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The global stock market bull run stuttered overnight, signalling a soft start to Australian trade after more than a week of strong gains.

ASX SPI200 index futures declined 84 points or almost 1.4 per cent after Wall Street broke a six-session winning run and European markets fell.

US stocks closed mixed as investors took profits from some of this up-leg’s biggest winners and rotated back into temporarily-out-of-favour tech stocks. The S&P 500 fell 25 points or 0.78 per cent as gains in technology heavyweights were outweighed by declines in value stocks. The Dow shed 300 points or 1.09 per cent.

The Nasdaq briefly broke above 10,000 for the first time in history. The tech-heavy index closed 29 points or 0.29 per cent ahead at 9,954 as Apple, Amazon, Facebook and Netflix all put on at least 3 per cent. The tech giants helped lead the March market rebound, but had fallen out of favour in recent days as traders rotated into value plays that had yet to recover as much.

Recovery plays weakened overnight. Airlines and cruiselines such as United, Delta and Carnival gave back more than 7.5 per cent. Planemaker Boeing topped losses on the Dow, sinking 6 per cent.  

“Today’s all about giving back some of the sharp gains we’ve seen in those value names,” Keith Buchanan, portfolio manager at GLOBALT in the US, told CNBC.

Australian stocks look set to open sharply lower after hitting a three-month high. The S&P/ASX 200 climbed 146 points or 2.4 per cent yesterday to close above 6000 for the first time since March 8. The benchmark index has put on 389 points or 6.8 per cent in six sessions since last Monday amid rising optimism about a global economic recovery as lockdown restrictions are lifted.

The S&P 500 briefly turned positive for the year on Monday night after employment data showed the economy added a record 2.5 million jobs in May, driving unemployment lower and defying expectations the jobless rate might peak as high as 20 per cent. The Federal Reserve met overnight and is due to release a policy statement tonight that will be closely analysed for changes in outlook. A massive global stimulus effort has helped supercharge the share market recovery. The S&P 500 has bounced 46 per cent from its March low to finish last night roughly 5 per cent from an all-time high.

Nine of eleven US sectors declined. The tech sector edged up 0.5 per cent and communication services 0.2 per cent. The energy sector took the biggest hit, sliding 3.6 per cent despite a swing session on oil markets. Brent crude settled 38 cents or 0.9 per cent ahead at US$41.18 a barrel after trading as low as US$37.07 and losing 3.4 per cent on Monday.

The materials sector fell 1.2 per cent, pressuring the US listings of Australian miners. BHP’s US-listed stock gave up 0.76 per cent and its UK-listed stock 0.88 per cent. Rio Tinto shed 0.91 per cent in the US and 0.82 per cent in the UK. The spot price for iron ore landed in China eased $1.40 or 1.3 per cent to US$105.15 a dry ton.

The stock market’s loss was gold’s gain as havens attracted a bid. Gold for August delivery settled $16.80 or 1 per cent higher at US$1,721.90 an ounce.

Copper extended Monday’s three-month peak. Benchmark copper on the London Metal Exchange rose 1.3 per cent to US$5,753.50 a tonne. Lead edged up 0.1 per cent and tin 1.4 per cent. Aluminium was unchanged. Nickel lost 1.1 per cent and zinc 1.4 per cent.

The dollar fell back below 70 US cents, lately off 0.83 per cent at 69.61 US cents.

The day ahead brings consumer sentiment data at 10.30 am EST, followed by Chinese inflation figures at 11.30 am. Wall Street also has inflation data on tap, but tonight’s main event is the Federal Reserve policy statement and press conference.

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