Outlook for the day: Negative after surging treasury yields dragged the Dow and S&P 500 off record levels.
ASX futures: down 71 points or 0.85%
Overnight themes:
Wall Street's benchmarks finished mixed but mostly lower as rising treasury yields pressured rate-sensitive stocks and signalled investors were increasingly resigned to "higher rates for longer" amid a resilient economy.
The S&P 500 slid 0.18% as property companies, healthcare providers and lenders dropped.
The Dow fell 0.8%. Four-fifths of its component companies declined. Exceptions included Apple, Microsoft and Boeing.
The Nasdaq Composite put on 0.27% as the tech sector resisted the sell-off. Nvidia jumped 4.14% to a new record. Most of the Magnificent 7 group of market-leaders also rose.
The Dow and S&P 500 fell away as the yield on 10-year US treasuries climbed to a 12-week high. The S&P real estate sector slumped 2.08%, health 1.19% and financials 0.88%.
“Bond yields continue to back up, which implies to me that investors are now thinking that the Fed will be slower to lower interest rates because the economy remains resilient. As a result, the Fed will likely have a harder time pushing the inflation rate down to its target 2% level in the next year or so” - CFRA chief investment strategist Sam Stovall (per CNBC).
The major indices were coming off six straight weeks of gains and face several hurdles in the next few weeks, including Q3 trading updates and a tight presidential election.
"It's not at all unusual for the market to want to take a little bit of a breather after six weeks of continually record highs" - Carol Schleif, chief investment officer at BMO Family Office (per Reuters).
Gold hit new heights before fading late in the session as US treasury yields and the greenback rose. Gold futures settled 0.3% ahead at US$2,738.90 an ounce. However, spot prices have turned negative in recent action after touching an all-time high at US$2,740.37 an ounce.
"The 10-year yields are moving a lot higher, the dollar index got stronger. And that's putting some weight on gold" - Daniel Pavilonis, senior market strategist at RJO Futures (per Reuters).
Oil clawed back some of last week's 7.6% loss after China cut lending rates to spur economic activity. The People's Bank yesterday cut the one-year loan prime rate by a quarter-point to 3.1%, and the five-year prime by a quarter-point to 3.63%. Brent crude bounced 1.7% to US$74.29 a barrel.
Iron ore advanced yesterday, but base metals dropped overnight amid questions over how effective loan rate cuts will be in reviving Chinese demand. Benchmark ore firmed 1.45% in China and 0.41% in Singapore. On the London Metal Exchange, copper gave up initial gains, declining 0.6%. Nickel slumped more than 2%.
Key events today:
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S&P 500: down 11 points or 0.18%
Dow: down 344 points or 0.8%
Nasdaq: up 50 points or 0.27%
Dollar: down 0.82% to 66.59 US cents
Iron ore (Dalian): up 1.45% to US$108.18
Brent crude: up US$1.23 or 1.7% to US$74.29
Gold (futures): up US$8.90 or 0.3% to US$2,738.90
Gold (spot): down US$1.26 or 0.05% to US$2,720
Silver (spot): up 10 US cents or 0.28% to US$33.80
NYSE Arca Gold Bugs: up 0.59%
Bitcoin: down 1.34% to US$67,602
Copper (LME): down 0.66% to US$9,562
Nickel (LME): down 2.15% to US$16,635
Lithium carbonate (China): down 0.2% to 73,500 yuan
Global X Lithium & Battery Tech ETF: down 1.12%
Uranium (spot): steady at US$83.25
Global X Uranium ETF(URA): down 0.63%
BHP: down 1.4% (US); down 0.91% (UK)
