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Record closes on Wall Street point to a strong start to the holiday-shortened Australian trading week.

US stocks have put on more than 2 per cent in two hops over the Easter long weekend amid optimism over the improving economic outlook.

ASX futures last traded 23 points or 0.33 per cent ahead on Friday morning before closing for Easter. That figure does not reflect another strong advance overnight.

Wall Street

The Dow and S&P 500 claimed new closing highs overnight as positive data underlined the strength of the economic recovery. The services industry recorded the biggest increase in activity on record. A separate report showed overall employment surged almost 50 per cent more than expected last month.  

The Dow Jones Industrial Average climbed 374 points or 1.3 per cent. The S&P 500 put on 58 points or 1.44 per cent. The Nasdaq Composite added 225 points or 1.67 per cent as bond yields continued to back off from recent highs.

The Institute for Supply Management’s services index jumped from 57 to 63.7 last month, the highest reading in the measure’s history. The services sector accounts for roughly 80 per cent of US private-sector GDP, according to Investing.com.

The official March government jobs report on Easter Friday showed the economy added 916,000 jobs last month, well ahead of the 675,000 anticipated by economists polled by Dow Jones. The unemployment rate fell to 6 per cent, in line with expectations.

“The reopening of leisure & hospitality hit a higher gear in March and evidence suggests that it will hit an even higher gear in April. The vaccine distribution process has been progressing well, and a more normal economy appears to be close at hand,” analysts at US financial services company Jefferies wrote.  

So-called “reopening plays” outperformed. The S&P 1500 airlines index gained 2.5 per cent. The Hyatt and Marriott hotel groups added 2.5 and 1.8 per cent, respectively. Cruise companies surged up to 7.2 per cent.

Tech stocks also rose ahead of a new quarterly reporting season. Facebook, Microsoft and Google parent company Alphabet hit record highs.

Australian outlook

A strong start appears certain following two days of solid US gains (Wall Street did not take the Easter Monday holiday). The S&P 500 put on 2.6 per cent in the two sessions since the ASX last traded. The Dow added 546 points or 1.6 per cent. The Nasdaq gained almost 3.5 per cent.  

The S&P/ASX 200 finished last week on an upswing, rising 0.56 per cent on Thursday to a second straight gain and its highest close since late February. Wall Street’s back-to-back advances appear to hand the index a shot at breaking out of its recent sideways trading pattern.  

Big Tech led the US advance. The tech sector climbed 2 per cent overnight. The materials sector tacked on 1.2 per cent and financials 0.7 per cent. Energy was the only sector to buck the trend, falling 2.4 per cent.

A busy week looms on the economic calendar. The Reserve Bank meets today and releases a rate policy statement at 2.30pm AEST. While no changes to policy settings are anticipated, the statement is always keenly read for pointers to the bank’s position on rates, stimulus measures, employment and the recovery.

Also due today: monthly job ads, an important indicator for the health of the labour market. Construction figures are due tomorrow, along with weekly consumer sentiment data. Services industry data are scheduled for Friday, along with the six-monthly RBA Financial Stability Review. Scentre Group holds its AGM on Thursday.

Wall Street receives the minutes from the last Federal Reserve meeting on Thursday night. Fed Chair Jerome Powell is due to take part in a panel discussion about the global economy on Friday night. China releases inflation data on Friday.

The dollar has firmed over the long weekend, rising 0.4 per cent this morning to 76.49 US cents.

Commodities

Worries about increasing production and Covid’s spread in India helped pull oil down more than 4 per cent overnight. Brent crude settled $2.71 or 4.2 per cent weaker at US$62.15 a barrel. The OPEC+ oil cartel decided late last week to relax production caps.

BHP and Rio Tinto rallied for a second session in the US. BHP’s US-listed stock put on 2.3 per cent overnight after gaining 0.22 per cent on Thursday. Its UK-listed stock dipped 1.27 per cent on Thursday. Rio Tinto added 2.42 per cent in the US overnight and advanced 0.42 per cent on Thursday.  Its UK stock dropped 1.26 per cent on Thursday. The spot price for iron ore landed in China rose 70 cents or 0.4 per cent to US$167.70 a tonne.

Gold was little changed overnight, but eked out a third straight gain as the US dollar softened. Gold for June delivery settled 40 cents or less than 0.1 per cent ahead at US$1,728.80 an ounce. The yellow metal rose about 0.8 per cent on Thursday.

Copper jumped 3.7 per cent overnight to US$4.14 a pound.

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