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Aussie stocks were set to open under mild pressure following a risk-off session on Wall Street as a week-long recovery in global equities lost momentum.

The S&P 500 and Nasdaq Composite declined. The Dow finished flat.

ASX futures eased 10 points or 0.14 per cent. The S&P/ASX 200 dropped 21 points yesterday to its first loss in five sessions, but remained on track for a positive week following strong gains through Tuesday and Wednesday.  

Wall Street

US investors turned cautious ahead of an inflation update that is expected to show the highest annual growth in prices in almost 40 years.  

The S&P 500 faded 34 points or 0.72 per cent to its first loss of the week. The broadest of the three benchmarks drew within 1 per cent of a record during the previous session after reversing almost all of its 5.2 per cent dive since the omicron Covid variant was identified.

The Nasdaq Composite shed 270 points or 1.71 per cent. The Dow Jones Industrial Average finished unchanged.

“Most indices are now stabilizing, solidifying the recent gains registered after investors started to play down worries over the omicron variant,” Pierre Veyret, technical analyst at ActivTrades, told MarketWatch.

“The trading environment is however likely to stay significantly volatile as uncertainty remains regarding monetary policies in the U.S., especially after last week’s poor job report and high inflation numbers.”

This week’s recovery in travel stocks flagged. The S&P 500 airlines index dipped 1.53 per cent. An index of hotels, resorts and cruise lines eased 0.76 per cent. Expedia declined 1.53 per cent.

Boeing gave up 1.64 per cent after American Airlines said it was reducing flights due to delays in deliveries of aircraft. The airline said the aircraft-maker had not delivered 13 planes due by this northern winter. Shares in the airline sagged 0.49 per cent.

New applications for unemployment benefits last week fell to their lowest in 52 years. However, analysts said the decline of 43,000 to 184,000 claims was distorted by seasonal hiring for the holiday season, which would unwind in January.

Also affecting sentiment was news ratings agency Fitch cut its credit rating of Chinese developer Evergrande to ‘Restricted Default’ The downgrade came after the company failed to meet debt repayments on two coupons due last month.

Analysts said the downgrade might trigger cross-defaults on other debts. The US dollar and other havens, including treasuries, rallied.

Markets expect tonight’s November consumer price index will maintain pressure on the Federal Reserve to tighten monetary policy. Economists polled by Dow Jones anticipate the biggest increase in annual inflation since 1982. That in turn will encourage the Fed to accelerate the end of its asset-buying program and potentially flag rate rises as soon as next year.

Australian outlook

The market looks set for another day of consolidating its rebound gains from earlier in the week. The S&P/ASX 200 ran on the spot for much of yesterday’s session before fading to a loss of 21 points or 0.28 per cent. The decline barely dented the index’s tally for the week, which stood at 241 points or almost 2 per cent at yesterday’s close.

Commodity markets came under pressure from a rising US dollar overnight (more below). Crude, gold, copper and iron ore all retreated. That helped drag US materials down 0.55 per cent and the US energy sector 0.91 per cent.

The night’s only US sector gains were defensive: health +0.24 per cent and consumer staples +0.06 per cent.

US financials shed 0.26 per cent, industrials 0.31 per cent and tech 1.09 per cent.

Back home, Pendal Group and Washington H. Soul Pattinson hold annual general meetings today.

IPOs: Panther Metals lists at 12.30 pm AEDT. This explorer focuses on nickel and gold prospects in the Northern Territory and Laverton in Western Australia.

The dollar dropped 0.25 per cent overnight to 71.51 US cents.

Commodities

Oil‘s three-session win streak ended as traders kept a wary eye on the demand threat from tighter pandemic restrictions. The UK, Denmark and China have all introduced new rules this week to slow the spread of omicron. A Japanese government advisor this week reported the new variant was 4.2 times as transmissible as delta.

“More countries worldwide are reintroducing restrictions and other measures to curb climbing case numbers,” Louise Dickson, senior oil markets analyst at Rystad Energy, said. That sharpened “fears that the global market may yet be adversely impacted, and consequently causing a bearish environment for oil prices.”

Brent crude settled US$1.40 or 1.9 per cent lower at US$74.42 a barrel. The US benchmark, West Texas Intermediate, fell 2 per cent.

Iron ore eased for a second session in the wake of an 8.1 per cent surge on Tuesday that lifted prices to a six-week high. Prices declined as stainless steel futures fell to their lowest since July amid concerns about rising stocks. The spot price for ore landed in China retreated 30 US cents or 0.3 per cent to US$106.70 a tonne.

Mining giants BHP and Rio Tinto were mixed in overseas trade. BHP‘s US-listed stock dropped 1.01 per cent after its UK-listed stock shed 0.77 per cent. Rio Tinto inched up 0.17 per cent in the US after gaining 0.77 per cent in the UK.

Gold logged its first loss in three sessions as the rising greenback pressured rival stores of wealth. Metal for February delivery settled US$8.80 or 0.5 per cent lower at US$1,776.70 an ounce. The NYSE Arca Gold Bugs Index slid 2.89 per cent.

“There is moderate price pressure on the metals coming from the key outside markets being in bearish daily postures—weaker crude oil prices and a higher U.S. dollar index,” Jim Wyckoff, senior analyst at Kitco.com, said. 

Copper lost ground under dollar pressure and a general downturn in risk appetite. March copper fell 1.4 per cent on Comex to US$4.333 a pound.

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