ASX Today: ASX caps off worst week since GFC with more losses

The share market has a shot at back-to-back gains for the first time in three weeks following a tech-led rally in the US.

Australian index futures climbed 26 points or 0.4 per cent, indicating a positive start after a 20-point advance for the S&P/ASX 200 yesterday.

The local market has not managed consecutive gains since July 3. Three weeks of to and fro amid a surge in COVID-19 cases in Victoria have left the index 14 points below where it finished that session.

Tech giants steered the US market higher overnight ahead of trading updates later this week. The tech-heavy Nasdaq led the major indices with a rise of 173 points or 1.67 per cent. The S&P 500 put on 24 points or 0.78 per cent. The Dow trailled with a gain of 115 points or 0.43 per cent.

Broker upgrades for Apple, Amazon and Alphabet helped set a positive tone for a busy week of corporate updates. Apple, which reports quarterly earnings on Thursday, rose 2.4 per cent. Amazon, scheduled to report the same day, added 1.5 per cent. Alphabet, Facebook and Netflix all put on at least 1.2 per cent.

Technology was the pick of the sectors with a 1.6 per cent gain closely tailed by a 1.4 per cent advance in materials as gold hit an all-time high. Gold for August delivery blew past the old intraday peak of US$1,923.70 an ounce set in September 2011, touching US$1,941.90 before settling $33.50 or 1.8 per cent ahead at US$1,931 an ounce, its highest settlement on record. The NYSE Arca Gold Bugs Index surged 4.7 per cent as Barrick Gold gained 5.2 per cent and Newmont 3.4 per cent.

Gold has risen more than 26 per cent this year, aided by a softening US dollar, record-low interest rates, pandemic fears and geopolitical tensions. The US dollar index slumped to its weakest level in two years overnight, boosting the Australian unit. The Aussie dollar was lately up 0.64 per cent at 71.49 US cents after brushing a 15-month high.

“Given the slumping view toward US economic prospects and ideas that Europe will open a significant macroeconomic edge over the US, it is not surprising to see the [US] dollar forge yet another lower low for the move and, in turn, contribute to the upward extension in precious metals prices,” analysts at Zaner Metals wrote.

Market sentiment was boosted by reports of progress towards a new stimulus package to support the flagging US economy. Senate Republicans this morning unveiled a new US$1 trillion package to replace existing measures that expire on Friday. Treasury Secretary Steven Mnuchin called on the weekend for bipartisan support for a new package, but US Senate Democratic Leader Chuck Schumer this morning dismissed the Republican proposal as "totally inadequate". The Federal Reserve gathers tonight and is expected to reaffirm its call for government support for the economy.

Australian giants BHP and Rio Tinto caught a bid from the positive overnight sentiment towards miners. BHP's US-listed stock put on 3.38 per cent and its UK-listed stock 2.25 per cent. Rio Tinto gained 2.96 per cent in the US and 1.93 per cent in the UK. The spot price for iron ore landed in China dipped $1.75 or 1.6 per cent to US$107.80 a dry ton.

US energy stocks edged up 0.2 per cent after oil reversed initial falls. Brent crude settled seven cents or 0.2 per cent ahead at US$43.41 a barrel.

Signs of seasonal demand weakness in China dampened copper's recent rally during an otherwise positive session for base metals. Benchmark copper on the London Metal Exchange eased 0.1 per cent to US$6,426.50 a tonne. Aluminium and nickel improved 0.4 per cent, lead and tin 2.1 per cent, and zinc 0.7 per cent.


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