A battered and bloodied share market looks set to open higher after Wall Street mirrored Friday's hectic late rally here.
Index futures indicate an opening advance of 61 points or around 1.1 per cent if traders hold their nerve after another weekend of negative headlines about the spreading coronavirus.
The ASX 200 surged an extraordinary 235 points or 4.4 per cent on Friday, much of it in the final minutes of trade after earlier crashing more than 8 per cent. "Hold my beer!" said Wall Street before it surpassed the Aussie effort with its biggest rally since the global financial crisis.
US stocks burst higher after President Donald Trump declared a national emergency, unlocking billions in funds to combat the Covid-19 pandemic. The S&P 500 soared 230 points or 9.29 per cent to its strongest one-day percentage gain since 2008. The Dow put on 1,985 points or 9.36 per cent, its biggest ever point gain. The Nasdaq added 673 points or 9.35 per cent.
As in Australia, most of the gains came in the dying minutes of the session, implying significant institutional buying. The Dow climbed more than 1,000 points in half an hour.
The wild late rally reversed most of Thursday's losses, Wall Street's heaviest since 1987. However, the major indices still finished sharply lower for the week. The S&P 500 lost 8.8 per cent and the Dow 10.4 per cent. Similarly, the ASX 200 haemorrhaged 10.9 per cent, falling to a four-year low.
Trump's declaration of a national emergency unlocked US$50 billion in emergency relief funds and loosened restrictions on healthcare. The president said the public will have access to 50,000 new testing kits this week. Democrat House leader Nancy Pelosi earlier said Congress and the White House were close to a deal for economic relief. Also helping sentiment, the Federal Reserve announced it will accelerate its buying of government bonds to help steady a jittery market.
US gains were spearheaded by a 13.2 per cent surge in financials and a 12 per cent rise in tech stocks. Apple and Facebook both gained more than 10 per cent. On the Dow, Intel surged 19.5 per cent, American Express 19.2 per cent and JPMorgan Chase 18 per cent.
Oil stocks rebounded after Trump said he had asked the Energy Department to buy crude for the US strategic petroleum reserve. The energy sector climbed 8.8 per cent. Brent crude settled 63 cents or 1.9 per cent higher at US$33.85 a barrel. Prices crashed 25 per cent last week after the failure of an OPEC production pact triggered a price war as Saudi Arabia undercut rival producers.
The big miners look set to gap higher this morning following huge gains in overseas action. BHP's US-listed stock spiked 10.86 per cent and its UK-listed stock 12.15 per cent. Rio Tinto put on 12.97 per cent in the US and 10.31 per cent in the UK. The spot price for iron ore landed in China rose 90 cents or 1 per cent to US$91 a dry ton.
Symptomatic of an extraordinary five days that spared nothing, not even traditional safe havens, gold ended its worst week in eight years with further losses. Gold for April delivery settled $73.60 or 4.6 per cent weaker at US$1,516.70 an ounce, extending the precious metal's decline for the week beyond 9 per cent.
“It seems that investors have been selling gold in order to cover losses elsewhere,” Caroline Bain, economist at Capital Economics in the US, wrote in a research note. “Ample liquidity in the gold market means that the sale of gold holdings is a relatively quick and seamless way to raise cash in times of need.”
Copper mounted a tentative rebound during a broadly positive session on the London Metal Exchange. Benchmark copper rose 0.4 per cent to US$5,447.75 a tonne. Aluminium gained 1.4 per cent, nickel 4.2 per cent and zinc 2.5 per cent. Lead eased 2.3 per cent and tin 0.9 per cent.
The dollar continued to test its GFC lows, falling another 0.73 per cent this morning to 61.37 US cents, a level last seen in November 2008.
The week ahead will be dominated by efforts to contain the economic impact of the virus outbreak. The US Federal Reserve meets tomorrow and is expected to announce more stimulus measures on Wednesday. The US Senate is expected to vote on an emergency relief bill as soon as tonight. Today brings a round of Chinese economic data at 1 pm EST that will provide an insight into the damage wreaked by the virus.