Outlook for the day: Mildly negative after US stocks rebounded overnight but finished below session highs, and after the Reserve Bank yesterday pushed back against interest rate cuts this year.
ASX futures: down 19 points or 0.25%
Overnight themes:
US stocks rebounded overnight as buyers waded back in after three days of heavy selling drove the Nasdaq into a correction and other major stock benchmarks sharply lower. Stocks recovered as central bankers rejected speculation the US economy was headed for recession.
The S&P 500 climbed 1.04%, with all 11 sectors logging gains. The Dow put on 0.76%. The Nasdaq added 1.03%. A final-hour fade took some of the shine of the rally.
Stocks rose after a sharp rebound in Japanese shares and after Federal Reserve policy-makers poured water on recession fears.
Japan's Nikkei 225 index bounced 10.23% yesterday, reversing much of Monday's harrowing 12.4% plunge. Monday's fall was the index's worst since 1987 and came as a rate hike last week prompted the unravelling of the yen carry trade.
San Francisco Fed President Mary Daly said the latest jobs report showed the economy was slowing, but "not falling off a cliff". She said the Fed was "open to adjusting the policy rate in coming meetings". Chicago Fed President Austan Goolsbee said the Fed would react to any deceleration of growth. "If the conditions collectively start coming in on the through line that there's deterioration on any of those parts, we're going to fix it," he said.
The odds on a 50 basis point rate cut next month rose to 75%, according to CME's FedWatch tool.
Megacaps Nivida and Meta Platforms fuelled the rebound, both gaining almost 4%.
"The market had just gotten top heavy, but it did reprice a decent amount, particularly the Nasdaq, and people are coming back to the idea that with lower rates it should provide a support for stocks" - Rick Meckler, partner at Cherry Lane Investments (per Reuters).
Sector gains ranged from 0.4% for energy up to 2.3% for real estate. Notable gains included financials +1.46%, industrials +1.22% and tech +1.11%.
RBA Governor Michele Bullock used a press conference late yesterday afternoon to push back against market expectations that interest rates will drop this year. "The board's feeling is that the market path at the moment is pricing in interest rate reductions by the end of this year," Bullock said. "I think the board's feeling is that the near term by the end of the year, in the next six months, that doesn't align given what the board knows at the moment. And given what the forecasts are, that doesn't align with their thinking about interest rate reductions at the moment." The RBA Governor's comments came too late in the day to affect yesterday's Australian trade, but may have an impact on the outlook for this session.
Commodity prices were mixed but mostly steadier overnight. The Bloomberg Commodity Index firmed 0.37% as recoveries in US and Japanese stocks helped settle market jitters. Brent crude edged up 0.24% off Monday's near seven-month low.
Copper rebounded from a four-and-a-half month low in European trade despite a 3% slide in China-traded copper. Benchmark copper futures gained 0.39% on the London Metal Exchange. Nickel, tin, aluminium and lead also rose.
US precious metal miners clawed back some of Monday's losses despite a dip in the gold price. The NYSE Arca Gold Bugs index improved 1.54%. Gold for December delivery declined 0.52%.
Iron ore pulled back from a two-week high in China after signs of loss-making steel-makers cut production. Steel output declined 1.2% week-on-week as profitability contracted, according to Mysteel. Benchmark ore in China dropped 1.42%.
Key events today:
RBA Assistant Governor Sarah Hunter testifies on the cost of living before a Senate committee - 9 am AEST
S&P 500: up 54 points or 1.04%
Dow: up 294 points or 0.76%
Nasdaq: up 167 points or 1.03%
Dollar: up 0.07% to 65.2 US cents
Iron ore (Dalian): down 1.42% to US$106.61
Brent crude: up 18 US cents or 0.24% to US$76.48
Gold: down US$12.80 or 0.52% to US$2,431.60
Silver: up 1 US cent or 0.04% to US$27.22
NYSE Arca Gold Bugs: up 1.54%
Bitcoin: up 3.25% to US$56,422
Copper (LME): up 0.39% to US$8,923
Nickel (LME): up 1.48% to US$16,445
Lithium carbonate (China futures): up 0.71% to US$11,270
Global X Lithium & Battery Tech ETF: down 0.91%
Uranium (spot): steady at US$82.50
BHP: up 0.9% (US); up 0.97% (UK)
