Shares look set to extend yesterday's unexpected boom session at the open as global markets continued to look beyond the deepening coronavirus crisis.
US stocks advanced as oil hit an 18-year low and the Federal Reserve warned unemployment in the US may hit 32 per cent.
Australian index futures climbed 66 points or 1.3 per cent to 5257, signalling a positive start a day after the benchmark index's biggest rally on record. The S&P/ASX 200 surged 339 points or 7 per cent yesterday after the government announced a new emergency wages package to support businesses through the downturn.
The mood on financial markets has shifted over the last week from despair to cautious optimism that a blizzard of central bank and government stimulus measures may cushion listed companies from a likely global recession. The S&P 500 advanced 85 points or 3.35 per cent following the signing into law of a US$2.2 trillion economic rescue package late on Friday. The Dow put on 691 points or 3.19 per cent. The Nasdaq added 272 points or 3.62 per cent. The pan-European Stoxx 600 climbed 1.28 per cent.
Investors had to dig deep for positives during a night of bleak economic signals. Economists at the St Louis Federal Reserve project up to 47 million Americans could lose their jobs in the weeks ahead, equating to an unemployment rate of 32.1 per cent. GDP could fall 10 per cent this quarter and then tank 25 per cent next quarter in the US, according to JPMorgan Chase. The government's top infectious disease expert suggested the US death toll could reach 200,000.
Some commentators suggested there was relief in the market after President Donald Trump extended social distancing guidelines to April 30, ruling out the danger of a premature return to "business as usual" after Trump initially set April 12 as a deadline.
“Investors seemed pacified by the fact that with scientists in control of policy, the Covid-19 quarantine could have a clear definable timeline and effective plan of eradication rather than be subject to rolling waves of infection that could paralyse the US economy for months,” Boris Schlossberg, managing director of BK Asset Management, wrote.
Also helping sentiment was news Johnson & Johnson had identified a potential vaccine for the virus and will rush the drug to market if it proves effective. Trials on humans will commence in September, with a possible release early next year, far sooner than the industry standard. Shares in the company jumped 8 per cent. Abbott Laboratories climbed 6.4 per cent upon announcing it would release a rapid test kit for the virus.
Tech stocks, including Microsoft, Amazon and Google parent company Alphabet, led the rally in a sign investors were gaining interest in fallen stock market angels. Microsoft put on 7 per cent, Amazon 3.4 per cent and Alphabet 3.3 per cent.
BHP's US-listed stock matched yesterday's Australian rally, rising 4.1 per cent. The Big Australian's UK-listed stock edged up 2.58 per cent. Rio Tinto added 3.08 per cent in the US and 4.14 per cent in the UK. The spot price for iron ore landed in China declined $3.35 or 3.9 per cent to US$82.55 a dry ton.
Oil slumped below the psychologically-significant US$20-a-barrel level in the US. West Texas Intermediate settled $1.42 or 6.6 per cent weaker at US$20.09 after trading as low as US$19.27. The global benchmark, Brent crude, settled $2.17 or 8.7 per cent in the red at US$22.76 a barrel. The closes were the lowest since 2002.
Gold drifted lower amid reports that disruptions in the supply chain have been ironed out. Gold for April delivery settled $10.90 or 0.7 per cent lower at US$1,643.20 an ounce.
Aluminium slumped to a four-year low during a generally downbeat night on the London Metal Exchange. Benchmark aluminium fell 1.1 per cent to US$1,529 a tonne. Copper shed 0.4 per cent, nickel 0.3 per cent and zinc 0.3 per cent. Tin put on 0.5 per cent and lead 0.2 per cent.
The dollar edged up 0.02 per cent to 61.66 US cents.
Economists are hopeful that Chinese economic data due this morning may signal a recovery as that nation re-opens for business. Manufacturing and services gauges due at noon EST are predicted to bounce from record lows but show continued contractions in activity. Wall Street has consumer confidence figures scheduled tonight.