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The share market has broadly positive leads for the first session of 2022 after Wall Street started the new year on an upswing.
The Dow and S&P 500 marked the occasion with record closes. The Nasdaq also advanced.
Oil and iron ore rose. Copper and gold declined. The dollar sagged more than 1 per cent to back below 72 US cents.
Trade in ASX futures was suspended for the New Year break.
Wall Street
US stocks overcame a choppy start to reverse declines on Friday and add to last year’s bumper gains. Reopening plays outperformed in a sign investors remain confident the economy will ride out the Omicron Covid wave with minimal damage.
The Dow Jones Industrial Average rallied 247 points or 0.68 per cent to a new closing peak. The S&P 500 advanced 30 points or 0.64 per cent.
The Nasdaq Composite firmed 188 points or 1.2 per cent as investors bought two of the tech index’s biggest stars.
Apple briefly became the first company in history to record a market capitalisation of US$3 trillion. The tech giant inched two cents past the crucial US$182.86 level before trimming its rise to 2.5 per cent at US$182.01. The company’s valuation has tripled in four years.
Tesla surged 13.53 per cent after smashing delivery expectations. The electric carmaker delivered more than 308,000 vehicles last quarter despite a chip shortage. The company delivered almost twice as many vehicles last year as the year before.
The news appeared to raise expectations for other carmakers. Ford gained 4.77 per cent. General Motors put on 4.43 per cent.
Travel and tourism stocks advanced. The S&P 500 airlines index gained 3.4 per cent. The hotels, resorts and cruise lines index added 1.76 per cent.
“Looks like the reopening trade is in full force this morning and it basically says the market is looking through Omicron,” Thomas Hayes, managing member at Great Hill Capital, told Reuters. “It’s something we can live with, like the seasonal flu.”
Lenders were boosted by a sharp rise in long-term interest rates. The yield on ten-year US treasuries jumped more than 10 basis points to their highest in more than a month. Official rates are expected to rise up to three times this year as the Federal Reserve tries to rein in inflation.
Bank of America tacked on 3.8 per cent, Goldman Sachs 3.34 per cent and JPMorgan Chase 2.12 per cent. A broker upgrade helped lift Wells Fargo 5.73 per cent
The major indices ticked lower on Friday, during the final session of 2021. The Dow eased 0.16 per cent. The S&P 500 lost 0.26 per cent and the Nasdaq 0.61 per cent.
Those declines barely dented the indices’ gains across a strong year. The S&P 500 finished 2021 with a gain of 27 per cent. The Dow put on 18.7 per cent and the Nasdaq 21.4 per cent.
Australian outlook
The buoyant mood on Wall Street clearly survived the New Year break. The first week of the year tends to be positive as investors act on New Year resolutions to put money to work. Bank of America noted the S&P 500 has risen in 11 of the last 13 years. First-week gains in the US across that period averaged 1.6 per cent.
The S&P/ASX 200 looks set to play catch-up after ending 2021 on a sour note. The Australian benchmark dropped 69 points or almost 1 per cent on Friday as investors locked in profits from a six-session “Santa rally”. The rally looks to have a little more to give.
While it is important not to read too much into last week’s low-volume holiday trade, the ASX 200 did break the medium-term downtrend that had developed since its August peak. That bodes well for the weeks ahead, even if a near-term retrace is likely as institutional trading desks return to capacity.
Energy stocks surged 3.1 per cent in the US amid optimism ahead of tonight’s OPEC+ meeting. The financial sector rallied 1.24 per cent.
The three sectors that house Big Tech (technology, consumer discretionary and communication services) gained between 0.56 and 2.76 per cent.
A sharp rise in the US dollar helped push the materials sector down 1.37 per cent. The Australian dollar slumped 1.1 per cent to 71.88 US cents.
The domestic economic calendar is predictably light this week. ANZ releases December job advertising figures tomorrow.
In the US, the minutes from last month’s Federal Reserve meeting are due on Wednesday night. The December jobs report lands on Friday.
IPOs: Greentech Metals is scheduled to be the first launch of 2022 at 12 pm AEDT today. Greentech is an explorer with prospects in the Pilbara.
At this point it looks as if traders will have to wait until the end of the week for another listing. My Foodie Box is slated to debut on Friday. US giant Block Incorporated is also due to complete its takeover of Afterpay that day.
Commodities
Oil markets showed no concern that the OPEC+ oil cartel might ramp up production. Brent crude settled US$1.20 or 1.5 per cent ahead at US$78.98 a barrel.
The Organization of the Petroleum Exporting Countries and allies meet via teleconference tonight and are expected to stick to a plan to increase output by an additional 400,000 barrels a day.
Phil Flynn, senior market analyst at The Price Futures Group, said the cartel was unlikely to “change the script”. Last night’s gain reversed most of a US$1.75 end-of-year reversal on Friday night.
Gold and other metals wilted under a rising greenback. Gold for February delivery settled US$25.50 or 1.4 per cent lower at US$1,803.10 an ounce. Silver shed 2.4 per cent, platinum 2.6 per cent and copper 2.6 per cent. The NYSE Arca Gold Bugs Index slid 2.11 per cent.
Iron ore nudged higher in China. 62% Fe fines for Qingdao rose US$1.51 to US$122.26 a tonne.
BHP and Rio Tinto dipped in US trade. BHP eased 0.02 per cent and Rio Tinto 0.39 per cent. UK markets were closed for New Year.
