Record night on Wall Street to boost ASX

Australian shares look set to open firmly higher after Wall Street rose for the fifth time in six sessions as factories in China re-opened.

ASX SPI200 index futures rallied 44 points or 0.6 per cent to 6989, indicating a positive start ahead of January business confidence data and profit reports from Suncorp (ASX: SUN), Challenger (ASX: CGF) and Beach Energy (ASX: BPT).

The ASX 200 dived 40 points yesterday before rebounding to finish just 10 points or 0.1 per cent lower after China announced fresh measures to shield the economy against the effects of the coronavirus outbreak. The news helped soothe nerves in the US after a losing end to last week.

The S&P 500 bounced 24 points or 0.73 per cent to a new high as production at Chinese factories resumed after an extended break to help stem the virus contagion. Tech stocks spearheaded a rally that lifted the Nasdaq 108 points or 1.13 per cent to a record. The Dow put on 175 points or 0.6 per cent.

Electric car-marker Tesla jumped 3.1 per cent after its Shanghai factory resumed production. Gains in Apple were more modest, rising 0.47 per cent, following reports that one of its iPhone manufacturing plants had been banned from re-opening, while only ten per cent of the workforce turned up when another plant re-opened yesterday. Analysts have suggested iPhone sales could fall as much as 50 per cent amid production losses and on-going store closures.

The death toll from the virus was raised to 908 yesterday, with more than 40,000 confirmed cases in China. Despite that, the Shanghai Composite rose 0.51 per cent after the People's Bank of China issued special relending funds to cushion the economy against the virus.

Technology was the worst-performing sector here yesterday, but may see a lift after spearheading last night's US rally. Amazon climbed 2.6 per cent to an all-time high. Microsoft and Alphabet both rose at least 2 per cent.

The US earnings season enters the final furlong this week, with roughly two-thirds of S&P 500 companies having reported. More than 70 per cent of companies have beaten analyst estimates.

Oil sank to its lowest level in more than a year after the Organization of the Petroleum Exporting Countries and its allies failed to agree on immediate production cuts. Brent crude settled $1.20 or 2.2 per cent lower at $US53.27 a barrel, a level last seen in December 2018. OPEC met with allies last week but met resistance from Russia, which said it needed more time to consider a proposal to reduce production to support prices.

Materials underperformed in the US as a rising greenback dulled demand for dollar-denominated commodities. BHP's US-listed stock eased 0.02 per cent and its UK-listed stock 0.99 per cent. Rio Tinto shed 0.54 per cent in the US and 1.54 per cent in the UK. The spot price for iron ore landed in China eased 95 cents or 1.1 per cent to $US81.70 a dry ton.

Gold has been one of the big winners from the Chinese epidemic, rising for a fourth straight session. Gold for April delivery settled $6.10 or 0.4 per cent higher at $US1,579.50 an ounce.

Zinc slumped to its weakest price in three and a half years amid worries about Chinese demand. Three-month zinc ended 0.5 per cent lower at $US2,135 a tonne on the London Metal Exchange after hitting $US2,117, its weakest level since July 2016. Copper inched up 0.1 per cent, nickel 0.9 per cent and tin 0.9 per cent. Aluminium lost 1.4 per cent and lead 1.2 per cent.

The dollar clambered off its weakest level in a decade, rising 0.12 per cent to 66.8 US cents.

Aside from another round of interim earnings, the day ahead brings January business confidence figures at 11.30 am EST. In the US tonight, Federal Reserve Chair Jerome Powell is due to testify before the House Financial Services Committee.


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