Morning traders. Thanks loungers, especially @Ravgnome and @Patterns.
Outlook for the day: Australian stocks face a second day of mild selling pressure following a jump in the dollar and after index heavyweights BHP and Rio Tinto sat out a US rally.
ASX futures: down 31 points or 0.35%
Overnight themes:
US stocks rose as rate-cut hopes and a rally in AI-related stocks helped investors move on from Friday's grim employment report.
The S&P 500 bounced 0.21%, reversing more than half of Friday's 0.32% decline. The Nasdaq Composite rallied 0.45% to a new record close. The Dow Jones Industrial Average gained 114 points or 0.25%.
AI chip stocks led the advance following an upbeat trading update from Broadcom last Thursday. Shares in the chipmaker put on 3.21% en route to a new high. Rival Nvidia gained 0.77% as the tech sector firmed 0.67%. “There just continues to be great momentum for AI spend, AI infrastructure buildout, and not just concentrated in the... [Magnificent Seven],” Ross Mayfield, investment strategist at Baird Private Wealth Management, told CNBC. “The average tech stock is doing really well... There’s kind of a broad-based strength.”
Friday's anemic August jobs report rekindled fears about a slowing economy, but also opened the door to multiple rate cuts before year-end. A quarter-point cut is fully priced in when the Federal Reserve meets on September 16-17. The odds on a half-point cut have crept up to 10%. Several brokers have revised their rate cut forecasts higher since Friday. "The focus is on next Wednesday's Fed rate cut. The market is greedy. It's already discounted 25 basis points. Now, if people are buying because they expect 50, well, that's not going to happen," Jake Dollarhide, chief executive officer of Longbow Asset Management, told Reuters.
Inflation reports later this week loom as the last obstacle to a rate cut next week. However, most analysts now believe Friday's jobs shock was severe enough to discount any danger that this week's consumer and producer inflation reports could divert the Fed from cutting. "The growth scare from the labor market is going to overwhelm even hot inflation because the Fed right now is viewing any tariff-induced inflation as a one-time price increase," Jeff Schulze, head of economic and market strategy at Clearbridge Investments, told Reuters. The August Producer Price Index drops on Wednesday, followed by the Consumer Price Index on Thursday.
Tech was the pick of the sectors, followed by consumer discretionary +0.53% and materials +0.23%. Financials edged up 0.02%. Drags included utilities-1.07% and real estate -0.68%.
Gold's run of records continued into the new week as expectations for multiple US rate cuts drove the greenback to a seven-week low. Spot gold surged through US$3,600 an ounce for the first time, lately trading US$41.32 or 1.15% ahead at US$3,633.82. US gold futures settled at a record US$3,677.40 for a gain of US$24.10 or 0.7%. The US dollar index declined 0.32% after weak US job figures on Friday opened the door to several more rate cuts this year. "If weakness in U.S. data continues, then so too should the ongoing bullish momentum in gold, as both the U.S. dollar and yields fall further," Fawad Razaqzada, market analyst at City Index and FOREX.com, told Reuters.
BHP and Rio Tinto eased in US trade despite a fifth straight rise in iron ore yesterday. Benchmark ore futures on China's Dalian Commodity Exchange ended daytime trade 0.64% higher at US$111.05 a metric ton following news of a sharp drop in Brazilian shipments last week, due to port maintenance. Singapore ore futures climbed 0.53% to their highest since July 24. BHP dipped 0.35% in US trade. Rio dropped 0.39%.
Oil rebounded from a three-session losing streak after the OPEC+ cartel agreed to increase production by less than feared. The group of major producers will boost output by 137,000 barrels per day from next month - a significantly smaller increase than previous production hikes of up to 555,000 bpd in recent months. Brent crude settled 52 US cents or 0.79% higher at US$66.02 a barrel.
Copper inched higher in London as US dollar weakness lowered prices for buyers using other currencies. Benchmark LME copper firmed 0.09% to US$9,906.50 a metric ton. Aluminium, zinc and lead also rose.
Key events today:
S&P 500: up 14 points or 0.21%
Dow: up 114 points or 0.25%
Nasdaq: up 98 points or 0.45%
VIX: down 0.46% to 15.11
US 10-year treasury yield: down 3.2 points to 4.045%
Dollar: up 0.53% to 65.89 US cents
Iron ore (Dalian): up 0.64% to US$111.05
Brent crude: up 52 US cents or 0.79% to US$66.02
Gold (futures): up US$24.10 or 0.7% to US$3,677.40
Gold (spot): up US$41.32 or 1.15% to US$3,633.82
Silver (spot): up 37 US cents or 0.9% to US$41.33
Palladium (spot): up US$31 or 2.8% to US$1,137.50
Antimony (China ore): down 2.09% to US$19,127
NYSE Arca Gold Bugs: up 1.15%
Bitcoin: up 0.73% to US$112,096
Copper (LME): up 0.09% to US$9,906.50
Nickel (LME): down 0.65% to US$15,180
Lithium carbonate (China spot battery grade): down 0.08% to US$9,235
Global X Lithium & Battery Tech ETF: up 1.96%
Uranium (spot): up 0.79% to US$76.75
Global X Uranium ETF (URA): up 1.96%
BHP: down 0.35% (US); down 0.08% (UK)
Rio Tinto: down 0.39% (US); up 0.33% (UK)
