Shares were set to open tentatively higher following a tech and mining-led rally in the US as an annual gathering of central bankers got underway.
ASX futures edged up nine points or 0.13 percent. The S&P/ASX 200 is on a two-session winning streak after rising 0.71 per cent yesterday.
Fresh Chinese stimulus measures boosted industrial metals. The dollar rallied more than 1 percent. Gold rose for a third session. Oil pared two days of gains.
Wall Street
US stocks rose for a second night as investors waited to hear Federal Reserve Chair Jerome Powell address the Jackson Hole symposium. The Fed chief is due to speak tonight.
The S&P 500 rallied 58 points or 1.41 percent. The Dow Jones Industrial Average gained 323 points or 0.98 percent. The Nasdaq Composite put on 208 points or 1.67 percent.
Chip-makers led as traders interpreted sector leader Nvidia’s soft quarterly update as marking a possible bottom in a recent sales dip. Shares in the company bounced 4.01 percent. The Philadelphia Semiconductor Index climbed 3.66 percent.
Tech giants Apple, Amazon and Alphabet also rose as treasury yields backed off a two-month high.
“Lower interest rates have certainly put some support underneath some of the more growth-oriented sectors,” Bill Northey, senior investment director at US Bank Wealth Management, told Reuters.
The basic materials sector was lifted by Chinese stimulus measures announced yesterday and by news the US economy did not contract by as much last quarter as first thought. Annualized second-quarter gross domestic product was revised upwards to a decline of 0.6 per cent from an initial reading of -0.9 per cent.
Stocks fell sharply through the first half of the week before recovering some of their gains in recent sessions. US investors are on edge about the likely pace and size of future increases in the current rates cycle.
“The market is trying to decide if we are mid cycle or late cycle and sending a couple different signals,” Liz Young, head of investment strategy at SoFi, told CNBC. “We’re waiting to get news of what happens [tonight] in Jerome Powell’s speech and kind of stuck without a whole ton of direction.”
Inflation data tonight will also have an impact on the rates outlook. A strong reading would maintain pressure on the Fed to keep hiking rates.
Australian outlook
A V-shaped week looks set to end with a third day of repair-work following heavy falls through Monday and Tuesday. The market has recovered some of its losses since Tuesday’s three-week low, but the S&P/ASX 200 would need to gain an improbable 67 points today to extend its longest run of weekly advances since June 2021.
Investors may be wary of committing until the market hears from Fed Chair Powell tonight. A nervy Wall Street could run hard in either direction, depending on how hawkish the Fed chief sounds.
All 11 US sectors rallied overnight for a second day. Materials topped the list with a rise of 2.26 percent. Two sectors dominated by Big Tech – communication services and IT – were next with gains of 2.06 and 1.68 per cent, respectively.
Also seeing solid gains were real estate +1.56 per cent, industrials +1.53 per cent and financials +1.52 per cent.
The domestic reporting season peaked yesterday and winds down from here into month-end. Companies reporting today include Wesfarmers, Ramsay Health Care, Mayne Pharma, Costa Group, Polynovo, Coventry Group, BWX, Monash IVF, Dusk, Integral Diagnostics, Jumbo Interactive, NextDC, Resolute Mining, Village Roadshow and Australian Finance Group (sources: CommSec, Australian Financial Review).
The dollars surged 1.05 per cent overnight to 69.78 US cents.
Commodities
Industrial metals rose after China announced 19 new policies to support the economy. The list included fresh funding for infrastructure.
“Some people have been worrying about the lack of infrastructure growth in addition to property market weakness, so that certainly provides some necessary help,” Xiao Fu, head of commodity market strategy at Bank of China International, told Reuters.
“In terms of scale it’s not comparable to what we saw in 2009, it’s more targeted, but nevertheless it’s still helpful. At the moment they don’t want to have a big bazooka.”
Benchmark copper on the London Metal Exchange rallied 1.3 percent to US$8,167 a tonne. Aluminum gained 0.2 per cent, nickel 1.5 per cent, lead 0.3 per cent, zinc 1 per cent and tin 0.2 per cent.
BHP‘s US-traded depositary receipts rallied 3.06 per cent. The miner’s UK listing gained 1.83 per cent. Rio Tinto put on 1.78 per cent in the US and 0.4 per cent in the UK.
Iron ore initially moved higher, but failed to hold its gains. The most-traded ore contract on the Dalian Commodity Exchange faded 0.2 percent to 705.5 yuan. The spot price for ore landed in China dipped 19 US cents or 0.2 per cent to US$104.96 a tonne.
A rebound in gold extended into a third session. Metal for December delivery settled US$9.90 or 0.6 per cent higher at US$1,771.40 an ounce as the US dollar and treasury yields retreated. The NYSE Arca Gold Bugs Index improved 0.43 percent.
Oil trimmed two days of gains following reports Iran had dropped some of its demands as the European Union negotiates a nuclear deal that would allow sanctioned crude back onto the market. Brent crude settled US$1.88 or 1.9 percent lower at US$99.34 a barrel.