soft night for commodity prices and a rise in the dollar point to a weak start
to Australian trade despite modest gains on Wall Street following a historic
change to central bank policy.
ASX SPI200 index futures fell nine points or a little more than 0.1 per cent, signalling a quick reversal of yesterday’s ten-point gain.
A week that began with two straight rises and a five-month high on Tuesday has unravelled amid a slew of full-year earnings reports and a rise in the dollar. Today’s open looks set to erase the last of the index’s gains for the week.
The dollar hit an 18-month high overnight, a boon for importers but a headwind for exporters and companies that generate profits in US dollars. The Aussie reached 72.91 US cents on the spot market, its highest level since February 2019, and was lately ahead 0.35 per cent at 72.58 cents.
Commodity markets were mixed but
broadly lower overnight. While base metals improved, iron ore, oil and precious
metals all lost ground. BHP and Rio Tinto declined in overseas trade (more
Earnings season wraps up today with
reports scheduled from Boral, Village Roadshow, Openpay Group, Medusa Mining, Retail
Food Group and The Market Herald.
S&P 500 and Dow edged higher in volatile trade after the Federal Reserve unveiled a major policy
change that could keep interest rates lower for longer. Chair Jerome Powell said
the central bank will use “average inflation targeting”, a new policy
that means inflation will be allowed to rise above the Fed’s 2 per cent target
for “some time” before the bank raises rates.
S&P 500 finished an uncertain
session six points or 0.17 per cent ahead at a record. The Dow rose 160 points or 0.57 per cent, briefly turning positive for the
year before trimming its advance. The Nasdaq
fell 40 points or 0.34 per cent as tech stocks declined.
financial sector was the night’s big
winner, rising 1.7 per cent as interest rate-sensitive banks were boosted by a spike
in US government bond yields. On the
Dow, JPMorgan Chase gained 3.3 per cent and Goldman Sachs 1.4 per cent. Bank of
America gained 1.9 per cent and Wells Fargo 2.3 per cent.
Investors were cheered by regulatory approval for a cheap rapid Covid-19 test. Shares in Abbott Laboratories spiked 7.9 per cent following reports the White House intends to buy 150 million of the kits.
going to have low interest rates as far as we can see and Covid is on the way
out because of the inexpensive test that Abbot is introducing soon,” Peter Tuz,
president of Chase Investment Counsel in the US, told Reuters. “It gives
investors two reasons to be positive about equities.”
Economic data was also broadly
positive. First-time claims for unemployment benefits declined and the final
reading on second-quarter GDP was revised upwards, albeit to a dire 31.7 per
cent decline from an initial 32.9 per cent.
US-listed stock eased 0.22 per cent and its UK-listed stock 1.56 per cent
overnight. Rio Tinto shed 0.89 per cent in the US and 1.84 per cent in the UK.
The declines came after the spot price for iron
ore landed in China dropped $2.05 or 1.7 per cent to US$121.20 a dry ton.
winning streak ended amid expectations for a quick rebound in production in the
Gulf of Mexico as a hurricane reached land. Brent crude settled 55 cents or 1.2
per cent lower at US$45.09 a barrel.
Gold finished lower after wild swings as the market digested the rates implications of the new Fed policy. Gold for December delivery swung as much as 2 per cent in both directions before settling $19.90 or 1 per cent weaker at US$1,932.60 an ounce.
in the US dollar helped lift industrial
metals. Benchmark copper on the London Metal Exchange edged up 0.4 per cent
to US$6,640.75 a tonne. Aluminium and nickel gained 0.2 per cent, lead 0.4 per
cent, zinc 0.8 per cent and tin 1.5 per cent.
Read More: ASX Today: Dollar hits 18-month high