replacement.”
Technology, communication services, real estate and consumer discretionary were the only sectors to advance. Energy fell 2.1 per cent, financials 0.9 per cent and materials 0.4 per cent.
Commodities
Gold‘s dramatic reversal continued amid volatility in the US dollar after the Federal Reserve doused hopes of ‘yield-control’ intervention in bond markets. Gold for December delivery settled $23.80 or 1.2 per cent lower at US$1,946.50 an ounce after sliding 2.1 per cent the previous session.
BHP’s US-listed stock dipped 0.07 per cent and its UK-listed stock 3.3 per cent as iron ore eased back from a six-year high. Rio Tinto shed 2.12 per cent in the US and 2.23 per cent in the UK. The spot price for iron ore landed in China dipped 40 cents or 0.3 per cent to US$128.40 a dry ton.
Oil stuttered lower as the rise in US jobless claims compounded concerns about the demand outlook after the Fed’s downbeat assessment of the US economy. Brent crude settled 47 cents or 1 per cent weaker at US$44.90 a barrel.
Industrial metals declined with European stocks and other risk assets. Benchmark copper on the London Metal Exchange dropped 1.2 per cent to US$6,617.75 a tonne. Aluminium fell 0.3 per cent, nickel 0.5 per cent, lead 0.9 per cent, zinc 0.7 per cent and tin 0.4 per cent.
The dollar climbed 0.2 per cent to 71.95 US cents.
