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The share market looked set to open higher for a sixth session following record closes for the Dow and S&P 500.

The S&P/ASX 200 is on an end-of-year tear that has added 218 points or almost 3 per cent since last Tuesday. ASX futures climbed five points or 0.07 per cent this morning.

Oil rose for a sixth night. Iron ore, copper and gold declined. The dollar firmed above 72 US cents.

Wall Street

The Dow Jones Industrial Average sealed its longest winning run since March as US stocks finished mixed but mostly higher. Retailers were boosted by data showing strong demand for consumer goods.  

The Dow climbed 90 points or 0.25 per cent to a sixth straight gain. The S&P 500 advanced seven points or 0.14 per cent to a new closing peak. The Nasdaq Composite eased 16 points or 0.1 per cent.

The advances extended a rally across what traders call the “Santa Claus period”: the last five trading days of December and the first two of January.

“It appears the rally could very well put the S&P 500 at, or at least very near, an all-time record high as we close out the year,” Scott Wren, senior global market strategist at Wells Fargo Investment Institute, said.

Retailers filled the top three slots on the Dow after Mastercard reported an 8.5 per cent jump in retail sales in the run-up to Christmas. Ecommerce sales increased 11 per cent.

A separate report showed record imports of consumer goods last month. Economists said pandemic limits on services activity could divert spending towards consumer goods.

“The emergence of the Omicron variant may further ignite demand for imported goods if services activity is restricted,” Nancy Vanden Houten, lead economist at Oxford Economics, wrote.

Walgreens put on 1.59 per cent, Nike 1.42 per cent and Home Depot 1.14 per cent.

Growth stocks were kept in check by rising borrowing costs. The yield on ten-year US treasuries climbed almost six basis points to the highest in a month. Meta (Facebook) shed 0.95 per cent, Amazon 0.86 per cent, Nvidia 1.06 per cent and Advanced Micro Devices 3.19 per cent.

Airlines retreated after poor weather and staff shortages triggered by Covid forced hundreds of flight cancellations. The total number of confirmed cases in the US has risen from 2.54 million last month to more than 4.5 million in December. The seven-day average has increased by 260 per cent since late November.

United  Airlines dropped 1.86 per cent, Delta 1.19 per cent and Alaska Air Group 1.42 per cent. Boeing shed 1.2 per cent. Wynn Resorts fell 1.71 per cent. Cruise lines also retreated.

Australian outlook

The Santa rally appears intact following another broadly positive session in the US. Retail traders are having fun while institutional trading desks are temporarily understaffed/abandoned.

The S&P/ASX 200 put in another spurt yesterday, surging 89.5 points or 1.21 per cent to a fifth straight gain and the highest close in almost three months. Importantly, yesterday’s rally marked a clear break of the gentle downtrending channel that had developed since the index peaked in August. The top of that channel should now provide support during any backtest.  

The question for traders now is when to take profits. This rally is getting long in the tooth. Six-session rallies are rare, but seasonal factors are at play. Investors could have a few more sessions before the party ends.   

US investors have been rotating over the last two sessions into safer plays. The night’s best-performing sectors were all defensive. Real estate gained 0.64 per cent, health 0.6 per cent and utilities 0.51 per cent.

Cyclicals were mostly positive. Materials advanced 0.43 per cent and industrials 0.16 per cent. Financials eased 0.07 per cent. The energy sector dipped 0.63 per cent even as a rally in oil entered a sixth session.

The domestic economic calendar is empty today. No IPOs are scheduled by the ASX.

The dollar firmed 0.26 per cent overnight to 72.51 US cents.

Commodities

Mining giants BHP and Rio Tinto largely shrugged off declines in iron ore and copper. Iron ore retreated amid bearish signals from futures markets and reports of slow demand from steel mills.

The most-traded futures contract on the Dalian Commodity Exchange declined 1.6 per cent to US$106 a tonne. Copper dropped two cents or 0.6 per cent on Comex to US$4.413 a pound.

BHP‘s US-listed stock put on 1.01 per cent. Its UK-listed stock resumed trade after the Christmas break with a rise of 1.31 per cent. Rio Tinto gained 0.3 per cent in the US despite a decline of 0.42 per cent in the UK.

A sixth straight advance lifted oil to a five-week high. Brent crude settled 29 US cents or 0.4 per cent ahead at US$79.23 a barrel, a level last seen on November 25. The rally followed sharp declines in US crude inventories.  

“Looks like the fears of demand destruction caused by omicron were greatly exaggerated,” Phil Flynn, senior market analyst at the PRICE Futures Group, told MarketWatch.

Gold trimmed steep early losses to hold above the psychologically-significant US$1,800 an ounce level. Gold for February delivery settled US$5.10 or 0.3 per cent in the red at US$1,805.80 an ounce. The price fell as low as US$1,789.10 before recovering.

“The latest attempt to convincingly break above $1,800 didn’t end well, as the precious metal has now pulled back towards this key level after briefly brushing $1,820/oz yesterday,” Raffi Boyadjian, lead investment analyst at brokerage XM, said.

The NYSE Arca Gold Bugs Index eased 0.12 per cent.

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