Outlook for the day: Highly positive. The Australian market looks primed for fresh highs following the Dow's best night in a year and a fresh high for gold.
ASX futures: up 55 points or 0.69%
Overnight themes:
US stocks extended their push into record territory as Q2 earnings rolled in and solid June retail sales reassured investors about the resilience of the economy.
The Dow soared 1.85% to an all-time high during its strongest session since last June. UnitedHealth flew up 6.5% after its trading upbeat beat analyst expectations. Economic bellwether stocks Boeing and Caterpillar were also notably strong.
The S&P 500 firmed 0.64% as the healthcare sector hit a record.
The Nasdaq trailled with a rise of 0.2% as a shift from megacap tech leaders into other corners of the market continued. Drags included Nvidia and Microsoft.
A rotation into small caps accelerated, lifting the Russell 2000 index 3.5% to a fifth day of gains. The small-cap benchmark has gained more than 1% each session during its longest winning run since 2000. The index has gained more than 11% in a week.
“There’s a lot of momentum behind this rotation trade from from big-cap tech into small caps and into the average stock. It’s a rotation, but it’s much more about the upside in the more cyclical sectors in the market than a referendum on AI’s long-term potential” - Ross Mayfield, investment strategist at Baird (per CNBC).
The Dow Jones Transportation Average, a bellwether for the health of the US economy, jumped 3.28% after retail sales held steady in June, soothing fears of a hard landing for the economy as higher interest rates bite. Economists had anticipated a contraction in spending.
"As you look at the economic data, it's slowing down but not at a concerning pace. The Fed is seeing what it wants to see - it's that sweet spot of the economy slowing down but not too much and not too fast" - Tom Hainlin, national investment strategist at U.S. Bank Wealth Management (per Reuters).
The first full week of earnings season continued with well-received trading updates from Bank of America +5.35% and Morgan Stanley +0.91%.
Industrials and materials were the best of the S&P sectors, adding 2.54% and 1.96%, respectively. The tech sector eased 0.38%.
Gold miners surged as the yellow metal reset its all-time and closing highs for the first time since May. Gold for August delivery rallied US$38.90 or 1.6% to settle at US$2,467.80 an ounce. Prices hit US$2,470.20 during the night, eclipsing the former intraday peak of US$2,454.20. The NYSE Arca Gold Bugs index climbed 3.43%. ASX- and NYSE-listed Newmont advanced 2.05% in US trade to its highest in 14 months.
Oil declined for a third session to its weakest in more than a month as soft Chinese growth figures earlier this week continued to depress buying interest. Brent crude dropped US$1.12 or 1.3% to US$83.73 a barrel. GDP data released on Monday showed the Chinese economy expanded at a slower rate last quarter.
Iron ore eased amid doubts over whether this week's Third Plenum in China will deliver hoped-for stimulus measures for new construction. ING analysts warned Beijing should focus on clearing existing housing inventory, rather than new work. Benchmark ore eased 0.24% in China and 0.5% in Singapore.
Key events today:
US building permits, housing starts - tonight
US Federal Reserve "Beige Book" - tonight
S&P 500: up 36 points or 0.64%
Dow: up 743 points or 1.85%
Nasdaq: up 37 points or 0.2%
Dollar: down 0.42% to 67.34 US cents
Iron ore (Dalian): down 0.24% to US$114.25
Brent crude: down US$1.12 or 1.3% to US$83.73
Gold: up US$38.90 or 1.6% to US$2,467.80
Silver: up 52 US cents or 1.68% to US$31.46
NYSE Arca Gold Bugs: up 3.43%
Bitcoin: up 1.8% to US$64,734
Copper (LME): down 1.41% to US$9,668
Nickel (LME): down 0.06% to US$16,740
Lithium carbonate (China spot): steady at US$12,281
Global X Lithium & Battery Tech ETF: up 1.97%
Uranium (spot): down 0.35% to US$86
BHP: down 1.9% (US); down 2.62% (UK)
