Following strong leads from the US overnight, the local market is expected to open higher this morning with ASX SPI 200 Futures trading up 55 points (0.69%) to 8,035.
BHP (ASX:BHP) record shipments
BHP's Pilbara operations shipped a record 287.7 million tonnes of iron ore for the full 2024 financial year and the company expects to maintain similar production levels in the current year while improving its rail operations.
Despite earlier cuts in coking coal guidance due to wet weather in Queensland, BHP produced 44.6 million tonnes of metallurgical coal, within its upper guidance range of 43 to 45 million tonnes.
Its Mt Arthur thermal coal mine in NSW exceeded expectations, producing 15.4 million tonnes against a guidance of 13 to 15 million tonnes. Copper output reached 1.87 million tonnes, within the forecast range.
BHP announced a US$300 million impairment charge against its Western Australia nickel operations, which are expected to wind down production later this year.
Coal threat to power grid
Energy Minister Chris Bowen will speak at the National Press Club in Canberra today where he will argue that coal-fired power stations threaten the reliability of Australia’s electricity grid.
According to advance speech notes, Bowen will say: “Far and away the biggest threat to reliability in our grid is over-reliance on ageing coal-fired power stations. Over the last year, not a single day has passed without an unplanned outage at a coal power generator in eastern Australia."
This follows Bowen’s comments at the Australian Clean Energy Summit last night, where he argued that nuclear energy was too expensive and would take too long to build, and that nuclear is a “sideshow” globally, with much more wind and solar being added globally.
Overseas markets
US sharemarkets rose on Tuesday, as the bull market broadened out beyond technology names on investor hopes of forthcoming interest rate cuts. The Dow Jones index led gains, hitting a new intraday record high and recording its biggest one-day percentage gain in over a year.
- The Dow Jones index rose by 743 points or 1.9%,
- the S&P 500 index gained 0.6%, and
- the Nasdaq index added 37 points or 0.2%.
Financials rose 1.2% after earnings from Bank of America (NYSE:BAC) and Morgan Stanley (NYSE:NYSE:MS) came in ahead of analyst forecasts. Bank of America jumped 5.4%, while Morgan Stanley added 0.9%. Economically sensitive small caps extended their rally.
The Russell 2000 index posted a fifth straight day of gains greater than 1%, its longest winning streak since April 2000. The index ended up 3.5%. But megacap growth stocks, led by Nvidia and Microsoft (NASDAQ:MSFT), weighed on the tech-heavy Nasdaq index, each falling between 1% and 1.6%.
US government bond yields fell as investors balanced the likelihood of an impending US Federal Reserve interest rate cut against possibly inflationary policies if Donald Trump wins the November US presidential election. But yields pared losses after better-than-expected US retail sales data for June. The US 10-year Treasury yield fell 7 points to 4.16% and the US 2-year Treasury yield slid 3 points to 4.42%.
European sharemarkets fell on Tuesday as commodity-linked stocks tracked declining prices and luxury brands fell after Hugo Boss' dour annual forecast. The German fashion house slumped 7.5% after cutting its sales and earnings forecasts for the year, citing weakening global consumer demand, especially in China and the UK.
The basic resources sub-index led sectoral declines with a 1.7% fall after base metal prices tumbled. London-listed shares of Rio Tinto (ASX:RIO) fell 2.3% after the global mining giant reported second quarter iron ore shipments below estimates.
- The continent-wide FTSEurofirst 300 index fell by 0.3%.
- In London, the UK FTSE 100 index dipped 0.2%.
Currencies
Currencies were weaker against the US dollar in European and US trade.
- The Euro fell from US$1.0903 to US$1.0870 and was near US$1.0900 at the US close.
- The Aussie dollar dipped from US67.47 cents to US67.14 cents and was near US67.30 cents at the US close.
- The Japanese yen eased from 158.26 yen per US dollar to JPY158.85 and was near JPY158.40 at the US close.
Commodities
Global oil prices declined on Tuesday on worries of a slowing Chinese economy crimping demand and despite a growing consensus the US Federal Reserve could begin cutting its key interest rate as soon as September.
- The Brent crude price fell by US$1.12 or 1.3% to US$83.73 a barrel.
- The US Nymex crude price shed US$1.15 or 1.4% to US$80.76 a barrel.
Base metal prices fell on Tuesday.
- Copper futures slid 1.9% after weak economic data from China.
- Aluminium futures shed 2% to three-month lows on concern about oversupply.
The gold futures price rose by US$38.90 or 1.6% to a record high of US$2,467.80 ounce on Tuesday as US Federal Reserve interest rate cut hopes boost demand. Spot gold was trading near US$2,468 an ounce at the US close.
Iron ore futures slipped US28 cents or 0.3% to US$109.39 a tonne on Tuesday after a slew of weaker-than-expected Chinese economic data triggered demand concerns.
What’s on?
In Australia, building activity data is released; RBA official John Simon speaks; and BHP releases an operational review.
The New Zealand Consumer Price Index (CPI) is due.
In the US, industrial production, housing starts and building permits data are all scheduled with the Fed's Beige Book. Alcoa (NYSE:NYSE:AA), Johnson & Johnson (NYSE:JNJ), United Airlines, ASML (AS:ASML), US Bancorp (NYSE:NYSE:USB), Discover and Steel Dynamics all issue earnings results.
What’s happening in small caps?
The S&P/ASX Small Ordinaries (XSO) ended down 9.8 points or -0.32% to 3,055.3 yesterday.