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A record close on Wall Street points to a positive start to Australian trade after strong US economic data and corporate earnings bolstered confidence in the global recovery.

ASX futures climbed 15 points or 0.21 per cent as the Dow closed above 34,000 for the first time. The S&P 500 also reached a new all-time high.

The S&P/ASX 200 was primed to start the session at its highest level in 13 months. The All Ordinaries looked set to join Wall Street at fresh highs after hitting record territory yesterday with an advance of 37 points or 0.5 per cent.

Wall Street

US stocks soared as investors welcomed a surge in retail spending, plunges in unemployment benefit claims and bond yields, and broadly positive corporate earnings.   

The Dow Jones Industrial Average climbed 305 points or 0.9 per cent to 34,036. The S&P 500 gained 46 points or 1.11 per cent. The Nasdaq Composite put on 181 points or 1.31 per cent.

Retail spending was almost 50 per cent stronger last month than analysts expected as stimulus cheques hit accounts. Sales jumped 9.8 per cent, well ahead of the economist consensus of 6.1 per cent.

First-time claims for unemployment benefits fell to their lowest in a year. Just 576,000 Americans filed for benefits for the first time, down from 769,000 the previous week and well below the Dow Jones estimate of 710,000.

“Although 34,000 by itself is just another number, this is a monumental feat when you think back to where we were last year at this time,” Ryan Detrick, chief market strategist at LPL Financial, told CNBC. “The speed and resiliency of this economic recovery is unlike anything we’ve ever seen and it helps to justify stocks at all-time highs.”

The FAANG group of tech leaders advanced as bond yields tumbled. The yield on ten-year US treasuries sank eight basis points to its lowest level in two months. Facebook added 1.65 per cent, Amazon 1.38 per cent, Apple 1.87 per cent, Netflix 1.7 per cent and Google parent company Alphabet 1.93 per cent.

“For U.S. equities, it’s the best of both worlds, as we have the 10-year down but we have good economic data. That’s exactly what you’d want to see,” Tim Murray, capital markets strategist at T. Rowe Price Associates, told Reuters.

Dow component company UnitedHealth climbed 3.83 per cent after beating earnings expectations and raising its guidance. Asset manager BlackRock gained 2.09 per cent after increasing Q1 profits by 16 per cent. Citigroup and Bank of America also beat estimates, but saw their share prices dip 0.51 and 2.86 per cent, respectively.

Australian outlook

Investors could scarcely ask for a better set of leads: Wall Street up, iron ore nearing US$180 a tonne, industrial and precious metals up, oil up, bond yields down. If not for yesterday’s somewhat pre-emptive advance and the fact today marks the end of the week, ASX futures would surely be pointing significantly higher.

The fall in bond yields means we can expect a strong day for bond alternatives. US REITs climbed 1.95 per cent, health 1.74 per cent and utilities 1.11 per cent. High-growth tech stocks should also continue healing – the US sector rallied 1.79 per cent. Miners also have strong leads – see below. The US materials sector gained 1.26 per cent.

Potential headwinds include the banks, which have better margin opportunities when yields increase. The US financial sector dipped 0.11 per cent. Energy stocks were also weak, falling 0.88 per cent despite a fourth straight advance in crude.

The dollar also looms as a potential obstacle. The Aussie rose 0.36 per cent this morning to 77.52 US cents and seems to be building momentum for another crack at 78 cents.

Quarterly Chinese GDP figures at noon AEST have the potential to affect the market mood. Scheduled for the same time are monthly Chinese factory, retail, asset investment and unemployment data.

Commodities

Iron ore surged yesterday as heavy rains and operational hitches reportedly delay shipments to China from Brazil. Steel production has been tightened by pollution controls in Tangshan, China’s main steel-making city. The spot price for ore landed in China climbed $4.65 or 2.7 per cent to US$177.30 a tonne.

BHP‘s US-listed stock put on 1.87 per cent and its UK-listed stock 1.52 per cent. Rio Tinto gained 2.52 per cent in the US and 2.31 per cent in the UK.

Copper hit a six-week high as the US dollar fell and a report showed Chinese imports rose 25 per cent from this time last year. Benchmark copper on the London Metal Exchange rallied 2.4 per cent to US$9,297.25 a tonne. Aluminium added 0.7 per cent, lead 1.2 per cent, zinc 1.5 per cent and tin 0.7 per cent. Nickel eased 0.1 per cent.

Gold recorded its strongest close in seven weeks as US yields tumbled and the Biden administration pursued a tougher line with Russia and China. Metal for June delivery settled $30.50 or 1.8 per cent ahead at US$1,766.80 an ounce. The NYSE Arca Gold Bugs Index jumped 4.33 per cent.

Oil advanced for a fourth night. Brent crude settled 36 cents or 0.5 per cent higher at US$66.94 a barrel.

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