The stock market recovery looks set to continue at today's open after Wall Street's three-day rebound extended beyond 20 per cent.
Australian index futures flew up 184 points or 3.6 per cent as US stocks shrugged off news of massive job losses. The ASX 200 has bounced 567 points or 12.5 per cent in three sessions amid hopes strong government action will stop the spread of the Covid-19 outbreak and cushion the economy from the worst effects of the lockdown.
US stocks roared higher for a third night as a massive economic rescue bill was passed by the Senate and moved to a vote in the House of Representatives later tonight. Stocks hit their session highs after Democrat House Speaker Nancy Pelosi said the bill would pass with "strong bipartisan support".
The Dow continued this week's extraordinary rebound with a rise of 1,352 points or 6.38 per cent, jagging sharply higher in the final minutes of trade. The blue-chip average has bounced more than 20 per cent in three sessions, its biggest three-day gain since 1931.
The broader S&P 500 put on 155 points or 6.24 per cent and the Nasdaq 413 points or 5.6 per cent. The scale of US gains suggest the ASX 200 has headroom to move significantly higher today.
The Senate unanimously approved a US$2 trillion relief package before news that more than three million Americans filed for unemployment benefits last week. First-time claims surged to 3.28 million, almost five times as many as the GFC peak of 665,000 and eclipsing the previous record of 695,000 from the early 1980s. While the consensus figure anticipated by economists was around 1.5 million, some expected claims to be as high as four million.
“This is the first alarming data print, but the whisper number was probably higher than that so it does seem like there’s a little bit of relief in the market,” Shawn Snyder, head of investment strategy at Citi Personal Wealth Management, told Reuters.
The relief package includes one-off direct payments to individuals, improved unemployment insurance, loans to business and better health care. The Senate rejected a contentious attempt by a group of Republicans to cap unemployment insurance that threatened to derail the unanimous vote.
"We're determined to get money in people's pockets immediately," Treasury Secretary Steven Mnuchin told CNBC.
Sentiment was boosted by assurances from Federal Reserve Chair Jerome Powell that the central bank has more ammo following unprecedented stimulus measures over the last few weeks. "We still have policy room in other dimensions to support the economy," Powell said before markets opened.
Boeing, which will receive support from the relief package, moved higher. The planemaker was the Dow's best performer with a rise of 14.1 per cent.
The tone of the three-day rally shifted towards defensive assets overnight, with utilities, real estate and health topping the sectors with gains of between 7 and 8.4 per cent. The energy sector climbed 6.2 per cent despite oil's first reversal in four sessions. Brent crude settled $1.05 or 3.8 per cent lower at US$26.34 a barrel. The US benchmark, West Texas Intermediate, lost a chunky $1.89 or 7.7 per cent, easing to US$22.60.
A mixed night for the biggest Australian miners saw losses in the UK supplanted by gains in the US. BHP's US-listed stock rose 1.45 per cent after its UK-listed stock shed 3.09 per cent. Rio Tinto tacked on 2.76 per cent in the US after falling 1.83 per cent in the UK. The spot price for iron ore landed in China eased $1.10 or 1.3 per cent to US$85.95 a dry ton.
Gold rallied as the US dollar fell on the grim jobs news. Gold for April delivery settled $17.80 or 1.1 per cent ahead at US$1,651.20 an ounce, reversing most of Wednesday's fall.
The dollar climbed back above 60 US cents overnight as stimulus measures in the US depressed the greenback. The Aussie was last up 1.8 per cent at 60.65 US cents.
Finance ministers gather tonight for a G20 meeting to discuss measures to tackle the economic impact of the coronavirus.