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Australian shares looked set to build on a five-week high following fresh records in the US and a seven-year peak in oil.
ASX futures rallied 14 points or 0.19 per cent. The S&P/ASX 200 has risen for seven of the last eight sessions, closing yesterday at its strongest since mid-September.
Wall Street
A record for Tesla and optimism about a big week of corporate earnings helped steer US stocks deeper into record territory.
The S&P 500 rallied 22 points or 0.47 per cent. The Dow Jones Industrial Average edged up 64 points or 0.18 per cent. The Nasdaq Composite, which has yet to recoup all of last month’s losses, led with a rise of 136 points or 0.9 per cent.
Electric car maker Tesla surged 12.66 per cent to a record after hire car company Hertz ordered 100,000 vehicles and Morgan Stanley raised its price target. The company’s market capitalisation passed US$1 trillion for the first time. The share price was up more than 28 per cent for the month after rising on nine of the last ten sessions.
PayPal climbed 2.7 per cent after dousing media reports it was preparing a US$45 billion bid for Pinterest. Shares in Pinterest dived 12.71 per cent.
The energy sector climbed 1.44 per cent after Saudi Arabia’s energy minister stared down calls for higher output. Prince Abdulaziz bin Salman told Bloomberg Television oil producers needed to be careful increasing production because the Covid crisis was not yet over and flare-ups might dent demand.
West Texas Intermediate crude hit a seven-year high before settling 90 US cents or 1.1 per cent ahead at US$84.66 a barrel. Brent crude settled 81 US cents or 1 per cent ahead at US$86.34 a barrel.
Investors were preparing for the biggest week so far of the third-quarter reporting season. Updates are due this week from the S&P 500’s five largest companies: Facebook, Alphabet, Microsoft, Amazon and Apple. A third of Dow companies are also scheduled to report.
“This is a make-it or break-it type of week in earnings season. Our expectation is for positive results,” Alex Chaloff, co-head of investment strategies at Bernstein Private Wealth Management, said.
The Dow and S&P 500 both hit new highs last week as earnings surprised to the upside. Two weeks into the season, 84 per cent of the 117 S&P 500 companies that have reported have beaten earnings expectations, according to Refinitiv data.
“Rising tide of earnings is lifting all the boats and adding fuel to the bull market fire,” Anu Gaggar, global investment strategist at Commonwealth Financial Network, said.
Australian outlook
These are buoyant times for investors. The Dow and S&P 500 are at all-time highs. Australian stocks have their sights on an eighth gain from nine sessions. Canada’s benchmark index has risen for an extraordinary 14 consecutive sessions.
The S&P/ASX 200 closed yesterday at its highest since mid-September and has plenty of overhead room before it reaches its old August peak.
Energy stocks have outperformed lately and should run again this session. The US sector put on 1.44 per cent. Materials were also strong, rising 0.89 per cent. Consumer discretionary surpassed both, due almost entirely to Tesla.
The US financial sector dipped 0.15 per cent as long-term interest rates retreated. Utilities were also weak, easing 0.43 per cent.
Earnings and new listings will continue to provide much of the excitement here. Potential highlights among today’s annual general meetings include Regis Healthcare, Redbubble, Bega Cheese, Polynovo and Pinnacle Investment Management Group. Quarterly reports are due from Evolution Mining, Northern Star, Ramelius Resources and Paladin Energy.
IPOs: there are three starters under orders this session. C29 Metals is first out the gate at noon AEDT. The company is a copper explorer with projects in NSW, SA and WA. GQG Partners at 12.30 pm describes itself as a “global boutique asset investment firm”. RemSense Technologies at 2 pm is a tech services provider.
The dollar climbed 0.36 per cent overnight to 74.95 US cents.
Commodities
Gold logged a six-week closing high as treasury yields retreated from multi-month highs. Metal for December delivery settled US$10.50 or 0.6 per cent higher at US$1,806.80 an ounce. The NYSE Arca Gold Bugs Index climbed 1.57 per cent.
Natural gas bounced 9.2 per cent in the US to US$5.763 per million British thermal units following a forecast for a cold start to November. The cold snap is expected to boost demand for heating.
BHP‘s US-listed stock gained 1.27 per cent and its UK-listed stock 2.83 per cent. Rio Tinto put on 1.44 per cent in the US and 2.01 per cent in the UK. The spot price for iron ore landed in China eased 60 US cents or 0.5 per cent to US$119.75 a tonne.
Copper rebounded from two days of decline as Shanghai warehouse inventories fell to 12-year lows. Benchmark copper on the London Metal Exchange rallied 2.2 per cent to US$10,070.25 a tonne. Aluminium rose 0.3 per cent, nickel 3.2 per cent, lead 0.3 per cent, zinc 0.2 per cent and tin 0.8 per cent.
