Outlook for the day: Positive after Wall Street rebounded from its worst week since March 2023.
ASX futures: up 78 points or 0.98%
Overnight themes:
US stocks rebounded as bargain-hunters took advantage of last week's 4.3% slide in the S&P 500 to a three-week low.
The broadest of the three major US stock benchmarks rallied 1.16% to its first gain in five sessions, ahead of inflation data that could determined the size of next week's expected interest rate cut. The Nasdaq also gained 1.16%. The Dow bounced 1.2%.
The US market was coming off its worst week of the year after soft manufacturing and employment data rekindled worries that the Federal Reserve have left it too late to start lowering rates, condemning the economy to a sharp slowdown. The major benchmarks suffered their heaviest weekly losses since March 2023 (Dow, S&P 500) and January 2022 (Nasdaq).
Stocks rebounded as investors looked ahead to the expected start of a rate-cutting cycle next week, and the flow-on effect for consumer demand and stocks.
"Investors had a little time over the weekend to think about things. Clearly there was an overreaction to economic data last week. It raised overblown fears of a potential recession. A pause gives you the opportunity to be more rational" - Kristina Hooper, chief global market strategist at Invesco (per Reuters).
The rally was broad enough to boost all sectors. Gains ranged from 0.04% for communication services up to 1.63% for consumer discretionary. The two sectors that matter most on the ASX - financials and materials - gained 1.4% and 0.99% in the US.
August consumer inflation data is due tomorrow, followed by wholesale inflation on Thursday. White House candidates Donald Trump and Kamala Harris go head to head tonight in the first presidential debate.
Oil climbed off a 33-month low as a tropical storm menaced operations in the Gulf of Mexico. Brent crude lifted 1.1% to US$71.84 a barrel. The global benchmark slumped on Friday to its weakest settlement since December 2021.
“Oil futures rebounded as markets reacted to risks of production disruptions by a potential hurricane system near the U.S. Gulf Coast. The U.S. National Hurricane Center predicted the storm may strengthen into a hurricane, heightening concerns about its impact on oil infrastructure” - Milad Azar, market analyst at XTB MENA (per MarketWatch).
Copper and other base metals rebounded in London, fuelled by China stimulus hopes after soft inflation data underscored weakness in the Chinese economy. Benchmark copper bounced 1.2%. Nickel gained 1.07%.
Iron ore broke a six-session losing streak in China. Benchmark ore firmed 0.44% in daytime trade to US$96.35 a metric ton.
Gold firmed ahead of inflation data tomorrow night that will play a key role in setting the size of this month's expected interest rate cut. Gold futures climbed 0.32% to US$2,532.70 an ounce on Comex. Spot silver rallied almost 1.5%.
"If [US] inflation numbers come much lower than expected and raise hopes for a 50-bp cut, then gold could hit all-time highs. But even if the consensus stays for a 25-bp cut, gold wouldn't see a dramatic loss in prices as the Fed is definitely cutting rates" - Kinesis Money market analyst Carlo Alberto De Casa (per Reuters).
Key events today:
September consumer sentiment - 10.30 am AEST
August business confidence - 11.30 am
S&P 500: up 63 points or 1.16%
Dow: up 484 points or 1.2%
Nasdaq: up 194 points or 1.16%
Dollar: down 0.11% to 66.62 US cents
Iron ore (Dalian): up 0.44% to US$96.35
Brent crude: up 78 US cents or 1.1% to US$71.84
Gold (futures): up US$8.10 or 0.32% to US$2,532.70
Gold (spot): up US$19.23 or 0.77% to US$2,506.23
Silver (spot): up 42 US cents or 1.49% to US$28.35
NYSE Arca Gold Bugs: up 1.14%
Bitcoin: up 6.08% to US$57,885
Copper (LME): up 1.12% to US$9,096.50
Nickel (LME): up 1.07% to US$16,030
Lithium carbonate (China): down 0.48% to 72,250 yuan
Global X Lithium & Battery Tech ETF: up 1.03%
Uranium (spot): down 0.63% to US$80
BHP: up 0.76% (US); up 1.1% (UK)
