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Soft index futures suggest a pause in the traditional ASX Santa rally despite another record session on Wall Street.

The SPI200 sagged 26 points or 0.4 per cent to 6726 on Saturday morning even as US stocks sealed a fourth week of gains with their best percentage tally since September. The local market faces headwinds from declines in iron ore, copper and crude oil.

Not all commentators were convinced the ASX will open lower. AMP Capital’s Chief Economist Shane Oliver told Fairfax, “The more likely scenario is we will open 10 to 15 points [higher], constant with the rally we saw with the US and Europe… The lead in from Wall Street and Europe is positive… Sometimes the futures market can give the wrong signals.”  

US stocks rallied as President Donald Trump spruiked progress on geopolitical issues and as strong economic data soothed concerns about the economy. The S&P 500 advanced 16 points or 0.49 per cent to a new record, the index’s seventh gain in eight sessions. The broadest of the three major US indices gained 1.7 per cent last week.

The Dow put on 78 points or 0.28 per cent on Friday, also ending at an all-time closing high. The Nasdaq added 38 points or 0.42 per cent for an eighth straight rise.

Buying sentiment was boosted by news of a “very good talk” between Trump and Chinese President Xi Jinping. Trump tweeted that China had started “large scale” purchases of US farm produce ahead of the signing of a phase-one trade deal early next month. He also claimed progress on North Korea and Hong Kong. Chinese state media quoted Xi as saying the trade deal “is a good thing for the US, China and the entire world”.

Recession fears have abated in the US as the year ended with a run of strong economic signals. A Friday report showed consumer spending improved 0.4 per cent last month, raising hopes for the Christmas shopping season. A separate report showed economic growth held steady at 2.1 per cent over the third quarter.

The Santa rally in Australia began with a bang last Monday, then stalled just short of record highs. The ASX 200 faded 17 points or 0.3 per cent on Friday to cut the weekly tally to 1.1 per cent. The index ended the week 48 points off its November closing high.

The big miners hit turbulence from price falls in iron ore and copper. BHP‘s US-listed stock shed 0.49 per cent on Friday and its UK-listed stock lost 0.3 per cent. Rio Tinto shrugged off the declines, rising 0.5 per cent in the US and 0.81 per cent in the UK.

The spot price for iron ore landed at China’s Tianjin port declined $2.30 or 2.5 per cent to $US90.90 a dry ton. Benchmark copper sagged 0.7 per cent during a mixed session on the London Metal Exchange. Lead improved 1.1 per cent, nickel 2.5 per cent and zinc 0.7 per cent. Aluminium was flat. Tin eased 0.2 per cent.

Crude oil turned lower after a report showed an increase in drilling activity in the US. Baker Hughes reported that the number of active drills in the US rose by 18 to 685 last week. Brent crude declined 40 cents or 0.6 per cent to $US66.4 a barrel.

Gold gave up some of Thursday’s gains as strength in the US economy sapped demand for havens. Gold for February delivery settled $3.50 or 0.2 per cent weaker at $US1,480.90 an ounce. The precious metal rose 0.6 per cent on Thursday and is almost 13 per cent ahead for the year.

The dollar opened Christmas week steady at 68.99 US cents.

Economic data is light this week as world markets pause for Christmas. The only item of note in Australia this week is today’s monthly private-sector credit update. The ASX trades normally today, closes early tomorrow at 2.10 pm EST and re-opens on Friday. Wall Street has housing data and durables goods figures tonight.  

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