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The share market looked set to trim a winning week at today’s open after US stocks finished mixed but broadly lower amid taper worries after retail sales unexpectedly increased.

ASX futures eased 18 points or 0.24 per cent as the Dow and S&P 500 declined, but finished well off overnight lows. The Nasdaq turned positive late in the session.

BHP and Rio Tinto slumped in overseas trade as iron ore collapsed to its lowest since July 2020. An exchange traded fund of uranium companies – this week’s hottest sector – fell more than 3 per cent. Gold logged its sharpest loss in six weeks. Oil inched to a seven-week high.

Wall Street

The S&P 500 and Dow dropped as unexpectedly strong retail sales handed the Federal Reserve further ammunition to tighten monetary policy.

The S&P 500 fell seven points or 0.16 per cent. The Dow Jones Industrial Average shed 63 points or 0.18 per cent. The Nasdaq Composite turned positive in afternoon trade, ending with a gain of 20 points or 0.13 per cent.

August retail sales increased 0.7 per cent from the previous month, defying expectations of a delta-fuelled downturn. Economists polled by Dow Jones had predicted sales would decline 0.8 per cent.

“The Treasury curve bear steepened and the S&P500 fell presumably on the good news is bad for Fed expectations logic,” Scotiabank said in a note.

Weak August employment figures earlier this month raised hopes the Fed might delay announcing the start of the unwinding of its quantitative easing program. The central bank meets next week, with economists divided on whether policy-makers will announce the taper or wait until November.

Overnight, claims for unemployment benefits were weaker than expected, but not by enough to offset the retail sales surprise. First-time filings rose by 20,000 to 332,000 last week. Economists had anticipated a decline of around 18,000.

Miners and energy stocks were the biggest drags as a spike in the US dollar weighed on precious and industrial metals. Newmont dropped 3.95 per cent, Barrick Gold 4.39 per cent and Freeport-McMoRan 6.64 per cent.

Australian outlook

The S&P/ASX 200 looks set to give back some of yesterday’s 43-point rally, but should cling on for a third winning week from four. The index has put on 54 points so far this week, rising for three of the last four sessions.

Mining and oil companies loom as headwinds. US materials dropped 1.09 per cent and the energy sector 1.06 per cent as a surging US dollar weighed heavily on commodity prices.

The greenback jumped 0.35 per cent on the retail surprise to a near-three week high. The Australian dollar slid 0.58 per cent to 72.98 US cents.

Havens in the US included consumer discretionary +0.44 per cent, real estate +0.16 per cent and technology +0.06 per cent.

There is nothing on the economic calendar today to change the overnight narrative. The ASX 200 staged its biggest rally in six weeks yesterday, retaining most of its initial gains after soft employment data offered the RBA no reason to tighten policy.

IPOs: a big day coming up, with three companies set to debut. SSH Group lists at 11.30 am AEST. The company contracts out security, staffing and equipment.

Koonenberry Gold follows at noon. The explorer has a greenfields project in north-west NSW, 160 km from Broken Hill. Way 2 VAT lists at 1 pm. This Israeli tech company has a software app for reclaiming VAT (value added tax) and GST.

Commodities

BHP and Rio Tinto sagged as iron ore fell to its lowest since July 2020. The spot price for ore landed at Tianjin fell US$6.90 or 6.1 per cent to US$106.50 a tonne.

BHP‘s US-listed stock slumped 3.66 per cent and its UK-listed stock 3.35 per cent. Rio Tinto gave up 4.65 per cent in the US and 4 per cent in the UK. Brazilian ore miner Vale dropped 5.11 per cent.

Ore prices that traded near US$230 in May have more than halved in four months. Data this week showed steel production plunged 13.2 per cent last month from the same period last year amid environmental curbs on output. On Monday, Yunnan province asked steelmakers to restrict output until the last two months of the year.

Uranium has been this week’s hottest commodity, but succumbed to profit-taking overnight. The Global X Uranium ETF (URA) retreated 3.31 per cent from a seven-year high.

Gold slumped as the greenback and US yields spiked on the US retail surprise. Metal for December delivery settled US$38.10 or 2.1 per cent lower at US$1,756.70 an ounce. The NYSE Arca Gold Bugs Index shed 4.07 per cent.

“Clearly, the unexpectedly strong U.S. retail sales have boosted the dollar and gold has corrected sharply lower,” Ross Norman, chief executive officer at Metals Daily, told MarketWatch. “It appears the move lower has been accelerated by stops being triggered and is now touching support at $1,750.”

Industrial metals wilted under the same pressures. Benchmark copper on the London Metal Exchange slumped 2.7 per cent to US$9,348.50 a tonne. Aluminium lost 0.4 per cent, nickel 3.1 per cent, lead 1.6 per cent and tin 0.1 per cent. Zinc inched up 0.3 per cent.

Oil eked out a seven-week high. Brent crude settled 21 US cents or 0.3 per cent ahead at US$75.67 a barrel. The US benchmark closed flat.

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