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Shares look set to open cautiously higher after Wall Street eked out skinny gains in volatile trade following mixed reports on the health of the US economy.
ASX SPI200 index futures inched up seven points or 0.1 per cent. Gold, bounced off a two-month low. Oil and iron ore rose.
Wall Street
US stocks swung in and out of negative territory before finishing higher as traders weighed soft benefits data against an unexpectedly strong housing report. The S&P 500 rose ten points or 0.3 per cent.
The Dow Jones Industrial Average finished with a gain of 52 points or 0.2 per cent after being up more than 300 points and down as much as 226 points. The Nasdaq Composite added 39 points or 0.37 per cent as Apple, Microsoft, Amazon, Alphabet, Facebook and Netflix advanced.
First-time claims for unemployment benefits increased by 4,000 to 870,000 last week, sharpening concerns the economic recovery in the US was losing momentum. Economists polled by Dow Jones anticipated a reading around 850,000. Continuing claims declined but by less than expected. The S&P 500 opened in correction territory following the report before recovering.
The market mood stabilised after the strongest housing sales figures in 14 years. New home sales topped an annual rate of one million for the first time since 2006, well ahead of expectations.
“People are getting concerned about what kind of economic recovery we’re going to get in the next few months,” Megan Horneman, director of portfolio strategy at Verdence Capital Advisors in the US, told CNBC. “Some parts of the economy are doing well and some are slowing down a bit.”
Goldman Sachs slashed its US GDP forecast for next quarter from 6 per cent growth to 3 per cent because of a political stalemate over further fiscal stimulus. The company’s chief economist said he did not expect any additional fiscal support until next year.
Australian outlook
The local market has a second straight winning week in its sights despite falling for three out of four sessions so far. Wednesday’s powerful 140-point surge positions the S&P/ASX 200 for a win, provided the index loses no more than 11 points this session.
Ten of eleven US sectors advanced overnight, with defensive utilities and consumer staples finishing top of the heap with gains of 1.2 and 0.8 per cent, respectively. The technology sector put on 0.6 per cent and financials 0.2 per cent. The health sector shed 0.5 per cent.
Last night’s action once again raised hopes Wall Street was building a base as a losing month winds down. Wall Street’s fear gauge, the VIX, retreated 0.2 per cent and remained well below levels earlier in the month.
“The key is the VIX index, which has not yet reached levels that would suggest a continued strong move to the downside,” Peter Cardillo, chief market economist at Spartan Capital Securities in the US, told Reuters. “So you might get a day of bargain hunting followed by a day of selling, but as the last days of September come into place, we should begin to see some sort of window dressing by institutions.”
Commodities
The US materials sector gained 0.7 per cent as iron ore and precious metals bounced. BHP’s US-listed stock put on 1.58 per cent after its UK-listed stock closed little changed, up 0.08 per cent. Rio Tinto gained 1.27 per cent in the US and 0.72 per cent in the UK. The spot price for iron ore landed in China rose $1.50 or 1.3 per cent to US$115.90 a dry ton.
Gold secured its first advance in four sessions as bargain hunters took advantage of two-month lows. Gold for December delivery settled $8.50 or 0.5 per cent ahead at US$1,876.90 an ounce. Silver edged up 0.4 per cent.
Oil rose for a third night, bolstered by evidence of diminishing US stockpiles earlier in the week. Brent crude settled 17 cents or 0.4 per cent higher at US$41.94 a barrel.
Industrial metals declined as traders mulled US dollar strength and concerns that rising virus numbers will slow demand from Europe and the US. Benchmark copper on the London Metal Exchange fell 1.4 per cent to US$6,527.25 a tonne. Aluminium gave up 0.7 per cent, nickel and zinc 1.2 per cent, lead 1.1 per cent and tin 3.2 per cent.
The dollar faded 0.16 per cent to 70.53 US cents.
