ASX to slip as commodities wilt, Wall St rallies

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Australian shares are poised to edge lower, with commodity prices continuing to deflate amid rising concerns about a recession. Copper tumbled to a 16-month low. Oil and gold slip.

ASX futures were down 9 points or 0.14 per cent to 6425 near 6.20am AEST.

  • On Wall St: Dow +0.6% S&P 500 +1% Nasdaq +1.6%
  • In New York: BHP -1.6% Rio -3% Atlassian +4.2%
  • Tesla -0.4% Apple +2.2% Amazon +3.2% Microsoft +2.3%

“The S&P 500 Index tries to build upon the initial rebound from the extreme oversold conditions realised last week,” JPMorgan equity strategists said. “The index needs to clear 3810-3900 resistance to confirm a short-term trend reversal, in our view.

“The deep oversold conditions and bullish momentum divergence signals already in place imply an increased probability for additional upside into July.”

The S&P 500 closed at 3795.73 overnight.

“From a pure technical perspective, a sustained break above the 4100-handle resistance levels is required to shift the medium-term trend dynamics to something more positive,” the JPMorgan strategists also said.

The local currency slid 0.4 per cent, slipping below US69¢; the Bloomberg dollar spot index was flat. The Australian dollar received no help from a bounce in the spot price of iron ore after China’s Xi Jinping said the government would ramp efforts to bolster growth.

On bitstamp.net, bitcoin was 4.2 per cent higher to $US20,847.37 at 5.55am AEST.

The yield on the US 10-year note dropped 7 basis points to 3.09 per cent at 4.24pm in New York.

On Wall Street, shares closed higher; the VIX edged above 29. Utilities and health care paced seven of the S&P 500’s 11 industry sectors higher; energy slumped as oil lost further ground.

“The market remains in a risk off/risk on mode until, just like the Fed, it sees hard evidence that inflation has plateaued,” LPL Financial’s Quincy Krosby said in a note. “Moreover, investors are seeing a market on sale but question whether there will be further reductions.”

In his second day of Congressional testimony, Federal Reserve chairman Jerome Powell said efforts to bring down inflation were “unconditional”.

“We have a labour market that is sort of unsustainably hot and we’re very far from our inflation target,” Powell told the House Financial Services Committee. “We really need to restore price stability, get inflation back down to 2 per cent, because without that we’re not going to be able to have a sustained period of maximum employment.”

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