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Stocks looks set to open modestly lower after a Wall Street rally dwindled in the final hour of trade.

Australian index futures declined 11 points or 0.2 per cent as the Dow trimmed a 400-point advance to a final tally of 133 points or 0.56 per cent. The late fade came as the Federal Reserve’s Vice Chairman doused expectations of a rapid return to strong economic growth. Vice Chair Richard Clarida said a third-quarter rebound was “one possibility”, but “more policy support will be needed from the Red and possibly also fiscal policy”.

The S&P 500 finished 26 points or 0.9 per cent ahead after being up twice as much. The Nasdaq held on for a closing gain of 94 points or 1.4 per cent.

The Fed official’s downbeat outlook appeared to catch US investors off-guard near the end of a strong session where buyers welcomed signs the economy was slowly starting to re-open. California announced retailers could start offering “curb-side pick-up” from Friday. New York Governor Andrew Cuomo said his state had reached “the other side of the mountain” as the number of hospitalisations and deaths declined. Overseas, Italy, Germany and Hong Kong moved towards relaxing lockdown restrictions imposed to contain the spread of COVID-19.

“Clarida threw a bit of a wet blanket on the market at the end of the session,” Michael Antonelli, market strategist at Robert W Baird in the US, told Associated Press. Traders betting on a V-shaped recovery may have been unsettled by the suggestion a third-quarter rebound was just “one possibility”.

The US is wading through the worst economic downturn since the Great Depression. Data overnight showed the services sector contracted last month for the first time since the end of the GFC. The trade deficit blew out by 12 per cent as a 6.2 per cent slump in imports was outweighed by a 9.6 per cent dive in exports.  

Healthcare stocks led the rally, rising 2.2 per cent following news that human trials had started on four vaccine candidates to prevent the coronavirus. Drugmaker Pfizer was the best performer on the Dow with an advance of 2.4 per cent. Regeneron climbed 6 per cent on news it could have an experimental COVID-19 antibody cocktail ready by the end of the northern summer. Tech stocks climbed 1.4 per cent.

Market sentiment was helped by a fifth day of gains in oil as buyers bet demand will recover as the global economy re-opens. US crude rose $4.17 or 20.5 per cent to US$24.56 a barrel. The close was the highest in three weeks. Brent crude settled $3.77 or 13.9 per cent ahead at US$30.97 a barrel.

“Demand devastation is fully priced in and the oversupply concerns are slowly easing,” Edward Moya, senior market analyst at Oanda, told MarketWatch.

The S&P/ASX 200 rose for a second session yesterday after the Reserve Bank left its key rate on hold. The benchmark index climbed 1.6 per cent to extend this week’s gains to 161 points. The local market has been in recovery since belly-flopping into May with a 5 per cent splat on Friday.

Some of the momentum in resource stocks faded in the US. BHP’s US-listed stock put on 0.72 per cent after its UK-listed stock gained 2.74 per cent. Rio Tinto fell 1.62 per cent in the US after adding 1.17 per cent in the UK. The price of iron ore landed in China was unchanged due to regional holidays.

Gold eased for the first time in three days as optimism about potential vaccines and re-opening the economy dulled demand for havens. Gold for June delivery settled $2.70 or 0.2 per cent weaker at US$1,710.60 an ounce.

Industrial metals were lifted by signs countries around the world were easing lockdown restrictions. Benchmark copper on the London Metal Exchange climbed 0.7 per cent to US$5,127.50 a tonne. Aluminium put on 0.1 per cent, nickel 1.6 per cent, lead 0.2 per cent, zinc 1 per cent and tin 0.9 per cent.

The dollar edged up 0.1 per cent to 64.37 US cents.

The day ahead brings March retail sales figures at 11.30 am EST. Wall Street has crude oil inventories and private payrolls data ahead, as well as quarterly earnings from General Motors, Fox, Apache and PayPal.  

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