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A week when COVID-19 re-infected financial markets looks set for a downbeat conclusion following a wobbly session on Wall Street.
ASX SPI200 index futures fell 24 points or 0.4 per cent as the Dow and S&P 500 succumbed to fresh fears about record infection rates in the US. The Nasdaq notched a record as traders bet on ‘stay-at-home’ stocks.
The decline in futures positions the S&P/ASX 200 for a fourth loss in five sessions. The index broke a three-session losing run yesterday, bouncing 35 points or 0.6 per cent as tech and mining stocks rallied. However, the general tone this week has been soft as the coronavirus outbreak in Victoria threatened recent economic gains.
The overnight action on Wall Street drew a clear line between winners and losers from the pandemic. The Nasdaq shook off a mid-session stutter to close 55 points or 0.53 per cent higher on gains in ‘big tech’. The broader S&P 500 fell 18 points or 0.56 per cent. The ‘old-school’ stocks of the Dow sank 361 points or 1.39 per cent.
Amazon climbed 3.3 per cent on expectations that its home-delivery service will prosper as the US battles record-high COVID-19 infections. Other winners last night included Netflix +1 per cent, Alphabet +1 per cent, Microsoft +0.7 per cent and Apple +0.4 per cent.
Wednesday’s tally of more than 60,000 new cases in a single day was a record for anywhere in the world. White House infectious disease adviser Dr Anthony Fauci said some states should “seriously look at shutting down”. Wall Street hit its lowest point of the session after Florida reported record hospitalisations and California a record increase in infections.
Stocks that depend on the economy returning to normal struggled. The S&P 1500 airlines sub-industry index tanked 5.4 per cent. Several major cruise companies fell at least four per cent. Planemaker Boeing shed 3.8 per cent and department store chain Kohl’s 7.3 per cent. Pharmacy chain Walgreens Boots Alliance tumbled 7.8 per cent after missing third-quarter earnings expectations and announcing 4,000 job cuts at its UK Boots high-street chain.
Economic data showed the number of Americans claiming unemployment benefits for the first time declined last week, but the overall number of claimants remained shockingly high. Continuing claims eased by around 700,000 to just over 18 million.
“The good news is that the number of filings continues to slide,” Amherst Pierpont chief economist Stephen Stanley wrote. “The bad news is that the pace of improvement has been far too slow and the level of initial claims remains nearly double the all-time high prior to this year.”
Australia’s big miners steered the local market higher yesterday, but face headwinds today after falling in overseas action. BHP’s US-listed stock dropped 1.19 per cent and its UK-listed stock 1.28 per cent. Rio Tinto shed 0.58 per cent in the US after trading flat in the UK. The spot price for iron ore landed in China inched up 15 cents or 0.1 per cent to US$107.05 a dry ton.
Energy companies retreated as oil sold off with other risk assets exposed to the impact of the virus. Chevron fell 4.2 per cent and Exxon Mobil 4.1 per cent. Brent crude settled 94 cents or 2.2 per cent lower at US$42.35 a barrel. The US benchmark, West Texas Intermediate, fell 3.1 per cent to US$39.62.
Copper hit a 14-month high on optimism that Chinese demand is recovering even as the rest of the world struggles with the virus. Benchmark copper on the London Metal Exchange climbed 1.1 per cent to US$6,300.35 a tonne. Aluminium added 0.2 per cent, lead 1.6 per cent, zinc 1.3 per cent and 1.6 tin per cent. Nickel dropped 1.8 per cent.
Gold retreated from its highest level since September 2011. Gold for August delivery settled $16.80 or 0.9 per cent weaker at US$1,803.80 an ounce after briefly dipping below US$1,800.
The dollar remained range-bound, easing 0.04 per cent to 69.6 US cents.
