Australian shares were set to open higher after the Nasdaq Composite joined the Dow and S&P 500 in record territory.
Declines in iron ore, coal and LNG kept ASX futures in check before the last session of the month. The SPI 200 ended the night session 18 points or 0.24 per cent ahead.
A strengthening dollar also weighed. The Aussie rallied for a fifth night towards its highest close in four months.
US stocks advanced as positive quarterly earnings offset weak economic data. Apple and Amazon climbed ahead of reporting after this morning’s closing bell.
The Nasdaq Composite finally put its September slump behind it, rising 212 points or 1.39 per cent to an intraday record. The tech-heavy index was the last of the major indices to recoup last month’s losses.
The S&P 500 put on 45 points or 0.98 per cent. The Dow Jones Industrial Average added 240 points or 0.68 per cent.
Well-received trading updates from Ford, Merck and Caterpillar kept the earnings party rolling. Ford jumped 8.96 per cent after raising its full-year guidance. Dow component companies Merck and Caterpillar climbed 6.14 and 4.06 per cent, respectively.
“Earnings have helped and a reminder that US reporting so far has been better than the long-term average in terms of beats,” Jim Reid, head of thematic research at Deutsche Bank, said. “It has still been healthier relative to some of the stagflationary gloom stories seen through September and early October which has perhaps helped the relief rally.”
Megacaps Apple and Amazon provided much of the Nasdaq’s momentum, rising 2.5 and 1.59 per cent before this morning’s quarterly reports. Tesla was another standout, climbing 3.78 per cent to a new record off the back of this week’s bulk order from rental firm Hertz.
Facebook gained 1.51 per cent after announcing plans to change its name to ‘Meta’ to reflect its aspirations to diversify from social media into virtual reality.
Cyclical sectors shrugged off soft GDP data. The economy grew at a tepid 2 per cent last quarter as the Delta Covid wave depressed activity. Economists had anticipated a stronger reading around the 2.8 per cent mark. The result also marked a sharp slowdown from the 6.7 per cent pace of growth in the June quarter.
“Slower growth in Q3 was the result of a normalization of spending activity and the significant bottlenecks that remained,” Bernd Weidensteiner, senior economist at Commerzbank, said. “It will not dissuade the Fed from deciding on a gradual end to its bond purchases next week, given the good situation on the labor market and increasing price risks.”
A cautiously positive start coming up, with the usual end-of-month institutional rebalancing adding another layer of uncertainty to a complicated outlook. Traders will weigh a strong night in the US against another ugly session on many commodity markets and the challenges a rising currency poses to an export-driven economy. A surge in long-term interest rates yesterday afternoon also clouds the picture.
The S&P/ASX 200 has staged a solid rebound from the September slump, rising for three straight weeks. The index enters the final session 15 points ahead for the week and 98 points higher for the month.
Wall Street was strong across the board last night. All 11 sectors rose, topped and tailed by real estate +1.47 per cent and communication services +0.32 per cent.
Of the sectors that matter most down under, financials put on 1.24 per cent as long-term interest rates rallied; materials gained 1.02 per cent. Industrials firmed 1.29 per cent, tech 1.06 per cent and energy 0.69 per cent.
The Australian dollar pushed towards its highest close in four months. The Aussie climbed 0.29 per cent to 75.4 US cents and a fifth straight gain. A stronger dollar is a headwind for exporters, a plus for importers. It is also a negative for companies that generate much of their earnings in US dollars.
Interest rates surged late yesterday. The yield on ten-year Australian government bonds touched 1.9 per cent for the first time since February.
The final session of the month brings a flurry of economic data: retail sales, producer prices and private-sector credit.
Today’s AGMs include SkyCity Entertainment, GWA, GUD and Carsales.com. The rush to get in quarterly updates before the end of the month always produces one of the busiest days of the season. Origin Energy and Western Areas are among the tailenders, according to Morningstar.
IPOs: Cooper Metals lists at 12.30 pm AEDT. The miner’s flagship copper-gold project is at Mount Isa. The company also has two early-stage projects in WA.
Iron ore continued to suffer collateral damage from Chinese attempts to rein in energy prices. The spot price for ore landed in China slumped US$6.50 or 5.4 per cent to US$113.15 a tonne.
Chinese stainless steel futures dropped 3.2 per cent after China’s state planner met with miners to discuss price limits. Thermal coal futures sank 9.7 per cent on the Zhengzhou Commodity Exchange.
“The policy intervention in coal prices is intensifying, and exchanges have tightened trading rules for relevant products. The market is in panic,” SinoSteel Futures analysts wrote.
BHP and Rio Tinto largely took the decline in ore in their stride. BHP’s US-listed stock climbed 0.61 per cent after its UK-listed stock inched up 0.15 per cent. Rio Tinto edged up 0.09 per cent in the US after losing 1.32 per cent in the UK.
Natural gas futures in the US dropped 42 US cents or 6.7 per cent to US$5.782 per million British thermal units after Russian president Vladimir Putin reportedly directed more gas towards Europe to ease a shortage.
Industrial metals rebounded in London despite further pressure in China. Aluminium hit a three-month low in Shanghai, but finished 2.6 per cent ahead on the London Metal Exchange. Tin traded limit down in Shanghai, then gained 1.5 per cent in London.
Benchmark copper on the LME fell more than 3 per cent before reversing 1.9 per cent higher to US$9,855.50 a tonne. Nickel put on 0.8 per cent, lead 1.7 per cent and zinc 1.5 per cent.
Oil was mixed. Brent crude settled 26 US cents or 0.3 per cent lower at US$84.32 a barrel. US crude edged up 15 cents or 0.2 per cent to US$82.21.
Weak US growth figures helped gold regain US$1,800 an ounce. Gold for December delivery settled US$3.80 or 0.2 per cent higher at US$1,802.60 an ounce. The NYSE Arca Gold Bugs Index retreated 2.04 per cent.