Aussie shares look set to open modestly lower following a tech-led rally on Wall Street as unemployment data improved and US investors bet on a new stimulus package.
ASX SPI200 index futures eased 15 points or 0.2 per cent, indicating a soft start after three days of gains. A 41-point rally yesterday extended the S&P/ASX 200's tally for the week to 114 points or 1.9 per cent.
Wall Street continued what has become a regular pattern of trading around break-even for much of the session before kicking decisively higher in the afternoon. The Nasdaq set the pace, as it has for most of this year, climbing 110 points or 1 per cent to a seventh straight gain, a new record and its first ever finish above 11,000. The 'FAANG' technology leadership group of stocks all contributed: Facebook +6.5 per cent, Apple 3.5 per cent, Amazon 0.6 per cent, Netflix 1.4 per cent and Google parent company Alphabet 1.8 per cent.
The S&P 500 and Dow Jones Industrial Average rose for a fifth night. The S&P 500 put on 21 points or 0.64 per cent to draw within 1 per cent of its pre-coronavirus pandemic record. The Dow gained 185 points or 0.68 per cent, but remains roughly 7 per cent short of its previous peak.
“It’s a tale of a bifurcated market,” Dryden Pence, chief investment officer at Pence Wealth Management in the US, told CNBC. “You’ve got a few sectors that are doing well... and they’ve left a lot of the rest of the market behind.”
The outlook for tonight's July government jobs report was boosted by news of the lowest initial unemployment benefit claims since the start of the pandemic. Initial claims fell to 1.186 million last week, well below the 1.4 million anticipated by economists surveyed by Dow Jones. Continuing claims declined by a seasonally-adjusted 844,000 to 16.1 million. The report raised hopes stubbornly high unemployment may finally be starting to fall after a string of disappointing reports.
Politicians continued to lob grenades at each other ahead of tonight's self-imposed deadline for a new US$1 trillion stimulus package. Congressional leaders remained at loggerheads over how much relief to offer the unemployed. Senate Majority Leader Mitch McConnell called the Democrat plan "bad economics". House Speaker Nancy Pelosi told CNBC, "Perhaps you mistook [Republicans] for somebody who gives a damn." The White House threatened to take executive action if the two sides were unable to reach a compromise.
Technology, communication services and utilities were the best of the sectors. Materials, financials, energy and health - key drivers of the Australian market - all finished lower.
The Arca Gold Bugs Index of US goldminers eased 0.4 per cent despite a fifth night of gains and a new record for the yellow metal. Gold for December delivery settled $20.10 or 1 per cent higher at US$2,069.40 an ounce.
“Gold is surging once again after better-than-expected jobless claims, real yields resume their freefall, and as lawmakers struggle to make further progress on stimulus talks,” Edward Moya, senior market analyst at Oanda, wrote.
A four-day winning run in oil ended with a whimper. Brent crude settled eight cents or 0.2 per cent lower at US$45.09 a barrel after industry giant Saudi Aramco lowered its official selling price.
Iron ore climbed above US$120 a tonne for the first time in 12 months. The spot price for ore landed in China rose $2.95 or 2.5 per cent to US$121.40 a dry ton. BHP's US-listed stock gained 1.46 per cent after its UK-listed stock dipped 0.26 per cent. Rio Tinto shed 0.94 per cent in the US and 2.44 per cent in the UK.
A lacklustre session on the London Metal Exchange saw copper's rally run out of steam. Benchmark copper dipped 0.3 per cent to US$6,479.75 a tonne. Aluminium rose 0.7 per cent, nickel 0.4 per cent, lead 1.7 per cent and zinc less than 0.1 per cent. Tin gave up 0.3 per cent.
The dollar scored its highest close since February 2019. The Aussie was lately up 0.06 per cent at 72.37 US cents.