Outlook for the day: Neutral following a mixed night on Wall Street and commodity markets.
ASX futures: up 2 points or 0.02%
Overnight themes:
US stocks closed mixed but little changed as the head of the Federal Reserve said there was no rush to lower interest rates.
The Dow and S&P 500 eked out slender gains of 0.28% and 0.03%, respectively. The Nasdaq dipped 0.36% as Tesla dragged and most of the Magnificent Seven struggled for traction.
Fed Chair Jerome Powell told the Senate Banking Committee the central bank felt no pressure to take immediate action on interest rates following a string of cuts late last year and a run of solid economic reports. “With our policy stance now significantly less restrictive than it had been and the economy remaining strong, we do not need to be in a hurry to adjust our policy stance,” Powell said in the first of two appearances this week before congressional committees.
Investors appeared reluctant to add to positions ahead of consumer inflation data tonight and additional tariff announcements from the White House this week. President Donald Trump raised tariffs on steel and aluminium imports yesterday and flagged further announcements over the next two days regarding reciprocal tariffs on imports from countries that impose duties on US goods.
"Valuations are elevated, company guidance is measured, inflation is persistent, government policy is uncertain, tariff talk is ongoing and global tensions are elevated. So in aggregate, the level of uncertainty is high, which implies increased volatility" - Terry Sandven, chief equity strategist at U.S. Bank Wealth Management (per Reuters).
Tesla was the biggest drag on the Nasdaq, falling 6.34% after artificial intelligence leader OpenAI knocked back an Elon Musk-led bid to buy the non-profit. The Dow and S&P 500 were lifted by a trading update from Coca Cola (+4.75%), and a 2.18% rise in Apple following reports the tech giant will partner with Alibaba on AI features for China's iPhone market.
Energy was among the best of the S&P sectors, gaining 0.76% as oil sealed a third straight winning night. Brent crude settled at its highest in two weeks in the wake of Middle East price hikes following tighter sanctions on Russia and Iran. The international oil benchmark firmed US$1.13 or 1.5% to US$77 a barrel.
Other notable sector gains included consumer staples +0.91%, materials +0.54% and financials +0.26%. Drags included consumer discretionary (Tesla), health and communication services.
“In our opinion, oil prices have fallen too much in the last three weeks. The U.S. tariffs of 10% on goods imports from China and the Chinese counter-tariffs of 15% on crude oil imports from the U.S. are unlikely to have a significant impact on oil demand... “The quantities of crude oil that China has previously purchased from the U.S. are negligible and are now likely to be sourced elsewhere, which will increase demand accordingly" - Carsten Fritsch, commodity strategist at Commerzbank (per MarketWatch).
Iron ore rose for a second session as traders anticipated supply disruptions as tropical storms menaced the Pilbara. Port Hedland cleared ships from the port following a weather warning from BoM. Rio Tinto cleared ships from its WA ports last week. Benchmark ore finished 1.1% ahead at US$111.12 a metric on the Dalian Commodity Exchange.
Gold hit 'pause' on a run that had delivered investors a string of record highs over the last two weeks. Gold futures eased US$1.80 or 0.1% to US$2,932.60 an ounce a day after breaking above US$2,900 for the first time. Earlier, futures hit a new intraday record at US$2,968.50, according to MarketWatch. The overnight reversal on spot markets was deeper: the spot price was lately down 0.67% to US$2,898.07
"The [gold] market's becoming a bit overextended and just due for some downside corrective pressure and some chart consolidation" - Jim Wyckoff, a senior market analyst at **promotion blocked** Metals (per Reuters).
Copper's six-session win streak in the US ended as the London Metal Exchange benchmark also retreated during a soft night for base metals amid fears more metals will get caught up in Trump's trade war. US copper futures declined 2.34% a day after reaching a record premium over LME futures. In London, benchmark copper declined 0.96% to US$9,356.50 a metric ton. Nickel, aluminium, zinc and lead also declined on the LME.
