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A mixed close on Wall Street points to mild opening pressure on Australian stocks following two weeks of strong gains.

ASX index futures eased 14 points or 0.2 per cent after the S&P 500 snapped a four-day rally.

Australian stocks have been on a two-week tear amid rising optimism about the reopening of the economy. The S&P/ASX 200 put on 259 points last week and another 236 by yesterday’s close for a nine-session tally of nearly ten per cent.

US stocks finished mostly lower after jobs data disappointed and big-tech stay-at-home stocks declined. The S&P 500 shed 11 points or 0.34 per cent. The tech-heavy Nasdaq gave up a chunkier 67 points or 0.69 per cent. A late bounce lifted the Dow to a gain of 12 points or 0.05 per cent.

Investors proved cautious about taking on more risk ahead of tonight’s monthly jobs update. While a report on Wednesday showed the private sector lost fewer jobs last month than economists expected, data last night indicated 1.88 million Americans filed for unemployment benefits for the first time last week – higher than a predicted 1.8 million. Continuing claims increased by 437,000 to 19.3 million, denting hopes of a swift recovery as businesses reopen.

The heavily-weighted tech stocks that led the market out of its March trough have stuttered in recent days as traders rotate out of winners from the stay-at-home economy into companies that benefit from a return to work. Overnight, Facebook fell 1.7 per cent, Amazon 0.7 per cent, Apple 0.9 per cent, Netflix 1.8 per cent and Google parent company Alphabet 1.7 per cent. By contrast, the Arca Airline Index jumped 10.1 per cent and planemaker Boeing gained 6.4 per cent.

Despite the tech setback, the Nasdaq Composite closed within 3 per cent of its all-time high. An index of the biggest non-financial stocks within the Composite called the Nasdaq-100 hit an intraday record before fading to a loss of 0.8 per cent. The index includes companies such as Amazon, PayPal and PepsiCo. The S&P 500 and Dow have both bounced more than 42 per cent since their pandemic lows despite the worst economic data on record.

“The market is trading on extreme optimism like I’ve never seen in my career,” Phil Blancato, CEO of Ladenburg Thalmann Asset Management in the US, told CNBC. “We’re looking at the worst data in our lifetime. Yet, here we are at all-time highs… The market either knows something we don’t or we’re trading on extreme optimism.”

Commentators have attributed much of the stock market recovery to the tide of stimulus money flooding from central banks. Overnight, the European Central Bank announced it will more than double its emergency purchase program to 1.35 trillion Euros. The US Federal Reserve meets next week.

Financials, industrials and materials were the only sectors to eke out wins. Real estate and utilities both lost at least 1.8 per cent.  

Australia’s mining giants traded mixed in overseas action as iron ore slid back below US$100 a dry ton. Rio Tinto’s US-listed stock edged up 0.21 per cent following a 1.08 per cent drop in its UK-listed stock. BHP eased 0.16 per cent in the US and 0.65 per cent in the UK. The spot price for iron ore landed in China dropped $1.60 or 1.6 per cent to US$99.20.

Oil inched higher following a report that major producers have cut production broadly in line with an OPEC+ deal in April. Data tracker Kpler reported the oil cartel last month reduced production by 8.9 million barrels a day or 89 per cent of the agreed ten million a day. Brent crude settled 20 cents or 0.5 per cent higher at US$39.99 a barrel. A Bloomberg report in the last hour said OPEC was set to extend the production cap after winning support from Iraq.

Gold rose for the first time in four sessions as the US stock market wobbled and the US dollar was pressured by the ECB cash splash. Gold for August delivery settled $22.60 or 1.3 per cent ahead at US$1,727.40 an ounce.

Most industrial metals made gains as the falling greenback made dollar-denominated commodities cheaper for the holders of other currencies. Benchmark copper on the London Metal Exchange rose 0.2 per cent to US$5,512.25 a tonne. Aluminium added 0.3 per cent, lead 1.3 per cent, zinc 0.6 per cent and tin 0.6 per cent. Nickel declined 0.7 per cent.

The dollar was flat this morning at 69.41 US cents.

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