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A mixed finish on Wall Street points to a subdued Australian open after a roaring start to the week.

ASX SPI200 index futures declined 19 points or 0.4 per cent to 5459 as US stocks closed little changed. The Nasdaq extended its winning run into a sixth session, the S&P 500 finished flat and the Dow declined.

Australian stocks ran hard yesterday as state after state announced plans to loosen coronavirus restrictions. The S&P/ASX 200 rallied 70 points or 1.3 per cent with investors snapping up some of the worst-performing COVID-affected companies in the belief Australia is on its way out of the pandemic. Travel and tourism companies, retailers and advertising-starved media companies outperformed.  

However, the way ahead will be bumpy, judging by overnight events. European markets declined and Wall Street stuttered after reports of new infections around the world raised questions about reopening economies too soon. Several countries that have eased restrictions, including Germany, South Korea, Singapore and Japan, reported new clusters. The pan-European Stoxx 600 eased 0.4 per cent, Germany’s DAX index 0.73 per cent and France’s CAC 1.31 per cent.

Weakness in Europe set the scene for a negative start to US trade. The S&P 500 turned positive by lunchtime, but surrendered its gains in the final hour to finish 0.1 per cent or less than a point ahead. The Dow shed 109 points or 0.45 per cent. The Nasdaq held on for a gain of 71 points or 0.78 per cent.

The last week has seen a growing divergence between the performance of big US tech companies that have benefitted from stay at home orders and companies that depend on the economy running normally. Last night’s rise extended the Nasdaq‘s longest winning run since December. The tech-heavy index finished just 6 per cent below its February all-time high.

While the surge of new infections in other parts of the world raised the possibility of secondary shutdowns, investors reportedly bought the opening dip out of  fear of missing the market recovery.

“I don’t know who would be selling going into the reopening of the economy, saying I’m going to take my ball and go home now,” Robert Pavlik, chief investment strategist at SlateStone Wealth in the US, told Reuters. “A lot of professional investors are fearful of missing out and that has kept them in the market begrudgingly.”

Some of the heat came out of stocks that would benefits most from lifting restrictions. Major airlines dropped 3 – 4 per cent, casino groups shed up to 5 per cent and theme-park operator Disney fell 0.9 per cent.

Tech and health were the pick of the US sectors. Seven of eleven sectors declined, led by financials, energy and materials. BHP’s US-listed stock declined 2.7 per cent and its UK-listed stock 1.87 per cent. Rio Tinto gave up 3.15 per cent in the US and 1.38 per cent in the UK. The spot price for iron ore landed in China eased 60 cents or 0.7 per cent to US$87.85 a dry ton.

Fresh production cuts in Saudi Arabia, Kuwait and the United Arab Emirates failed to lift oil. Brent crude settled $1.34 or 4.3 per cent lower at US$29.63 a barrel.

“The Saudi announcement of additional cuts failed to excite the market since it appears the production is being cut as a response to lack of market demand,” Manish Raj, chief financial officer at Velandera Energy, told MarketWatch. “If there are no buyers for the barrels, then there is no reason for the market to cheer the cuts.”

Copper hit an eight-week peak before fading after China’s central bank announced fresh support for the economy over the weekend. Benchmark copper hit US$5,370 a tonne on the London Metal Exchange before finishing 0.4 per cent weaker at US$5,223.75. Aluminium gained 0.8 per cent, nickel 0.2 per cent, lead 1.8 per cent, zinc 1.2 per cent and tin 0.5 per cent.

Gold was dragged lower by a strengthening greenback. Gold for June delivery settled $15.90 or 0.9 per cent in the red at US$1,698 an ounce.

The Australian dollar also wilted under the rise of the US dollar, falling 0.63 per cent to 64.88 US cents.

The 11.30 am EST release of NAB’s April business confidence survey  will shed light on the mood within Australian businesses. China and the US release inflation data later today.

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