Outlook for the day: Positive after Wall Street rose on bets that November inflation data would not prevent the Federal Reserve from lowering interest rates next week.
ASX futures: up 38 points or 0.45%
Overnight themes:
Megacap US stocks surged after November consumer inflation figures met expectations, clearing the way for a likely interest rate cut next week.
The Nasdaq climbed 1.77% to close above the 20,000 milestone for the first time as traders bought likely winners from lower rates. Apple, Amazon, Tesla, Alphabet and Meta Platforms all hit intraday records. Nvidia, Netflix and Microsoft also rose.
The S&P 500 rallied 0.82% as gains in Big Tech were partly offset by weakness in health and other sectors.
The Dow struggled for traction during an uneven rally dominated by the "Magnificent Seven" group of megacap growth stocks. The blue-chip average closed 0.22% lower as UnitedHealth and other healthcare stocks weighed.
The Nasdaq took wing after a Labor Department report showed US consumer prices increased by 0.3% last month to an annual growth rate of 2.7%, in line with expectations. Core inflation also increased by 0.3% for an annual rate of 3.3%.
The odds on a rate cut next week climbed to 95% from 86% before the inflation report, according to CME's FedWatch tool.
“We expect a rate cut in the final meeting here at the end of the year. With no surprises, the direction of the market’s been higher, and there’s been nothing to derail it from melting up into year-end.” - Tom Hainlin, senior investment strategist at U.S. Bank Asset Management (per CNBC).
At a sector level, the rally was all about sectors featuring the Magnificent Seven. Communication services popped 3.08%, consumer discretionary 2.02% and tech 1.5%. Other gains were more muted: financials +0.26% and energy +0.02%.
Drags included health -1.3%, consumer staples -0.63% and materials -0.37%.
Gold jumped to its highest in six weeks as traders bet last night's inflation data was not hot enough to derail an interest rate cut next week. Benchmark futures settled US$38.30 or 1.4% ahead at US$2,756.70 an ounce.
"We expect gold to reach fresh new highs in 2025, with the elevated bond yields we have today easing over the course of the year and geopolitical risks remaining a supportive driver of gold sentiment... We believe gold could reach $3,000/oz by the end of 2025." - Nitesh Shah, commodity strategist at WisdomTree (per Reuters).
Copper pulled back from a four-week high as a rising US dollar hiked prices for holders of other currencies. Benchmark copper eased 0.43% on the London Metal Exchange to US$9,177 a metric ton. Prices rallied earlier this week after China's Politburo announced it would loosen monetary policy after US President-elect Donald Trump threatened another trade war.
"China talked about stimulus all year and did very little. They are talking about it again, but we'll have to wait for the detail to see if it's going to make any difference... U.S. tariffs next year might prompt China to roll out retaliatory tariffs and its own stimulus to offset the impact." - Tom Price, analyst at Panmure Liberum (per Reuters).
Iron ore gave back some of this week's gains as seasonal weakness discouraged buying at a two-month high. November data showed ore imports slowed ahead of an annual winter slowdown in construction. Benchmark ore declined 1.64% on the Dalian Commodity Exchange to US$111.38 a metric ton.
Key events today:
November employment report - 11.30 am AEST
US wholesale inflation (PPI) - tonight
US unemployment claims - tonight
S&P 500: up 49 points or 0.82%
Dow: down 99 points or 0.22%
Nasdaq: up 348 points or 1.77%
Dollar: down 0.05% to 63.72 US cents
Iron ore (Dalian): down 1.64% to US$111.38
Brent crude: up US$1.33 or 1.84% to US$73.52
Gold (futures): up US$38.30 or 1.4% to US$2,756.70
Gold (spot): up US$22.21 or 0.82% to US$2,718.19
Silver (spot): up less than 1 US cent or 0.1% to US$31.93
NYSE Arca Gold Bugs: up 3.8%
Bitcoin: up 4.92% to US$101,301
Copper (LME): down 0.43% to US$9,177
Nickel (LME): up 0.54% to US$15,845
Lithium carbonate (China): down 0.13% to 76,550 yuan
Global X Lithium & Battery Tech ETF: up 0.52%
Uranium (spot): up 0.16% to US$76.50
Global X Uranium ETF(URA): up 1.61%
BHP: up 0.34% (US); up 0.05% (UK)
