Morning traders. Thanks Trees.
Market wrap:
The share market has a new six-year high in its sights after US stocks neared record levels overnight on news that inflation remains contained and corporate earnings are exceeding estimates.
The September SPI 200 futures contract rallied 17 points or 0.3% to 5512 as BHP and Rio Tinto saw solid gains in US action as commodities continued to benefit from revised expectations for global growth.
The S&P 500 advanced 10 points or 0.53% to close within two points of a record as US traders put Ukraine and Gaza on the backburner to focus on domestic issues. The Dow added 62 points or 0.37% and the Nasdaq 31 points or 0.71%.
“The equity market seems destined to trend higher,” Terry Sandven, chief equity strategist at US Bank Wealth Management, told
Bloomberg. “We think there is still some modest upside if you continue to see earnings rise. The inflation numbers are supportive of higher stock prices. It reflects US economic growth that is neither too slow nor too fast.”
Concerns that rising inflation might pressure the Federal Reserve to raise interest rates sooner than later were soothed by news that the consumer price index rose a tepid 0.3% last month. Most of the rise was accounted for by a jump in energy prices that has since eased.
A separate report showed sales of existing homes improved for a third month to the strongest level since October. Sales grew 2.6% last month to a seasonally-adjusted annual rate of 5.04 million, ahead of expectations.
Thirty-six S&P 500 companies reported earnings overnight, including Microsoft, Coca-Cola, McDonald’s and Apple. Shares in Apple, the world's largest company by market capitalisation, were lately down 0.3% in after-market trade following the release of its earnings reports at the close of regular trade.
“Earnings so far are modestly above expectations, though revenues continue to be on a weak side,” Jim Russell, senior equity strategist at US Bank Wealth Management, told
MarketWatch.
Eight out of ten S&P 500 industry groups advanced, led by health and tech stocks. BHP put on 1.69% and Rio Tinto 1.88% in US trade. Spot iron ore for import to China yesterday eased 60 cents to US$95.40 a dry tonne.
Aluminium and zinc continued to set the pace among base metals, hitting new multi-month highs. In London, aluminium rose 1.1% to a 16-month peak, zinc 1.1% to a three-year peak, copper 0.2%, nickel 0.4% and lead 0.7%. Tin lost 0.3%. US copper for September delivery was recently up 0.2% at US$3.21 a pound.
Gold stocks lost ground in the US as traders favoured assets with greater exposure to the economic cycle. The Arca NYSE Gold Bugs Index dipped 1.03% as gold for August delivery fell $7.60 or 0.5% to settle at US$1,306.30 an ounce. The contract was lately trading at US$1,307.40.
Oil eased ahead of tonight's weekly US inventory report. West Texas Intermediate crude oil for August delivery fell 17 cents or 0.2% to settle at US$104.42 a barrel and was recently trading at US$103.89.
European stocks bounced back from three sessions of heavy selling, led by gains in oil stocks. The Stoxx Europe 600 index rallied 1.33% as Germany's DAX rebounded 1.27%, France's CAC 1.52% and Britain's FTSE 0.99%. Russia’s MICEX Index rose 1.6%, the index's first gain since the shooting down of MH17 over Ukraine.
The dollar edged back towards 94 US cents this morning as US inflation data dampened expectations of near-term interest rate rises. The Aussie was last buying 93.95 US cents.
TRADING THEMES TODAY
TESTING THE HIGHS: Wall Street is always happiest when it's staring at its navel (the outside world is a dangerous, scary place full of unpredictable foreigners behaving badly). Thus shares tend to rise when there is enough to think about at home, and fall when there is so little going on that traders have no choice but to confront the dragons beyond US borders. Thankfully, last night offered plenty of domestic data to chew on, and the market found much to its liking. The ASX has shown signs of improving resilience lately and these leads might just be enough for a decent push beyond this congestion zone. Some notable specs suffered a few dents yesterday, but there is no shortage of opportunity just now and no sign that the party is going to end any time soon.
ECONOMIC NEWS: The quarterly consumer price index and trimmed mean CPI are due at 11.30am. Crude oil inventories and earnings reports are highlights of tonight's US session.
Good luck to all.
