Outlook for the day: Negative after US stocks finish mixed and surging energy prices exacerbate inflation worries.
ASX futures: down 30 points or 0.42%
Friday/weekend themes:
Geopolitical fears triggered a "flight to safety" amid a revival in inflation fears as energy prices soared ahead of a possible Israeli ground assault on Gaza.
Wall Street's main indices finished mixed as investors bought potential winners from an expanded Middle East conflict and sold potential losers.
Oil surged 5.7% as Israel moved closer to a ground offensive in Gaza. Prices soared amid concerns that a ground assault risks inflaming the conflict in a way that could disrupt crude supplies. Iran's Foreign Minister indicated Hezbollah could open another front if Israeli attacks on Gaza continue.
Gold prices bolted almost US$60 an ounce to their biggest gain this year. The NYSE Arca Gold Bugs index of US gold miners jumped 4.58%.
Treasury yields declined as investors bought another traditional haven. (Yields move inversely to price.) The 10-year yield shed around eight basis points.
“It’s a war trade. Investors are selling tech, buying energy, buying bonds and buying gold" - Jay Hatfield, chief executive officer and portfolio manager at Infrastructure Capital Advisors.
Also weighing on sentiment was evidence that consumers were more concerned about inflation as energy prices rebounded. Inflation expectations jumped to 3.8% this month from 3.2% in September, according to a University of Michigan survey.
Events in the Middle East overshadowed a broadly positive start to the Q3 earnings season. JPMorgan Chase, Wells Fargo and UnitedHealth all rallied after reporting. Citigroup declined.
A sharply divided market saw gains for energy and defensive sectors, and declines for growth sectors and industrials. Energy popped 2.25%, utilities 1.09% and consumer staples 0.84%. Tech sank 1.52%.
The Australian dollar was smashed below 63 US cents on Friday, but recovered strongly this morning. The Aussie was lately up 1.2% and trading above 63 US cents.
Key events this week:
Minutes of this month's RBA meeting - tomorrow
US retail sales - tomorrow
"Fireside chat" with new RBA Governor Michele Bullock - Wednesday
China economic data (industrial production, retail sales, etc) - Wednesday
September employment data - Thursday
Quarterly business confidence - Thursday
Speech by Fed Chair Powell - Thursday
Also: various Federal Reserve officials speak across the week
S&P 500: down 22 points or 0.5%
Dow: up 39 points or 0.12%
Nasdaq: down 167 points or 1.23%
Dollar: up 1.17% to 63.03 US cents
Iron ore (Dalian): up 1.45% to US$117.30
Brent crude: up US$4.89 or 5.7% to US$90.89
Gold: up US$58.50 or 3.1% to US$1,941.50
NYSE Arca Gold Bugs: up 4.58%
Copper (LME): down 0.53% to US$7,949
Nickel (LME): down 0.97% to US$18,546
Lithium carbonate (China spot): up 0.59% to US$23,755
