Outlook for the day: Positive. The ASX 200 looks set to test new heights following record closes for the S&P 500 and Nasdaq and a two-month high in iron ore.
ASX futures: up 32 points or 0.37%
Overnight themes:
US stocks closed at records after robust economic data and corporate earnings steadied doubts about the health of the economy and the American consumer.
The S&P 500 rallied 0.54% to its ninth record close of the year. The Nasdaq Composite also broke new ground, rising 0.74% to its tenth record close. The Dow put on 230 points or 0.52%.
Retail sales expanded three times as much as economists forecast last month, increasing by 0.6%, according to the US Census Bureau. Initial claims for unemployment benefits shrank by 7,000 last week to 221,000, also beating expectations.
"A reassuring retail sales result comes at the perfect time as earnings season kicks into gear,” Bret Kenwell, eToro U.S. investment analyst, told CNBC. “If earnings are more upbeat than expected and if management continues to tell a reassuring story about consumer spending, stocks could react favorably — even after a rally to record highs that some investors may view as overextended. At the end of the day, consumers are the backbone of the U.S. economy.”
The night's quarterly earnings reports supported the optimistic mood. Stand-outs included PepsiCo +7.45%, United Airlines +3.11% and the US listing of AI chip-maker TSMC +4.03%. Of the 50 S&P 500 companies that have reported so far this season, around 88% have beaten analyst expectations, according to Factset data. Anthony Saglimbene, chief market strategist at Ameriprise Financial, said economic and corporate earnings reports "are showing that the economic backdrop is still pretty solid, and so markets have been able to grind higher this week with some data to support where we are going."
Finance and tech set the pace. The S&P financial sector gained 0.92%. Tech added 0.89%. The only sectors to miss the rally were health -1.18% and real estate -0.16%.
Iron ore hit a two-month high amid reports of a rebound in steel production and as Rio Tinto reported lower shipments to China than analysts expected due to cyclone disruptions. Broker Galaxy Futures said demand had picked up in China as the major steel producing regions of Shanxi and Tangshan start to implement restrictions on production. Rio's first-half ore shipments, reported yesterday, were the lowest for that half since 2014. Benchmark ore on the Dalian Commodity Exchange climbed 1.81% to US$109. 39 per metric ton.
An index of US battery metal miners jumped more than 4% overnight to a four-month high after the US announced a 93.5% tariff on graphite, which is widely used to manufacture batteries. The US Commerce Department said the measure was necessary to prevent "dumping" of subsidised Chinese graphite. The Global X Lithium & Battery Tech ETF rallied 4.25%. Tesla and other battery suppliers have argued against the measure. Tesla shares slid 0.7%.
Better-than-expected US economic data boosted the greenback and treasury yields, which in turn pressured gold. Spot gold was lately down US$43.40 or 1.3% to US$3,303.71 an ounce. Earlier, US gold futures settled US$13.80 or 0.4% lower at US$3,345.30.
Key events today:
US preliminary consumer sentiment - tonight
US earnings season (AmEx, 3M) - tonight
S&P 500: up 34 points or 0.54%
Dow: up 230 points or 0.52%
Nasdaq: up 154 points or 0.74%
VIX: down 3.73% to 16.52
US 10-year treasury yield: steady at 4.457%
Dollar: down 0.61% to 64.82 US cents
Iron ore (Dalian): up 1.81% to US$109.39
Brent crude: up US$1 or 1.46% to US$69.52
Gold (futures): down US$13.80 or 0.4% to US$3,345.30
Gold (spot): down US$43.40 or 1.3% to US$3,303.71
Silver (spot): up 23 US cents or 0.61% to US$38.14
Palladium (spot): up US$28 or 2.17% to US$1,316
Antimony (China ore): down 0.01% to US$19,793
NYSE Arca Gold Bugs: down 0.77%
Bitcoin: down 0.13% to US$119,847
Copper (LME): up 1.41% to US$9,678
Nickel (LME): up 0.47% to US$15,046
Lithium carbonate (China spot battery grade): down 0.01% to 7,985 yuan
Global X Lithium & Battery Tech ETF: up 4.25%
Uranium (spot): down 1.59% to US$70.75
Global X Uranium ETF(URA): up 1.08%
BHP: up 1.02% (US); up 1.43% (UK)
