Despite a solid start, the Australian share market wiped out all its earlier gains by the end of the day, despite a rebound on Wall Street which lifted the Nasdaq index to a three-month high.
The ASX 200 index fell by one point (practically flat), and finished trading at 6,975 points.
Some of today's best performers were Block (+8.9pc), Pointsbet (+11.6pc), Imugene (+10.9pc), Life360 (+9.6pc), and Bega Cheese (+6.9pc).
On the flip side, Lynas Rare Earths (-3.5pc), Orica (-9.3pc), Graincorp (-6.6pc) and Whitehaven Coal (-3.1pc) suffered heavy losses.
Although six out of every 10 stocks traded higher, mining giants Fortescue Metals (-2pc), Rio Tinto (-1.6pc) and BHP (-1.1pc) were the biggest drags on the market due to weaker iron ore prices.
The Australian dollar fared slightly better. It had risen 0.3 per cent, to 69.6 US cents by 4:15pm AEST.
A bounce in global stock markets and some easing in tensions around US House Speaker Nancy Pelosi's visit to Taiwan also helped the local currency.
Helping at the margin was data from the ABS showing Australia's trade surplus had surged to a record high of $17.7 billion in June, led by gains in gold and metals exports. It was also the 54th monthly trade surplus in a row.
That brought the rolling 12-month surplus to a whopping $137 billion, a net inflow of cash to the Aussie and a boon to mining profits and government tax receipts.
Record surplus boosting Australian economy
"Another month, another record trade surplus," said CommSec chief economist Craig James.
"Does anyone seem to care? They should. The income flowing into Australia is supporting Aussie businesses at a crucial time – a time when fears of recession are being expressed globally.
"The value of our exports is more than exceeding our imports. Price effects or not, incomes are lifting, boosting the bottom-line of our businesses, helping them meet cost pressures, and, in turn, supporting employment levels."
Economists from Commonwealth Bank expect the strong net exports figure to boost Australia's second-quarter economic growth.
The gross domestic product (GDP) report is due on September 7 and is shaping up to be quite robust. However, the outlook is not so bright, with surging inflation and rising interest rates set to drag growth down sharply into 2023.
The Reserve Bank will release its updated forecasts on Friday and has already foreshadowed a steep rise in inflation to a top of 7.75 per cent and a slowdown in growth to just 1.75 per cent for next year.
That is a major reason why markets have pared back the likely peak for interest rates to around 3.3 per cent, from more than 4 per cent in June, and are pricing in rate cuts by late next year.
Tech recovers, while oil plummets
Wall Street's main indexes rebounded, after dropping for the past two days.
The Nasdaq jumped 2.6 per cent, to 12,668 points, its highest level since early May, and the S&P 500 climbed 1.6 per cent, to end the session at 4,155, while the Dow Jones index rose 1.3 per cent, to 32,813.
Spot gold rose 0.2 per cent, to $US1,763.10 an ounce.
Meanwhile, oil prices fell sharply, with Brent crude futures down 3.4 per cent, to $US97.10 a barrel.
It comes after the OPEC+ group of oil-producing nations, including Saudi Arabia and Russia, announced that it would increase its supply by a mere 100,000 barrels per day.
On top of that, a new report from the Energy Information Administration showed an unexpected surge in US crude and gasoline stocks.
"Oil is still up 25 per cent from the beginning of the year," said Oliver Pursche, senior vice president at Wealthspire Advisors in New York
"This recent drop is a combined result of that and a reflection that there is going to be an economic slowdown. The market is trying to find equilibrium."
Stronger-than-expected earnings
Investor sentiment was also boosted by strong earnings reports from PayPal, CVS Health Corp and other companies.
Financial results — which exceeded the market's low expectations — have helped US markets rebound from losses caused by worries about decades-high inflation, rising interest rates and shrinking economic output.
Apple and Amazon rallied almost 4 per cent, while Facebook-owner Meta Platforms jumped 5.4 per cent.
PayPal soared almost 10 per cent after it raised its annual profit guidance and said activist investor Elliott Management had an more-than-$US2-billion stake in the financial technology firm.
CVS Health gained 6.3 per cent after the largest US pharmacy chain raised its annual profit forecast when it posted strong quarterly results.
"We're going through second quarter earnings and, by and large, from the tech complex to consumer discretionary and industrials, we're seeing a lot of better-than-feared prints, and that's just good enough right now," said Sahak Manuelian, managing director of trading at Wedbush Securities in Los Angeles.
US services sector rebounds
The turnaround comes as the latest economic data showed the US services industry unexpectedly rebounded in July as supply bottlenecks and price pressures eased.
The Institute for Supply Management said its non-manufacturing PMI (purchasing managers index) rebounded to a reading of 56.7 points last month (from 55.3 in June). This increase ended three straight monthly declines.
Economists polled by Reuters had forecast the non-manufacturing PMI decreasing to 53.5. A reading above 50 indicates expansion in the services sector, which accounts for more than two-thirds of U.S. economic activity.
That emboldened enough investors to bet that the US economy was not in recession, despite the nation's output (or GDP) slumping for six months in a row.
ABC/Reuters
