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The ASX looked set for a flat start after a mixed end to a whippy session in the US raised hopes of respite at the end of a challenging week for investors.

A late recovery lifted the Nasdaq Composite back into positive territory. The Dow and S&P 500 trimmed losses.

ASX futures eased five points or less than 0.1 per cent as the dollar and key commodities declined.

The dollar sank below 69 US cents for the first time since June 2020. Copper and gold fell to multi-month lows. Iron ore shed 3 per cent.

Wall Street

US stocks took investors on another wild ride as financial markets continued to factor in a series of aggressive rate hikes to control inflation.

The Dow Jones Industrial Average closed with a loss of 104 points or 0.33 per cent after rising as much as 80 points and falling more than 500 points. The decline was the blue-chip average’s sixth in a row.

The S&P 500 eased five points or 0.13 per cent. The Nasdaq Composite swung late in the session to a gain of seven points or 0.06 per cent.

The night continued a recent run of rollercoaster sessions where stocks have risen and fallen sharply before generally fading by the closing bell. Last night was the first in a while where late buying softened earlier falls.

“These wild swings of upwards of 2% up or down are extremely rare, and showcase a very fragile investor psyche for that amount of volatility to happen in such a short time frame,” Ryan Detrick, chief market strategist at LPL Financial, said.

“Continued concerns over inflation, which looks like it has peaked yet is staying stubbornly high, continues to concern investors, pushing the S&P to the brink of a bear market.”

The S&P 500 closed more than 18 per cent from its January peak. A bear market is commonly defined as a close more than 20 per cent below a recent high. The Nasdaq Composite was more than 30 per cent off last year’s record.

“Even if you say we’re in a bear market, there’s rallies within bear markets that can be very sharp,” Truist’s chief market strategist Keith Lerner said.

“I think, at least short-term, and given how oversold we are and given that we’re starting to see people nibble at some of these areas that have been the most beaten up, I think that’s at least a silver lining in a sea of red and gloom over the last couple of days.”

Mohamed El-Erian, the influential adviser at Allianz, said he bought after identifying trading opportunities in oversold stocks.   

“I dipped a toe in this afternoon via a small handful of high-beta names,” he tweeted. “Do I think the selling is over? I suspect not though, of course, I don’t know any more than others. I do sense some trading opportunities.”

Apple, formerly the largest company in the world by market capitalisation, entered a bear market after falling 2.69 per cent. Saudi Aramco replaced the tech giant as the world’s most valuable company on Wednesday.

Australian outlook

Traders will likely welcome anything less than another bloodbath at the end of a bruising week. The S&P/ASX 200 has fallen 265 points or almost 3.7 per cent in four sessions.

The headline numbers on Wall Street disguise encouraging signs of dip-buying at the end of the session. Nonetheless, Australian investors will likely need a greater show of conviction to return to this market in any number.

Declines in key commodities will cap upwards movement today. Index heavyweights BHP and Rio Tinto declined in overseas trade (more below).

US investors bought healthcare stocks (+0.92 per cent), consumer discretionary (+0.8 per cent) and real estate (+0.75 per cent). They sold utilities (-1.16 per cent), technology (-1.14 per cent) and financials (-0.71 per cent).

The materials sector eased 0.19 per cent. Energy inched up 0.1 per cent.

The dollar has tumbled more than six US cents in five weeks, falling from near 75 US cents in late March to 68.56 US cents this morning. The Aussie lost 1 per cent overnight.

Economic calendar: the Reserve Bank’s Deputy Governor Michele Bullock is due to take part in a panel discussion in Sydney at 12 pm AEST.  

Commodities

Bulk metals declined after the default of a major Chinese property developer sharpened worries about demand as China pursues zero-Covid. Sunac China, the country’s third-largest developer, missed a deadline for a bond repayment. China’s property sector has been hit a by a wave of defaults, raising questions about future demand for raw materials

“Demand hopes have given way to demand concerns,” Commerzbank analyst Daniel Briesemann said.

Iron ore fell after China’s National Development and Reform Commission urged local authorities to check steel production remained within limits set for this year. The spot price for ore landed in China dropped US$4.04 or 3 per cent to US$130.16 a tonne.

Copper fell to a seven-month low. Benchmark copper on the London Metal Exchange dropped 2.7 per cent to US$9,103.50 a tonne. Aluminium and lead gave up 1.3 per cent, zinc 3.9 per cent and tin 5.6 per cent. Nickel was unchanged.

BHP‘s US-traded depositary receipts declined 1.26 per cent. The miner’s UK listing fell 2.91 per cent. Rio Tinto shed 1.53 per cent in the US and 2.87 per cent in the UK.

Gold ended at its weakest level since early February as the US dollar surged. Metal for June delivery settled US$29.10 or 1.6 per cent lower at US$1,824.60 an ounce. The NYSE Arca Gold Bugs Index slumped 4.43 per cent.

Oil finished little changed. Brent crude dipped six US cents or 0.1 per cent to settle at US$107.45 a barrel. The US benchmark edged up 42 US cents or 0.4 per cent to US$106.13.

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