The share market’s unblemished December win record is under threat after US stocks reeled back from all-time highs.
ASX SPI200 index futures declined 25 points or 0.4 per cent, signalling early weakness following seven days of gains. The index has risen every session this month.
US stocks hit fresh intraday highs early in the session, then sank as traders appeared to lose patience with stalled stimulus negotiations. Tech stocks led the retreat.
The Nasdaq Composite skidded 244 points or 1.94 per cent. Heavyweights Apple, Facebook and Microsoft lost at least 1.9 per cent. The S&P 500 shed 29 points or 0.8 per cent. The Dow Jones Industrial Average gave up 105 points or 0.35 per cent.
“I think we’re having a bit of a digestion day after hitting new highs,” Keith Lerner, chief market strategist at Truist, told CNBC. “There’s some hesitation because of the stimulus talks.”
The rot set in after Senate Majority Leader Mitch McConnell told Politico that Republicans and Democrats were “still looking for a way forward,” dashing hopes a deal was close. The White House, Senate Republicans and House Democrats continued to pursue separate plans. Politico summed up the stalemate: “After a flurry of momentum over the last week, the stimulus talks are back to where they’ve been for months: nowhere.”
Negotiations continued as the pandemic tightened its grip on the US. The nation has seen a million new cases in just four days, pushing the national total beyond 15 million.
Johnson & Johnson was among the Dow’s best performers, rising 1 per cent a day after indicating it expects vaccine trial results next month, earlier than expected. Food delivery service DoorDash soared 83.5 per cent upon debut after raising $3.37 billion from investors.
The ASX faces a likely consolidation day following a seven-day tear that has lifted the index 3.2 per cent.
There was nothing significant on the news wires overnight to change the broader global market up-trend. US action looked like a standard retrace as investors cashed in at record levels. Americans have been buying in the conviction the two sides of politics will eventually reach an accommodation. That remains the only possible outcome, although there may be a temptation to drag out the talks until after the Georgia Senate runoff elections on January 5.
The extravagantly-valued technology sector bore the brunt of the selling, falling 1.9 per cent. A positive sign for the Australian market is that the financial and materials sectors were among the better performers. Financials fell 0.3 per cent. Materials gained less than 0.1 per cent. Energy and industrials turned positive in the final minutes, rising 0.3 and 0.2 per cent, respectively.
Today’s economic calendar is light. The monthly inflation expectations survey and quarterly RBA Bulletin are unlikely to add anything new to the economic outlook. Ora Gold reports earnings.
The dollar advanced 0.43 per cent to 74.4 US cents.
BHP and Rio Tinto faced mild selling despite a fresh multi-year high in iron ore. The spot price for ore landed in China edged up 80 cents or per 0.5 cent to US$150.75 a tonne, the highest price since March 2013. BHP’s US-listed stock fell 0.03 per cent and its UK-listed stock 0.49 per cent. Rio Tinto shed 0.69 per cent in the US and 1.38 per cent in the UK.
Gold stocks retreated as the yellow metal logged its first loss in three sessions. Gold for February delivery settled $36.40 or 1.9 per cent lower at US$1,838.50 an ounce. The NYSE Arca Gold Bugs Index declined 3.1 per cent.
Oil marked time after US stockpiles recorded their biggest weekly increase since April, a possible sign of declining demand. Brent crude settled two cents or less than 0.1 per cent ahead at US$48.86 a barrel. The US benchmark eased eight cents or 0.2 per cent o US$45.52.