The ASX looks set to open lower for a third day after fresh doubts about a trade deal triggered “risk-off” selling on Wall Street.
ASX SPI200 index futures skidded 20 points or 0.3 per cent to 6619 following declines in US stocks, the Australian dollar, oil, iron ore and industrial metals. Gold rose to a five-week high.
US stocks lost their grip on record levels as soft economic data and reports of Chinese doubts about a lasting trade deal overshadowed mostly positive corporate earnings and Wednesday’s rate cut. The S&P 500 dropped nine points or 0.3 per cent, ending a three-session run of higher intraday highs. The Dow gave up 140 points or 0.52 per cent as trade bellwethers Caterpillar and Boeing both fell at least 1.8 per cent. The Nasdaq shed 12 points or 0.14 per cent.
White House claims that a trade deal is coming this month were challenged by a Bloomberg report that said Chinese officials doubted a long-term deal was possible. The report said China feared President Donald Trump’s “impulsive nature” and suspected he might back out of any agreement. Trump tweeted that the two sides were working on a new location to sign a ‘Phase One’ deal after the APEC summit in Chile was cancelled due to civil unrest.
Adding to pressure on stocks, a measure of business activity in the greater Chicago district fell to its lowest level since 2015. The Chicago Business Barometer contracted to 43.2 last month from 47.1 in September. New orders were the weakest in ten years.
The broader market weakness overshadowed well-received quarterly earnings from Apple and Facebook. Apple climbed 2.3 per cent as optimism over the Apple Watch and AirPods offset declining sales of the iPhone. Facebook added 1.8 per cent after beating earnings and revenue expectations.
The local share market ended October on a soft note yesterday after a downbeat trading outlook from ANZ triggered losses in the heavyweight financial sector. The ASX 200 retreated 26 points or 0.4 per cent.
BHP and Rio Tinto both fell at least 0.3 per cent following soft Chinese manufacturing data. That weakness continued in overnight action. BHP’s US-listed stock lost 0.93 per cent and its UK-listed stock 1.1 per cent. Rio Tinto gave up 1.01 per cent in the US and 1.21 per cent in the UK. Iron ore prices continued to fall. The spot price at Tianjin eased $1 or 1.3 per cent to $US84 a dry ton.
A fourth day of falls left oil at its lowest level in a week. Brent crude settled 38 cents or 0.6 per cent lower at $US60.23 a barrel.
Industrial metals slumped after a report yesterday showed Chinese factory activity contracted during October for a sixth straight month. Benchmark copper on the London Metal Exchange shed 1.9 per cent, its biggest loss since early August. Aluminium lost 0.3 per cent, lead 2.2 per cent, nickel 0.8 per cent, tin 1.6 per cent and zinc 1.8 per cent.
Gold surged to a five-week high, helped by trade doubts, a weaker US dollar and haven-buying. Gold for December delivery settled $18.10 or 1.2 per cent ahead at $US1,514.80 an ounce.
The dollar dropped nearly a fifth of a cent, back below 69 US cents. The Aussie was lately buying 68.92 US cents.
The day ahead brings domestic manufacturing and producer-price reports, as well as a second take on Chinese manufacturing. A week of big-ticket news in the US concludes tonight with monthly jobs figures, average hourly earnings and manufacturing figures.