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Aussie stocks looked set to open lower after Wall Street broke a five-session losing streak but bulk metals declined.
ASX futures eased 15 points or 0.2 per cent. The S&P/ASX 200 rose 19 points or 0.25 per cent yesterday to a second straight advance as US equity futures signalled a positive start to the week.
Iron ore sagged to a fresh low for the year. Aluminium and nickel retreated from multi-year highs. Oil and gold advanced. The dollar moved closer to 74 US cents.
Wall Street
The Dow and S&P 500 rose for the first time in six sessions, but finished below session highs as tech stocks and vaccine makers dragged.
The Dow Jones Industrial Average bounced 262 points or 0.76 per cent. The S&P 500 hit its peak at the open and needed a late recovery to retain a gain of 10 points or 0.23 per cent. The Nasdaq Composite lost ten points or 0.07 per cent.
“What we are seeing here is basically a market that’s very much gripped by seasonal factors,” Peter Cardillo, chief market economist at Spartan Capital Securities, told MarketWatch. “We have had four or five days of declines. But the decline has been without any major volumes. That’s a good sign, which means the market isn’t likely to encounter any serious decline during the month of September.”
Cyclical stocks outperformed pandemic-resistant growth stocks amid signs the delta variant may have peaked in the US. The seven-day average of new cases fell to 136,000 from 157,000 last month.
“Reopening of the global economy was delayed by the delta variant spread, but the delta wave is likely receding in the US and globally, and the pandemic recovery should restart,” JPMorgan market strategist Marko Kolanovic said.
The Russell 1000 Value Index rallied 0.57 per cent, versus a 0.15 per cent decline in the Growth Index. The S&P 1500 airlines index firmed 1.96 per cent. Cruise lines Carnival and Royal Caribbean gained 2.46 and 2.8 per cent, respectively. Plane-maker Boeing rose 1.99 per cent.
Vaccine-makers Pfizer, Moderna and Johnson & Johnson retreated after a scientific review concluded Covid-19 booster shots were unnecessary at this stage. An international panel of scientists published a report in the peer-reviewed journal The Lancet that said vaccine-induced immunity remained highly effective against the delta variant.
Australian outlook
A cautious start coming up after Wall Street broke its losing run in less than convincing fashion. The S&P/ASX 200 has been anticipating a US rebound for the last two sessions, and may need more evidence to kick much higher.
Energy and financials were the pick of the US sectors, rising 2.94 and 1.14 per cent, respectively. The tech and materials sectors closed flat. Healthcare was the only significant loser, falling 0.61 per cent due to the loss of potential revenues from booster shots.
A busy session ahead for economic data includes the August business confidence survey and quarterly housing figures at 11.30 am AEST. Reserve Bank Governor Philip Lowe addresses an online event from 12.45. Lowe is expected to talk down the effects of the delta variant on the bank’s economic projections, insisting the hit from lockdowns will recede when locked-down states reopen.
IPOs: Heavy Minerals is scheduled to list today at 11.30 am AEST. The company is raising $5.5 million to explore for zircon and garnet ilmenite.
Dividend payments: companies trading ex-dividend today include Breville, Inghams, TPG Telecom and News Corp.
The dollar inched up 0.06 per cent to 73.7 US cents.
Commodities
Iron ore sank to its weakest since November after Yunnan became the latest Chinese province to clamp down on steel production. Authorities asked steel mills to reduce output to ensure lower production this year.
The spot price for ore landed at Tianjin sank US$6.15 or 4.8 per cent to US$122.60 a tonne. Westpac said it expects prices to stay around this level.
“As August closed, it was clear there had been a quantum shift in the market leading us to revise down our year–end forecast from $175/tonne to $125/tonne,” senior economist Justin Smirk wrote.
BHP’s US-listed stock edged up 0.38 per cent and its UK-listed stock gained 0.43 per cent. Rio Tinto put on 0.82 per cent in the US and 0.44 per cent in the UK.
Aluminium hit a 13-year high before fading amid concerns prices have run too far, too fast. The metal broke above US$3,000 a tonne on the London Metal Exchange, then dropped 1.1 per cent to US$2,883.50.
“The market is obviously a bit over-extended here,” Gianclaudio Torlizzi of consultants T-Commodity told Reuters.
Copper declined 1.4 per cent to US$9,550.50 a tonne. Nickel sank 3.3 per cent, lead 1.8 per cent, zinc 1.3 per cent and tin 0.4 per cent.
Oil ground higher as US production remained affected by the after-effects of Hurricane Ida. Brent crude settled 59 US cents or 0.8 per cent ahead at US$73.51 a barrel.
“There had been an expectation that a lot of the damage to the infrastructure caused by the storm wouldn’t take too long to fix,” Michael Hewson, chief market analyst at CMC Markets UK, said. “This turns out to be a little wide of the mark, and could well go on for a few weeks more.”
Gold edged higher but failed to hold the US$1,800 an ounce mark. Metal for December delivery settled US$2.30 or 0.1 per cent ahead at US$1,794.40 an ounce. The NYSE Arca Gold Bugs Index rallied 1.71 per cent.
