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A sixth straight record close on Wall Street points to a positive open on the ASX following yesterday’s rocky start to the financial year.

ASX futures climbed 25 points or 0.35 per cent as the S&P 500’s run of highs continued.

Oil, gold and iron ore advanced. The dollar fell to its lowest in almost seven months.

Wall Street

US stocks started the second half at record levels as upbeat economic data bolstered confidence in the recovery.

The S&P 500 climbed 22 points or 0.44 per cent to a sixth straight all-time  closing high. The Dow Jones Industrial Average put on 131 points or 0.38 per cent. The Nasdaq Composite added 18 points or 0.13 per cent.

Optimism about tonight’s June employment report was lifted by news claims for unemployment benefits fell to a pandemic-era low last week. First-time claims declined from 415,00 to 364,000, well below the 390,000 predicted by economists polled by Dow Jones. The four-week moving average for continuing claims eased to its lowest since March 2020.

Manufacturing activity remained strong. The ISM Manufacturing PMI eased a fraction from 61.2 to 60.6 last month, still close to historic highs.

The Congressional Budget Office raised its economic outlook for the next few years. The CBO expected US gross domestic product to increase 7.4 per cent this year and to average 2.8 per cent until 2025. The budget panel agreed with the Federal Reserve that inflation will run hot this year, then ease to 2 per cent next year.

The S&P 500 sealed its longest winning streak since February, and its longest run of record closes since last August. However, gains have been modest, with last night only the second time in the streak the index advanced more than 0.5 per cent.

“For markets so far this year, boring is beautiful,” David Carter, chief investment officer at Lenox Wealth Advisors, told Reuters. “Economic growth has been strong enough to support prices and many asset classes are trading with historically low volatility.

“It feels like investors left for the Fourth of July weekend about three months ago.”

Australian outlook

The domestic market looks ready to get back on the front foot, supported by a weakening dollar and a stealth rally on Wall Street that shows no signs of breaking.

Exporters should see gains after the dollar hit a fresh low for the year. The Aussie touched 74.6 US cents overnight for the first time since mid-December. The local unit was last down 0.33 per cent at 74.72 US cents.

The S&P/ASX 200 reversed into the new financial year yesterday, falling 47 points or 0.65 per cent during a session that saw negative Covid news and likely some late unwinding of EOFY window dressing. The index finished near its low, thanks to an institutional dump in the closing auction.

Covid numbers trended in the wrong direction in NSW yesterday. Worryingly, the Premier warned around half of the 24 new local cases had been in the community while infectious. With the lockdown nearing the halfway mark, health authorities will need to see a downturn in cases in the next few days if an extension is to be avoided.

Energy stocks led the US rally, rising 1.72 per cent as crude responded to signs the OPEC+ cartel may not lift production caps. The group delayed a decision on output until tonight amid reports the United Arab Emirates baulked at a Saudi-Russia deal to increase production by 400,000 barrels a day.

Utilities, health and communication services were the night’s other standouts. Financials gained 0.77 per cent. Mining giants BHP and Rio Tinto missed out on a 0.55 per cent advance in the materials sector following soft Chinese factory data (more below).

Monthly home loan figures were scheduled for 11.30 am AEST.

The last session of the week brings a deluge of IPOs. Under the starter’s pistol today were BlueBet Holdings, 29Metals, Clean TeQ Water, Lode Resources, NexGen Energy and Tamboran Resources.

Commodities

A dispute within the Organization of the Petroleum Exporting Countries gave oil a leg up. Brent crude settled US$1.22 or 1.6 per cent higher at US$75.84 a barrel after the cartel was unable to agree on raising output.

The group’s advisory committee will meet again tonight to resolve a disagreement over a plan that would increase production by 400,000 barrels a day each month from August to December for a total increase by the end of the year of two million barrels a day.

Iron ore shrugged off signs growth in China’s factory activity was slowing as soaring prices of raw materials crimped margins. Caixin’s China manufacturing PMI eased to a four-month low of 51.3 last month from 52 in May. The spot price for ore landed in China increased 40 US cents or 0.2 per cent to US$218.80 a tonne.

Most industrial metals declined in the wake of the China report. Benchmark copper on the London Metal Exchange slipped 0.6 per cent to US$9,296.25 a tonne. Aluminium and nickel gave up 0.6 per cent, zinc 1.5 per cent and tin 1 per cent. Lead gained less than 0.1 per cent.

A mixed night for the mining majors saw BHP’s overseas listings rise 0.61 per cent in the UK and fall 0.58 per cent in the US. Rio Tinto shed 1.39 per cent in the US and 0.25 per cent in the UK.

Gold climbed for a second night amid reports of short covering as prices continued to stabilise. Metal for August delivery settled $5.20 or 0.3 per cent ahead at US$1,776.80 an ounce. The NYSE Arca Gold Bugs Index eased 0.28 per cent.

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