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The share market has a shot at breaking a three-week losing run after Wall Street shrugged off further rises in rates.

The S&P/ASX 200 will open 28 points or 0.39 per cent higher this morning, according to futures action. The Australian benchmark needs to recoup 52 points by this afternoon’s close to end a streak of weekly losses stretching back to the start of February.

US stocks logged solid gains despite pressure from higher treasury yields after a drop in claims for unemployment benefits.

BHP and Rio Tinto rose in overseas trade as iron ore prices increased for a second day. Oil climbed to a two-week high. Precious and industrial metals retreated as the US dollar rallied. The Australian dollar eased 0.4 per cent.

Wall Street

US stocks turned positive in afternoon trade on hopes of a modest rate hike this month. Atlanta Federal Reserve President Raphael Bostic said he was “firmly” in favour of a quarter-point hike, rather than the half-point increase favoured by some Fed policymakers.  

The S&P 500 rallied 30 points or 0.76 per cent. The Dow Jones Industrial Average gained 342 points or 1.05 per cent following a strong trading outlook from Salesforce. The Nasdaq Composite added 84 points or 0.73 per cent.

Stocks came under early pressure as a decline in first-time claims for jobless benefits underlined the strength of the jobs market. New applications fell to 190,000 last week from 192,000 the previous week.

Last week’s reading was the seventh in a row below 200,000, indicating layoffs remain well contained and a recession is currently unlikely. Increased claims for benefits are historically one of the first signs the economy is heading for recession.

“The labor market shows no fresh signs of deterioration with minimal job layoffs despite the news of big tech firings the last several months and this will harden the resolve of Fed officials to slow economic demand down with higher interest rates when they sit down to meet later in March,” Chris Rupkey, chief economist at FWDBONDS, said.

Bond yields rose in response to the report. The ten-year US yield climbed to its highest since November. The two-year yield touched a 15-year high.

“The bond market knows the Fed has more work to do and that is why 10-year yields are inching up above psychological resistance at 4.00% for a second day,” Rupkey said.  

The market gained traction in afternoon trade after Bostic pushed back against calls from other Fed policymakers for a jumbo 50 basis points rate hike this month.

“I am still very much of a mindset that slow and steady is going to be the appropriate course of action,” Bostic told reporters. “Going at a measured pace reduces the likelihood we overshoot,” he added.

Dow component Salesforce surged 11.51 per cent after beating revenue expectations and forecasting a stronger full-year result than the market anticipated. An upbeat profit outlook and strong holiday-quarter sales lifted department store Macy’s 11.48 per cent.

Tesla slumped 6.56 per cent after a much-heralded “Master Plan 3” proved light on detail about new models and timelines.

“The biggest surprise coming out of Tesla investor day is that there wasn’t a surprise,” Guido Petrelli, founder of Merlin Investor, said.

Australian outlook

Down-pressures on the market have abated somewhat this week as China’s economic revival lifts commodity prices and Wall Street shows more resilience to rising yields. The S&P/ASX 200 has held its ground well in the face of US headwinds and now has a shot at erasing Monday’s sharp loss.

This week’s resilience has been all about resources. The materials sector is on a three-session win run and could have a fourth in it following gains in BHP and Rio Tinto overnight. The US materials sector rallied 1.21 per cent.

Energy is also on a tear, climbing yesterday for a fifth session to a four-week high. The US energy sector put on 0.84 per cent overnight.

Offsetting strength in resources has been a sharp retreat in the big banks. The financial sector sagged yesterday to its lowest level since the first week of the year. The omens for today are not great: US financials sagged 0.53 per cent.

Defensive sectors were notably strong overnight. US utilities rallied 1.83 per cent, consumer staples 1.22 per cent and real estate 1.22 per cent. Tech gained 1.26 per cent.

The dollar took another beating from a pugnacious greenback, falling 0.41 per cent to 67.32 US cents.

The domestic economic calendar is empty today. China releases a gauge of services sector activity at 12.45 pm AEDT.

Companies trading this session without the right to their next dividend include Nine Entertainment, Lifestyle Communities, Ampol and Treasury Wine Estates. Pushpay holds its AGM.

Commodities

Iron ore rose for a second day following confirmation on Wednesday that Chinese factory activity has regained momentum after the pandemic. Buying continued after the steel production hubs of Handan and Tangshan lifted temporary production curbs imposed to improve air quality.

“The removal of production restrictions has partly contributed to the rising futures prices this morning. In addition, steel mills’ iron ore inventories hover at a relatively low level, lending support to prices,” analysts from Haitong Futures told Reuters.

The most-traded May ore futures on the Dalian Commodity Exchange ended daytime trade 1.56 per cent higher at 912.5 yuan (US$132.19) a tonne.

BHP‘s US-traded depositary receipts climbed 2.94 per cent. The miner’s UK listing added 2.27 per cent. Rio Tinto gained 1.42 per cent in the US and 0.77 per cent in the UK.

Oil logged its strongest finish in two weeks as solid US jobless claims data soothed concerns about US demand. Energy prices jumped on Wednesday as data showed the Chinese economy rebounded strongly as pandemic restrictions ended.

“Optimism surrounding China’s economic recovery are offsetting more hot inflation data in Europe and the U.S.,” Tyler Richey, co-editor at Sevens Report Research, said.

Brent crude settled 44 US cents or 0.5 per cent ahead at US$84.75 a barrel.

Gold‘s three-day win ended as the US dollar and treasury yields rose. Gold for April delivery settled US$4.90 or 0.3 per cent lower at US$1,840.50 an ounce. The NYSE Arca Gold Bugs Index eased 0.16 per cent.

Industrial metals wilted as a stronger US dollar lifted prices for buyers using other currencies. Benchmark copper on the London Metal Exchange declined 1.84 per cent to US$8,933 a tonne. Aluminium dropped 1.48 per cent, nickel 3.36 per cent, lead 0.63 per cent, zinc 2.79 per cent and tin 3.29 per cent.

Battery metal miners fell for the first time in four sessions. The Global X Lithium & Battery Tech ETF declined 0.73 per cent on the New York Stock Exchange.

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