The ASX is set to snap its three-day losing streak today, with ASX 200 futures trading 50 points higher, up 0.65% earlier this morning. The green start may not extend past the opening rise as investors factor Friday's release of the US PCE price index for April.
“After upside surprises in AU and German inflation reports earlier this week, the market is taking a more cautious approach to tonight’s EA and US PCE inflation data,” IG Markets analyst Tony Sycamore said.
As for the ASX, Sycamore said: “With just one trading day left before the month's end and after falling in seven of the past eight sessions, all eyes will be on whether the ASX200 can close today at or above 7664.1 to avoid a second consecutive monthly decline. Despite falls on Wall Street ASX200 futures are trading higher this morning, which suggests it’s in with a fighting chance.”
A brighter start for the local market would come after major US benchmarks struggled.
The S&P 500 sank 0.6%, to 5,235.48. The Dow Jones dropped 0.9% and the Nasdaq composite lost 1.1%. While most US stocks rose, it was Microsoft (NASDAQ:MSFT), Nvidia and Alphabet (NASDAQ:GOOGL) that dragged the indices down selling off more than 2%.
Salesforce had its worst day in 20 years after reporting weaker than expected revenue for the latest quarter. Revenue forecasts for the cloud-based software company also fell short of Wall Street’s. Shares tumbled 19.7%.
What happened overnight (source Commsec)
European sharemarkets
Closed higher on Thursday, buoyed by a dip in regional government bond yields. Leading the sectoral gains was real estate, which jumped 1.9%, while telecom stocks added 1.6%. Spain's European Union harmonised inflation rate accelerated more than expected to 3.8% in the 12 months through May, up from 3.4% in April, surpassing the survey estimate of 3.7%.
- The continent-wide FTSEurofirst 300 index rose 0.5%.
- The UK FTSE 100 index gained 0.6%.
Currencies
Were mixed against the US dollar during European and US trading sessions. The Euro rose from US$1.0788 to US$1.0844, stabilising near US$1.0830 by the US close. The Australian dollar increased from US$0.6593 to US$0.6646, and was trading around US$0.6630 at the US close. The Japanese yen strengthened from 157.10 yen per US dollar to JPY156.41, ending near JPY156.85 at the US close.
Commodities
Global oil prices fell on Thursday despite US data revealing the largest drop in the nation's stockpiles in five weeks, as traders awaited Sunday's OPEC+ meeting for further supply guidance. US inventories declined by 4.16 million barrels last week, significantly exceeding the median analyst estimate of 1.15 million barrels.
- Brent crude dropped by US$1.74, or 2.1%, to US$81.86 per barrel.
- The US Nymex crude price decreased by US$1.32, or 1.7%, to US$77.91 per barrel.
Base metal prices declined on Thursday.
- Copper futures fell by 2.6% as funds offloaded bullish positions amid concerns that high interest rates are dampening metals demand.
- Aluminium futures dropped 2.4% after reaching a two-year high.
- Conversely, the gold futures price increased by US$2.40, or 0.1%, to US$2,366.50 an ounce, as the US dollar and US Treasury yields slipped following the release of weak US economic data.
- Spot gold was trading near US$2,342 an ounce at the US close.
- Iron ore futures edged down by 12 US cents, or 0.1%, to US$117.62 a ton, pressured by fears of reduced demand in China as Beijing reiterated its policy to control crude steel output in 2024.
Rio acquisitions
Rio Tinto Ltd (ASX:RIO) (LSE:RIO, ASX:RIO, OTC:RTNTF) is acquiring Sumitomo Chemical Company Limited's stakes in smelters located in New Zealand and Australia, enhancing its aluminium operations.
The company is purchasing Sumitomo's 20.64% stake in New Zealand Aluminium Smelters (NZAS) for an undisclosed sum, securing full control of the Tiwai Point aluminium smelter. Additionally, Rio Tinto is buying Sumitomo's 2.46% interest in Boyne Smelters Limited (BSL), which operates the Boyne Island aluminium smelter in Gladstone, Australia. This acquisition will increase Rio Tinto's stake in BSL to 61.85%.
These transactions are contingent upon regulatory approvals from New Zealand's Overseas Investment Office and Australia's Foreign Investment Review Board, as applicable. Rio Tinto's shares were last trading at A$127.66.
CSL to deliver more avian flu vaccines to the US
CSL Seqirus, a division of ASX-listed healthcare giant CSL Ltd, will deliver an additional 4.8 million doses of pre-pandemic avian influenza vaccines as the US government bolsters its stockpile. This fourth order from the Biomedical Advanced Research and Development Authority (BARDA), part of the Administration for Strategic Preparedness and Response (ASPR) within the US Department of Health and Human Services (HHS), aims to enhance preparedness against potential influenza outbreaks.
The US Centers for Disease Control and Prevention (CDC) maintains a low risk to public health despite recent outbreaks of highly pathogenic avian influenza (HPAI) viruses reported in Africa, Asia, Europe, and North America. By late March 2024, the virus was detected in US livestock, leading to human cases associated with infected dairy cattle in Texas and Michigan.
The pre-pandemic vaccines are well-matched to the H5 of the currently circulating H5N1 strain. The vaccines will be produced at CSL Seqirus' manufacturing facility in Holly Springs, US, established through a public-private partnership with BARDA in 2009.
In other news, ratings agency S&P Global has upgraded CSL's rating to 'stable' from 'negative', anticipating a rebound in earnings. "We project CSL's earnings margins will recover from the previous year's sub-par performance, and a reduction in capital expenditure (capex) will enable other credit metrics to strengthen," stated S&P's note. CSL shares were last at A$278.32 on the ASX.
On the small cap front
The S&P/ASX Small Ordinaries (XSO) dropped 0.77% yesterday to 2,970.70. Over the five days, it is down 2.23%.
It has been a quiet start on the news front, but you can read about the following and more throughout the day.