Wall St Holds Record Highs Amid Lacklustre Session

By Glenn Dyer | More Articles by Glenn Dyer

Overnight futures traders seem to be more optimistic about the market outlook than what we saw on Wall Street on Wednesday where a dose of COVID-19 reality appeared.

The ASX 200 futures market had a 26 point gain pencilled in for the start at 9am today after a lackustre day’s trading in New York that saw the S&P 500 eventually end at another record high – the gain was less than 7 points which not what you would call was enthusiastic.

Yet there were some signs for optimism – oil bounced back and gold again rose, copper eased a little (back under $US3.50 a pound on Comex).

But iron ore prices scooted higher to their highest level since late 2013 at more than $US136 a tonne for 62% Fe fines delivered to northern China – the standard ore type produced by Australian producers like BHP, Rio and Fortescue and that will boost the trio whose share prices have been solid in recent days.

Wall Street confidence took a hit from a key Fed report on the state of the various US regions that showed slow or no growth spreading, thanks to the impact of COVID-19 and lockdowns and weakening demand from consumers.

That saw the optimism from Tuesday turn to wariness and the market is now eying tonight’s jobless claims and tomorrow’s November employment report for guidance.

The Dow rose 59.87 points or 0.2% to 29,883.79 and the S&P 500 gain 6.56 points or 0.18% to 3,669.01. The Nasdaq eased 5.74 points, or 0.05%, to 12,349.37, weighed down by a 2.7% fall in the share price of soon-to-be an S&P 500 member Tesla.

A weaker US dollar saw the Aussie nudge an unwanted 74 US cents for the second time this week. The greenback fell despite US bond yields jumping – driven by continuing talk of a new stimulus package and very silly talk of renewed inflation as a result.

Yields on 10 year US Treasuries are up from 0.88% last Friday to 0.94% on Wednesday – with no sign of any strengthening in the economy to justify the move.

Many American market-based analysts and economists can’t see (or don’t want to) the enormous negative weight on prices, growth and activity from the still very high levels of US unemployment and underemployment.

There are rising doubts about the accuracy of US jobless claims data (out tonight) and the veracity of the monthly jobs report which is due Friday night, Australian time.

In Europe Brent crude oil futures settled up 83 cents, or 1.75%, at $US48.25 a barrel while in New York, West Texas Intermediate crude settled up 73 cents or 1.64% at $US45.28 a barrel as it looks very likely that OPEC and Russia will do a deal on the production cap.

A further meeting between the two groups is due tonight, Australian time. The optimism about a deal ( Russia does want the 2 million cut in the cap to happen, OPEC wants it in place to the end of march, so a gradual cut is likely) was reinforced by a small 679,000 fall in US oil stocks last week, according to the Energy Information Administration.

But US oil production rose 100,000 barrels a day last week to 11.1 million barrels , the highest level since May, the EIA said- that’s result of 10 weeks or rising oil rig numbers across US fields and rising prices – up 27% in November alone.

The ASX’s gain Thursday will follow the less than enthusiastic reception for the surprise 3.3% quarter on quarter growth in September quarter GDP on Wednesday.

Off the back of the strong Wall Street lead the ASX 200 was up 0.4% at one stage, but then fell back, even though the GDP news was better than forecast.

By the close the AX 200 was up just 1.7 points higher at 6,590.2 – hardly a ringing endorsement.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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