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A tech-led retreat on Wall Street points to early down-pressure on Australian shares following yesterday’s record close.

ASX futures dropped 24 points or 0.33 per cent after US stocks fell for the first time in six sessions.

Iron ore, copper and oil declined. Gold inched higher. The dollar retreated.

Wall Street

The Nasdaq led a retreat from record levels ahead of after-market earnings updates this morning from tech giants Apple, Microsoft and Google parent company Alphabet.

The Nasdaq Composite slid 180 points or 1.21 per cent. The S&P 500 shed 21 points or 0.47 per cent. The “tech-lite” Dow Jones Industrial Average eased 86 points or 0.24 per cent. The falls broke five-session winning runs for all three benchmarks.

A risk-off session saw traders take profits ahead of a big week for “Big Tech” earnings and a Federal Reserve policy update. The tech giants that reported after this morning’s closing bell all fell in regular trade: Apple lost 1.49 per cent, Microsoft 0.87 per cent and Alphabet 1.59 per cent. Tesla, which reported yesterday morning, dropped 1.95 per cent.

“Expectations are so high. They’re going to have good numbers… but we are expecting much more or maybe they will talk down the second half of the year,” Paul Nolte, portfolio manager at Kingsview Investment Management, told Reuters.

After reporting, two of the three companies added to falls in volatile after-hours trade. Microsoft dropped 2.59 per cent. Apple was last down 1.12 per cent, reversing earlier gains. Alphabet rallied 3.39 per cent.

US-listed Chinese stocks remained under pressure following another day of heavy falls in Hong Kong and mainland China yesterday. Chinese regulatory intervention helped send the Hang Seng down more than 4 per cent for a second straight session. The Shanghai Composite dropped 2.49 per cent. This week’s sharp declines came after Chinese moves to rein in technology, education and property firms underlined the regulatory threat to other sectors.

The Federal Reserve began a two-day policy meeting overnight and is scheduled to release a policy update tonight. While the bank is not expected to spring any surprises, Chair Jerome Powell is expected to lay the groundwork for reducing the bank’s bond-buying program in the months ahead.

Australian outlook

The market’s golden run looks set for a pause, at the very least. The S&P/ASX 200 has put on around 180 points in five sessions and looks due for a day or two of consolidation following yesterday’s record close.

BHP and Rio Tinto have provided much of the momentum over the last week, hitting records here yesterday. Both look like acting as deadweights today after falling in overseas trade (more below).

Wall Street exercised caution ahead of this morning’s tech reports. Unfortunately, the reaction so far suggests those after-market updates have not changed the prospects for the day. One win out of three is unlikely to lift US futures.

The defensive tone of the US session was reflected in the night’s winners: utilities +1.72 per cent, real estate +0.81 per cent and health +0.44 per cent.

Tech and tech-related sectors were the  major losers: consumer discretionary -1.16 per cent, communications services -1.06 per cent and technology -1.01 per cent. The energy sector also shed 1.01 per cent.

The two sectors with the biggest weighting on the ASX – financials and materials – eked out slender wins of 0.05 and 0.14 per cent, respectively.

The session ahead brings one of the most anticipated economic reports of the month: the consumer price index. The report is expected to confirm inflationary pressures ran red hot last quarter, but is unlikely to have the effect it would have had if it had landed six weeks ago before lockdowns depressed the economic outlook. Economists expect the index to show a rise of 0.7 per cent last quarter, lifting the annual rate to 3.8 per cent.

The IPO pipeline is dry today, before resuming with two listings tomorrow.  

The dollar retreated 0.27 per cent to 73.64 US cents.

Commodities

Copper hit a fresh six-week high on the London Metal Exchange before fading during a soft session for industrial metals. Benchmark copper finished 0.5 per cent weaker at US$9,740 a tonne. Aluminium gave up 0.6 per cent, nickel 1.8 per cent, lead 1.9 per cent, zinc 0.9 per cent and tin 1.7 per cent.

Iron ore declined but held above the psychologically-significant US$200 a tonne level. The spot price for ore landed in China dropped US$2.50 or 1.2 per cent to US$200.45 a tonne.

BHP‘s US-listed stock dropped 1.27 per cent after its UK-listed stock fell 0.49 per cent. Rio Tinto dive 3.8 per cent in the US and 1.13 per cent in the UK.

Oil was dragged lower by the risk-off tone of the night’s trade. Brent crude settled 18 US cents or 0.2 per cent in the red at US$73.52 a barrel.

Gold inched higher but failed to regain US$1,800. Metal for August delivery settled 60 US cents or less than 0.1 per cent ahead at US$1,799.80 an ounce. The NYSE Arca Gold Bugs Index added 0.22 per cent.

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