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Record closes on the S&P 500 and Nasdaq Composite point to a cautiously positive start to Australian trade.
ASX futures rose six points or 0.1 per cent as most US stocks rallied at the start of the busiest week of this quarterly reporting season.
Iron ore hit an all-time high. The dollar edged back above 78 US cents.
Wall Street
The Nasdaq Composite set the pace, rising 122 points or 0.87 per cent to its first record finish since February 12. The new high marked an end to a technical correction that saw the tech-heavy index lose as much as 11 per cent between February and March as a spike in borrowing costs raised questions about valuations.
The S&P 500 edged up seven points or 0.18 per cent to a new peak. The Dow Jones Industrial Average faded to a loss of 62 points or 0.18 per cent as consumer staples giants weighed.
Tesla provided much of the momentum for the S&P 500 and Nasdaq, rising 1.21 per cent. However, the electric car-maker later sank 1.75 per cent in extended trading after its first-quarter revenue fell narrowly short of expectations.
While this earnings season has surpassed expectations, the market response has been muted. Refinitiv data indicates 85.5 per cent of the 124 companies that have reported so far have beaten analysts’ earnings targets. Roughly a third of the S&P 500 is due to report this week, including the index’s six largest companies by market value.
“Despite the strong earnings reports we’ve seen thus far, the market is really taking beats in stride amid already high valuations,” Chris Larkin, managing director of trading at E-Trade, said.
A two-day Federal Reserve policy meeting starts tonight. Chair Jerome Powell is due to hold a press conference tomorrow night to explain the central bank’s view on rates policy and the economy. Overnight, a report showed new orders for durable goods fell short of expectations.
Alphabet and Microsoft report tonight, followed by Apple and Facebook tomorrow night and Amazon on Thursday.
The consumer staples sector sagged 1.16 per cent amid concerns about rising input costs. Iron ore hit record levels yesterday. Copper neared a decade high. Corn futures touched their strongest level in seven years. The yield on ten-year US treasuries crept up more than a basis point.
Australian outlook
Record iron ore prices cushioned the ASX during yesterday’s holiday-affected session and should provide a platform again this session. The US materials sector gained 0.5 per cent. Both BHP and Rio Tinto advanced (more below).
The S&P/ASX 200 wilted 15 points or 0.2 per cent yesterday as the WA lockdown and weak participation dulled buying interest. Despite the setback, the index closed within 20 points of last week’s pandemic-era closing high.
Energy was the best of the US sectors, climbing 0.64 per cent. Also strong: consumer discretionary (Tesla) +0.62 per cent, technology +0.56 per cent and financials +0.33 per cent. Consumer staples, utilities, health and industrials all finished in the red.
Gold miners Northern Star and St Barbara are due to hand down quarterly updates today, as well as BHP spin-off South32. PWA Holdings is due to list.
The dollar cracked the 78 US cent level again this morning, rising 0.74 per cent to 78 US cents.
Commodities
The spot price for iron ore soared above US$190 a tonne yesterday to a record. Ore landed in China climbed $6.35 or 3.4 per cent to US$191.45 a tonne.
The rally followed steel production crackdowns in several Chinese provinces to contain pollution. Shaanxi province reportedly asked local authorities to verify steelmakers’ output met central planning restrictions. The city of Handan in Hebei province asked steel mills to limit production this quarter.
BHP‘s US-listed stock put on 1.34 per cent overnight and its UK-listed stock added 1.58 per cent. Rio Tinto gained 2.09 per cent in the US and 1.65 per cent in the UK.
Copper hit its highest level since August 2011 after port workers in major producer Chile called for a general strike. Benchmark copper on the London Metal Exchange rose 2 per cent to US$9,771 a tonne. Aluminium gained 1.6 per cent, nickel 1.7 per cent, lead 0.9 per cent, zinc 2.2 per cent and tin 0.8 per cent. US copper climbed 2.4 per cent to US$4.44 a pound.
Gold edged higher, supported by a falling US dollar. Metal for June delivery settled $2.30 or 0.1 per cent ahead at US$1,780.10 an ounce. The NYSE Arca Gold Bugs Index dipped 0.16 per cent.
Oil wilted under demand concerns over the spread of Covid in India and Japan. Brent crude settled 46 cents or 0.7 per cent lower at US$65.65 a barrel.
