Morning traders. Thanks loungers, especially @Ravgnome and @Patterns.
Outlook for the day: Positive after the Dow hit a new high as part of a rotation into value stocks.
ASX futures: up 15 points or 0.17%
Overnight themes:
US stocks closed mixed but broadly higher as optimism over interest rate cuts and an end to a record government shutdown helped offset on-going jitters about expensively-priced AI stocks.
The Dow Jones Industrial Average surged 559 points or 1.18% to a record close as investors rotated out of tech into less expensive corners of the market. The broader S&P 500 overcame early weakness to edge up 0.21% as tech losses limited gains. The tech-heavy Nasdaq Composite shed 0.25%.
Blue-chips Merck, Nike and McDonald's helped steer the Dow into new territory as investors favoured value stocks over growth counterparts. Healthcare was the best of the S&P sectors, gaining 2.33% as Amgen, Johnson & Johnson and Procter & Gamble all added at least 2%.
AI stocks - this year's big winners - came back under pressure following a disappointing forecast from CoreWeave. Shares in the AI cloud infrastructure provider dived 16.31%. Nvidia eased 2.96% after Japanese tech investor SoftBank announced it had sold its entire stake in the chipmaker. AMD declined 2.65%, Broadcom 1.79% and Palantir 1.37%.
“These tech companies, they’re cash flow machines,” Bill Fitzpatrick, portfolio manager at Logan Capital Management, told CNBC. “They’re terrific companies, but the starting point does matter, and given where they’re valued today, it doesn’t take much – a little bit of negative news – for the sentiment to turn just a little bit and you get an unwind that is more favorable to value equities.”
Expectations for more rate cuts were bolstered by a report from ADP showing private payrolls contracted in the second half of last month, undoing gains through the first half. Companies cut an average 11,250 jobs as the labour market soured. The update was significantly gloomier than an initial report from the payrolls company last week showing payroll gains of 42,000 through the first half of the month.
Politicians battled airline cancellations to get back to Washington DC for a vote tonight in the House of Representatives to end a 53-day federal government shutdown. The Republican-controlled House is expected to pass a Senate-approved package to temporarily fund government operations. "Expectations are that the shutdown is over... People will get back to work, economic data will be released once again and uncertainty will be behind us," CFRA Chief Investment Strategist Sam Stovall, told Reuters.
Tech was the only sector to decline, losing 0.72%. Besides healthcare, other beneficiaries of the rotation towards value included consumer staples +1.2% and real estate +1.08%. Materials firmed 1.07%. Financials added 0.42%.
A falling US dollar helped gold build on the previous session's near three-week high. The US dollar index eased almost 0.2% after dour private-sector jobs data bolstered the case for another rate cut next month. Spot gold was lately up US$8.58 or 0.21% to US$4,124.61 an ounce after overcoming mild profit taking earlier in the session. US gold futures settled US$5.70 or 0.1% lower at US$4,116.30. Silver, platinum and palladium also rose.
Copper firmed as the US dollar retreated and China signalled more support for its economy. The People's Bank of China yesterday said monetary policy would be "appropriately loose" following an announcement on Monday of new government measures to support private capital investment in infrastructure. "Chinese policymakers certainly have moved away from the stance a few years ago where they were quite restrictive on the economy and they've moved to a much more supportive state," WisdomTree commodities strategist Nitesh Shah told Reuters. Benchmark copper futures on the London Metal Exchange rallied 0.41% to US$10,840 a metric ton during a mixed session for base metals. Aluminium, lead and tin also rose. Nickel and zinc declined.
Iron ore largely edged higher as signs of a more supportive Chinese economic stance helped offset worries about a contraction in steel production this year. Crude steel output in China shrank 2.9% through the first nine months of this year, versus the same period last year. A steel production update including last month is due on Friday. Market bulls hope Beijing will unveil new stimulus measures for the economy when the Politburo meets next month. Benchmark ore futures on the Dalian Commodity Exchange edged up 0.2% to US$107.17 a metric ton in daytime trade.
Oil rallied for a third session as the looming end of a record US federal government shutdown encouraged bulls. Brent crude settled US$1.10 or 1.72% ahead at US$65.16 a barrel.
Key events today:
S&P 500: up 14 points or 0.21%
Dow: up 559 points or 1.18%
Nasdaq: down 59 points or 0.25%
VIX: down 1.82% to 17.28
US 10-year treasury yield: up 1.7 points to 4.121%
Dollar: down 0.05% to 65.31 US cents
Iron ore (Dalian): up 0.2% to US$107.17
Brent crude: up US$1.10 or 1.72% to US$65.16
Gold (futures): down US$5.70 or 0.1% to US$4,116.30
Gold (spot): up US$8.58 or 0.21% to US$4,124.61
NYSE Arca Gold Bugs: up 1.29%
Silver (spot): up 54 US cents or 1.06% to US$51.06
Palladium (spot): up US$39.50 or 2.76% to US$1,471
Antimony (China ore): down 0.01% to US$15,435
Bitcoin: down 2.43% to US$103,325
Copper (LME): up 0.41% to US$10,840
Nickel (LME): down 0.5% to US$15,025
Lithium carbonate (China spot battery grade): up 1.91% to US$10,203
Global X Lithium & Battery Tech ETF: down 1.01%
Uranium (spot): down 0.48% to US$78
Global X Uranium ETF (URA): down 2.97%
BHP: down 0.17% (US); up 0.71% (UK)
Rio Tinto: up 0.06% (US); up 0.43% (UK)
