Outlook for the day: Positive after interest rate cut hopes helped lift most US stocks.
ASX futures: up 80 points or 0.96%
Overnight themes:
US stocks finished mixed but mostly higher after benign inflation data and weak retail sales growth sharpened hopes for more rate cuts this year.
The S&P 500 climbed 0.41% to its sixth gain in seven sessions. The Dow rallied 272 points or 0.65%, its first gain in three nights as an upbeat outlook from Cisco helped offset a five-year low in UnitedHealth. The Nasdaq eased 0.18% as this week's rally in the Magnificent Seven lost heat amid speculation stocks have run too far, too fast since the April lows.
Wholesale prices defied downbeat expectations for an increase last month, posting their biggest fall in 16 years. The producer price index declined 0.5%, versus expectations for a rise of 0.3%. Core PPI also dropped sharply, down 0.4%, versus a forecast 0.3% increase. The report confounded expectations that the White House's tariff hikes would rekindle inflation.
"We're still waiting for that inflation pop. It's not here yet, but we're still waiting" - John Augustine, chief investment officer of Huntington National Bank (per Reuters).
Adding to hopes for rate relief: retail sales increased by an anaemic 0.1% last month following a 1.7% surge in March as shoppers rushed to beat tariff hikes. The US dollar index declined 0.23% as traders priced in the possibility of more rate cuts this year.
Treasury yields backed off four-week highs, providing a tailwind to rate-sensitive sectors. Utilities led the sector gains with a rise of 2.12%. Next best were consumer staples +2% and real estate +1.84%.
The three sectors dominated by the Magnificent Seven were the only drags, losing between 0.03% and 0.68% near the end of a week that has seen the Nasdaq surge more than 6%.
"People think there are going to be [trade] deals, so they are just getting ahead of that, and they don't want to be short stocks. 'Deal anticipation' is what I'd call it" - Dennis Dick, trader at Triple D Trading (per Reuters).
Oil retreated after US President Donald Trump said the US and Iran were close to a nuclear deal that could clear the way for lifting sanctions on Iranian crude, adding to oversupply worries. Brent crude settled US$1.56 or 2.36% lower at US$64.53 a barrel. The US crude benchmark declined 1.53% to US$61.61.
Iron ore built on Wednesday's five-week high despite soft lending data highlighting the impact of trade uncertainty on the Chinese economy. New bank loans slumped more last month than economists forecast as borrowers baulked after the US imposed a 145% tariff on Chinese imports. Ore futures on the Dalian Commodity Exchange lifted 1.17% to US$102.13 a metric ton. The Singapore ore benchmark eased 0.3% to US$101.50.
Gold rebounded as mild US wholesale inflation and soft retail sales data pressured the US dollar and as Russian President Vladimir Putin's failure to attend peace talks dampened hopes for an end to hostilities with Ukraine. Gold futures settled US$38.30 or 1.2% higher at US$3,226.60 an ounce. The spot price continued that momentum, lately trading US$53.54 or 1.68% ahead at US$3,239.46.
"Putin not attending the peace talks in Turkey dims expectations of progress towards a peace deal, which I think is helping to underpin gold prices today" - Peter Grant, vice president and senior metals strategist at Zaner Metals (per Reuters).
Key events today:
US preliminary consumer sentiment - tonight
US preliminary inflation expectations - tonight
S&P 500: up 24 points or 0.41%
Dow: up 272 points or 0.65%
Nasdaq: down 34 points or 0.18%
VIX: down 4.24% to 17.83
US 10-year treasury yield: down 10 points to 4.436%
Dollar: down 0.31% to 64.07 US cents
Iron ore (Dalian): up 1.17% to US$102.13
Brent crude: down US$1.56 or 2.36% to US$64.53
Gold (futures): up US$38.30 or 1.2% to US$3,226.60
Gold (spot): up US$53.54 or 1.68% to US$3,239.46
Silver (spot): up 41 US cents or 1.29% to US$4.64
Palladium (spot): up US$11.50 or 1.21% to US$959.50
Antimony (China ore): down 1.24% to US$25,770
NYSE Arca Gold Bugs: up 2.24%
Bitcoin: down 0.27% to US$103,238
Copper (LME): down 0.07% to US$9,600
Nickel (LME): up 0.03% to US$15,805
Lithium carbonate (China spot battery grade): up 0.09% to 7,933 yuan
