Gains on Wall Street and tentative steps towards relaxing lockdown restrictions point to a positive start to the Australian trading week.
ASX SPI200 index futures rallied 82 points or 1.6 per cent as US stocks rebounded into the weekend.
Risk appetite may receive another boost from news yesterday that Western Australia and Queensland will this week loosen restrictions on social behaviour. From today, West Australians will be allowed to gather in groups of up to ten people and leave home for activities such as picnics, fishing, hiking and camping. From Saturday, Queenslanders will be allowed to picnic, shop for non-essential items, visit national parks and drive up to 50 kilometres from home.
The changes in WA and Queensland represent the first relaxation of restrictions imposed last month to contain the spread of the COVID-19 virus. Queensland recorded just three new infections yesterday and WA none. Overseas, France, Spain and Britain recorded their lowest daily death tolls this month and New York announced plans to re-open the state from May 15.
US stocks climbed on Friday in a sign investors have become more comfortable with holding over the weekend as the trend in newsflow improves. The S&P 500 rose 39 points or 1.39 per cent. The Dow put on 260 points or 1.11 per cent. The Nasdaq added 140 points or 1.65 per cent.
“Fridays tell us a lot about market sentiment,” Steven Ricchiuto, US chief economist at Mizuho Securities, told clients. “When investors are worried about bad news coming over the weekend, when markets are closed, the Street is more comfortable being short than long. Alternatively, when markets are looking through to the longer-term, the weekend positioning matters less and what we see on Friday is the direction of sentiment.”
Friday’s rebound reversed some losses from earlier in the week when a dramatic plunge in the price of oil infected equity markets. The S&P 500 finished the week more than 1 per cent lower, ending a run of three consecutive weekly advances. The Dow lost 1.9 per cent for the week and the Nasdaq around 0.2 per cent.
Oil rose for a third straight session in the US, but ended the week with a record loss of more than 32 per cent. West Texas Intermediate edged up 44 cents or 2.7 per cent to US$16.94 a barrel. Brent crude, clawed back 11 cents or 0.5 per cent, settling at US$21.44. The international benchmark shed 23.7 per cent over the week.
Despite the gains, energy was the worst-performing US sector, rising just 0.2 per cent. Tech stocks led with a rise of 2.1 per cent, followed by materials, up 1.6 per cent, and health, up 1.4 per cent.
BHP and Rio Tinto bounced in the US after falling in the UK. BHP’s US-listed stock rallied 1.88 per cent and its UK-listed stock dropped 1.29 per cent. Rio Tinto gained 1 per cent in the US and lost 0.87 per cent in the UK. The spot price for iron ore landed in China edged up 20 cents or 0.2 per cent to US$83.90 a dry ton.
Gold dipped at the end of a strong week. Gold for June delivery settled $9.80 or 0.6 per cent lower at US$1,735.60 an ounce, trimming its tally for the week to 2.2 per cent.
The dollar started a new week at 63.85 US cents.
The S&P/ASX 200 climbed 26 points or 0.49 per cent on Friday, but finished 245 points lower for the week following heavy falls on Monday and Tuesday as oil tanked. The weekly decline was the local benchmark’s first in five weeks.
Tech giants Apple and Microsoft both rose at least 1.8 per cent on Friday ahead of quarterly earnings updates this week. Intel, AmEx and Verizon all rallied on Friday following earnings reports. One hundred and forty S&P 500 companies will report this week, including Amazon, Facebook, Boeing and McDonald’s. The big guns start to report from tomorrow night.
A busy week also brings a two-day US Federal Reserve meeting, ending with a policy statement on Wednesday night, and first-quarter US GDP data on Wednesday. The Australian economic calendar looks lighter, with the highlight likely to be Wednesday’s inflation report. Quarterly results are due from the likes of Newcrest, Fortescue, Woolworths, Coles and Qantas. ANZ releases half-year earnings on Thursday.