Australian shares are anticipated to edge lower today, following a weak day of trade on Wall Street.
ASX futures point to a decline of 21 points or 0.3% to 7,844, retracing gains made on Monday.
Despite recent momentum that brought the benchmark within a stone’s throw of its all-time high, cautious sentiment prevails.
US share markets experienced a downturn following the previous week's significant gains as investors exercised caution ahead of key US inflation data scheduled for later this week.
Losses mitigated by tech
Chip stocks advanced, mitigating losses on the tech-heavy Nasdaq index.
Micron Technology (NASDAQ:MU) and Nvidia saw notable gains, while concerns over production delays for Grand Theft Auto VI affected Take-Two (NASDAQ:TTWO) Interactive's performance.
In the US, major indices including the Dow Jones, Nasdaq and S&P 500 were all hovering around 0.3% lower as the day wrapped up.
JPMorgan (NYSE:JPM) strategists attribute much of the recent equity performance to multiple expansion rather than substantial earnings growth.
A cautious tone persists, with market sentiment hinging on central bank actions and economic performance.
Aussie pullback might be due
Australian equities, particularly the S&P/ASX 200, face the risk of a pullback as bullish momentum persists and positioning becomes increasingly extended, according to Citigroup quantitative market strategist Chris Montagu.
The S&P/ASX 200 closed higher on Monday, nearing its record high, but heightened positioning suggests potential for near-term profit-taking, especially considering the market's reliance on China-related resources.
Montagu also notes similar concerns for Japan's Nikkei index, with bullish positioning and profit levels indicating susceptibility to short-term profit-taking, in line with expectations of near-term range-bound trading before a potential breakout later in the year.
Cocoa stocks rise
Hold on to your stash of chocolate – cocoa prices have surged amid a supply crunch and increased demand from chocolate makers.
Cocoa futures soared around 50% this month and have more than doubled since the beginning of the year.
The rally has positioned cocoa prices near the $10,000 mark, previously deemed unthinkable, and even surpassing the value of copper.
European share markets were mixed, with Europe's main equity index reaching a record high.
Energy stocks recorded gains, while media companies faced losses. Notably, Dassault Aviation surged to an all-time high following a broker upgrade.
Currency and commodities
Global oil prices climbed following Russian government orders to curb oil output and attacks on energy infrastructure in the region.
Base metal prices also rose, driven by concerns over production recovery in China and positive technical indicators.
Gold futures prices increased, buoyed by expectations of interest rate cuts by the US Federal Reserve.
Market snapshot
- AUD +0.4% to 65.38 US cents.
- Bitcoin +7.1% to $US70,887 at 7.10am AEDT.
- On Wall St at 4pm: Dow -0.4% S&P -0.3% Nasdaq -0.3%.
- In New York: BHP (ASX:BHP) -0.1%, Rio +0.6%, Atlassian (NASDAQ:TEAM) +0.4%.
- Tesla (NASDAQ:TSLA) +1.1%, Microsoft (NASDAQ:MSFT) -1.4%, Apple (NASDAQ:AAPL) -0.8%, Nvidia +0.8%
- Alphabet (NASDAQ:GOOGL) -0.4%, Amazon (NASDAQ:AMZN) +0.5%, Meta -1.3%.
- VIX +0.5%, QQQ -0.2%, TLT -0.6%.
- Stoxx 50 +0.3%, FTSE -0.2%, DAX +0.3%, CAC -0.00%.
- Spot gold +0.3% to $US2171.65/oz at 3.12pm in New York.
- Brent crude +1.7% to $US86.90 a barrel.
- Iron ore +0.2% to $US108.40 a tonne.
Source: AFR
Looking ahead, here in Australia we await the release of consumer confidence surveys, along with speeches from Reserve Bank officials.
Premier Investments will unveil its results, while Atlas Arteria and Flight Centre (ASX:FLT) shares will trade ex-dividend.
In the US, durable goods orders, consumer confidence, manufacturing, and home prices data are scheduled for release, alongside earnings reports from McCormick (NYSE:MKC) and GameStop (NYSE:GME).
What’s happening in small caps?
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