Defence rally buoys Dow as tech stumble knocks Nasdaq

Stocks on Wall Street were mixed as US President Donald Trump’s call for a bigger military budget buoyed defence contractors such as Northrop Grumman and Lockheed Martin, while tech stars including Nvidia cooled ahead of US jobs data.

The kiwi dollar edged down against the greenback after data showed the US trade deficit expectedly shrank in October, with the Supreme Court’s ruling on the White House’s tariff programme expected as early as Jan 9.

Australian futures are pointing to an upbeat start to the day for the S&P/ASX 200 index when trading opens across the Tasman, following the lead from Wall Street’s blue-chip Dow Jones Industrial Average, with Chinese inflation figures the main event during the Asian trading session.

Meanwhile, oil prices recovered from their recent bought of selling after the ousting of Venezuela’s president Nicolas Maduro and the US swooping in to take control of the nation, while energy major Shell trimmed its earnings guidance on a weak oil trading performance.

National defence

US defence companies rallied, with Northrop Grumman up 3.2% in late trading and Lockheed Martin advancing 4.1% after US President Donald Trump called for an increased defence budget of US$1.5 trillion.

That came soon after Trump signed an executive order banning share buybacks and dividends by contractors working for the government at the expense of faster procurement and increased production capacity.

New Zealand’s Rakon supplies components to defence firms, and has gained 7.9% so far this year.

Stocks on Wall Street were mixed, with the Dow Jones Industrial Average up 0.7% in late trading, while the tech-heavy Nasdaq Composite dipped 0.4%. The S&P 500 was up 0.1%.

US non-farm payrolls figures on Friday in New York will be the next major piece of data feeding into expectations on whether the Federal Reserve will continue to cut its benchmark interest rate, while US trade figures showed an unexpected narrowing of the nation’s trade deficit in October.

That comes as investors await a Supreme Court ruling on the lawfulness of the White House’s Liberation Day tariff regime, which upended the global trade order. The judgment might be made as early as Jan 9.

The kiwi dollar traded at 57.50 US cents at 7am in Auckland from 57.68 cents yesterday.

Across the Atlantic, stock markets were mixed as the US’s FTSE 100 index was marginally weaker, while Germany’s DAX 30 inched higher, and France’s CAC 40 increased 0.1%.

Oil recovers

Oil prices recovered from some of the recent declines after the US military operation to snatch Venezuela’s president Nicolas Maduro to stand trial on allegations of narco-terrorism, and seize control of the Latin American nation’s oil assets injected volatility into the markets. Brent crude oil futures were up 2.5% at US$61.43 a barrel at 7am in Auckland.

Meanwhile, Shell shares declined after the energy major said weak oil trading would weigh on fourth-quarter earnings.

In the antipodes, Australian futures are pointing to a 0.5% gain for the ASX200 when trading opens across the Tasman, following the stronger lead from Wall Street’s Dow industrials.

Chinese inflation figures are the main economic data in the Asian trading session.

Reporting by Paul McBeth. Image from david hili on Unsplash.