Stocks look set to open lower after Wall Street gains petered out and key commodity prices weakened.
ASX SPI200 index futures faded 15 points or 0.2 per cent to 7061 as US stocks fell from record levels to close little changed. The benchmark Australian index, the S&P 500, surged 66 points or almost 1 per cent yesterday to a new peak after swift action by Chinese authorities soothed concerns about the potential economic impact of a virus outbreak.
On Wall Street, a strong earnings result from IBM helped carry the S&P 500 and Nasdaq to fresh highs before a late fade. The S&P 500 peaked early in the session at 3,337, but finished just less than a point or 0.03 per cent ahead at 3,322. The Nasdaq put on 13 points or 0.14 per cent.
IBM lit up earnings season after surprising analysts with strong revenue growth and raising its earnings outlook. Shares in the tech giant rose 3.39 per cent. The positive outlook helped lift the broader technology sector 0.43 per cent. Intel put on 3.6 per cent.
Boeing continued to be a drag on the Dow, declining 1.6 per cent to a 13-month low on news the airline doesn’t expect its troubled 737 MAX to return to service until after the northern-hemisphere summer. The DJIA slid 10 points or 0.03 per cent.
Fears of a coronavirus pandemic abated somewhat as Chinese authorities shut down travel in and out of Wuhan, the city at the centre of the outbreak. The virus has infected more than 550 people in places as far away as the US and Japan, and been blamed for 17 deaths. In the US, airlines and hotel groups exposed to the pandemic remained under pressure. United Airlines fell 2.86 per cent, Delta 1.16 per cent and Wynn Resorts 1.56 per cent.
Copper plumbed a three-week low as traders monitored the spread of the virus in China, a major consumer of raw materials. Benchmark copper on the London Metal Exchange finished the session 0.8 per cent weaker at $US6,108 a tonne after trading as low as $US6,095.50. Aluminium fell 0.7 per cent, nickel 0.2 per cent and zinc 2.3 per cent. Lead gained 1.3 per cent and tin 0.9 per cent.
“The concerns about the coronavirus have been negative for base metals,” Kieran Clancy, analyst at Capital Economics, told Reuters. “If the virus fails to translate into a big negative factor, then we will see most of this move in metals prices reversed.”
Oil fell to its lowest level since early December as rising US shale production continued to offset concerns about supply disruptions in the Middle East. Brent crude settled $1.38 or 2.1 per cent weaker at $US63.21 a barrel. Overnight, the International Energy Authority forecast US production will increase by 22,000 barrels a day next month to 9.2 million barrels a day.
Trade in BHP appeared to gain momentum overnight. The Big Australian’s UK-listed stock put on 0.51 per cent and its US-listed stock 1.37 per cent. Rio Tinto eased 0.11 per cent in the UK and jumped 0.92 per cent in the US. The spot price for iron ore landed in China continued to hover around the $US95 level, dipping 20 cents or 0.2 per cent to $US95.40 a dry ton.
Gold dipped as Chinese authorities announced steps to contain the coronavirus. Gold for February delivery settled $1.20 or 0.1 per cent lower at $US1,556.70 an ounce.
The dollar was broadly steady at 68.42 US cents.
All eyes will be on the December jobs report, due at 11.30am EST. Another big gain similar to last month’s unexpected 39,000 surge would dampen the prospect of a cut to the cash rate next month. Analysts predict the economy created roughly 12,200 new jobs last month, leaving the unemployment rate steady at 5.2 per cent. Wall Street has the weekly crude oil inventories update tonight, as well as earnings updates from Intel, Procter & Gamble and Starbucks.