Wall St steady as oil lifts

The Australian share market is set to open in modestly positive territory as oil cracked $US50 a barrel.

US stocks were little changed as oil rose. Picture: AP Photo/Mark Lennihan.

US stocks were little changed ahead of Friday’s jobs report, as oil cracked $US50 a barrel for the first time since June.

In Europe, stocks pulled back slightly on talk of the ECB reining in its stimulus program.

The Australian share market is set for a slight lift, with ASX futures up 11 points at 7.15am (AEDT).

A rally in financial shares this week has helped offset declines in bond proxies like consumer staples, keeping major US indexes steady ahead of the monthly employment data.

A strong report could reassure investors that the US economy remains on track, while bolstering the case for the Federal Reserve to raise interest rates in December. That could further widen the divergence between defensive shares and riskier shares like banks, whose profits should benefit from higher rates.

S&P 500 financials have gained 1.5 per cent so far this week.

US government bonds fell for a fifth consecutive session as a Labor Department report showed the number of Americans applying for first-time unemployment benefits, a proxy for lay-offs, fell back toward a four-decade low in the week ended Oct. 1.

Bonds sold off earlier in the week following a media report that the ECB might begin tapering, which the central bank subsequently denied. ECB policy makers warned at their September meeting of “increasing challenges” in sourcing bonds for its quantitative easing program, and hinted that the program could be expanded again.

The yield on the 10-year German government bond was minus-0.004 per cent on Thursday, according to Tradeweb, while the yield on 10-year US Treasurys reached 1.735 per cent from 1.718 per cent Wednesday. Yields rise as prices fall.

The Dow Jones Industrial Average fell 13 points, or less than 0.1 per cent, to 18269. The S&P 500 gained 0.1 per cent, and the Nasdaq Composite declined 0.2 per cent.

The Stoxx Europe 600 index fell 0.4 per cent. Banks were the biggest gainers in Europe, while the real-estate sector — which tends to perform best in a period of ultralow-interest rates — was the worst performer.

Investors remain divided on the prospect of higher US rates this year.

“The Fed is walking a tightrope,” said Neil Mellor, currency strategist at BNY Mellon. Following recent speeches by US Federal Reserve officials and stronger-than-expected economic data, some investors are thinking that “perhaps the moment of reckoning is nigh where monetary largesse is withdrawn and risk assets will get hit,” he said.

Federal Reserve Bank of Richmond President Jeffrey Lacker said on Wednesday that current economic conditions provide a “strong case” to raise short-term interest rates “more rapidly.”

Fed-fund futures, which traders use to place bets on central bank policy, showed a roughly 64 per cent chance of rate increase by December, according to CME Group.

Energy shares in the S&P 500 edged 0.2 per cent higher, a day after a climb in oil prices and upbeat data on the US services sector bolstered stocks. US oil gained 1.2 per cent at $US50.44 a barrel.

Health-care stocks in the S&P 500 fell 0.4 per cent and the Nasdaq Biotechnology Index slid 2.2 per cent after Alnylam Pharmaceuticals said Wednesday it had discontinued development of a rare-disease treatment. Shares of Alnylam dropped 48 per cent Thursday.

Fallout from the Alnylam announcement means “everybody’s going to sell and let it all wash out,” said Christian O’Brien, who trades healthcare stocks at Raymond James.

Gold fell to a four-month low as the WSJ Dollar Index rose 0.5 per cent.

In currencies, the British pound fell 0.9 per cent against the dollar to $US1.2647. From here, “It’s just a question of how far it can fall,” Mr Mellor said, given rising concerns about the UK’s future access to the single market.

The euro was down 0.4 per cent against the dollar at $US1.1162, while the dollar rose 0.5 per cent against the yen.

Dow Jones