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The share market looks set to give back a hefty chunk of its best monthly gain in decades after Wall Street succumbed to bleak economic data and profit taking.

Australian index futures sank 123 points or 2.2 per cent to 5417, suggesting a swift unwinding of much of yesterday’s 129-point rally. Yesterday’s surge capped a spectacular month that saw the S&P/ASX 200 put on 446 points or 8.8 per cent, the biggest monthly return in the index’s 20-year history. The All Ordinaries gained 487 points or 9.5 per cent during its strongest month since March 1988.

Wall Street also had a banner month, but finished in reverse. The S&P 500 dropped 27 points or 0.92 per cent overnight as dire jobs data and mixed corporate earnings offered a stark reminder of the economic damage from the COVID-19 pandemic. The decline pared the index’s April tally to 12.7 per cent, its best one-month gain since 1987.   

The Dow shed 288 points or 1.17 per cent. The blue-chip average’s 11.1 per cent April advance was its best monthly return in 33 years. The Nasdaq eased 25 points or 0.28 per cent. Its 15.5 per cent April tally was the biggest since the 2000 dot-com boom.

“There was horrific data, and several numbers that were abysmal,” Peter Tuz, president of Chase Investment Counsel in the US, told Reuters. “On the other hand, we’ve had a great month in April and people are taking some money off the table.”

The tone for the session was set in Europe, where the pan-European Stoxx 600 slumped 2.03 per cent after the European Central Bank left interest rates unchanged despite indications pandemic lockdowns have hit the European economy much harder than the US. First-quarter European gross domestic production dived an annualised 14.4 per cent, almost three time as much as the US decline of 4.8 per cent. Italy, Spain and France recorded sharp contractions.

Economic news also cast a long shadow over the US session. Almost 3.8 million Americans filed for unemployment benefits for the first time last week, pushing the number of job losses since the start of the pandemic over 30 million. Incomes sagged 2 per cent during March and consumer spending declined 7.5 per cent as people lost their jobs and stayed home.

US stock losses temporarily accelerated after the Washington Post reported the White House was considering retaliation against China for its handling of the initial coronavirus breakout. The virus has claimed more than 230,000 lives around the world and infected more than three million people.

Earnings season produced the usual mix of winners and losers. Facebook climbed 5.4 per cent and Microsoft 1 per cent, while Tesla shed 2.3 per cent and American Airlines 4.9 per cent. Apple sank 1.6 per cent and Amazon 5.3 per cent in after-hours trading after delivering earnings following the close of regular trade.

The materials sector led the decline, falling 3 per cent. BHP’s US-listed stock gave up 3.4 per cent and its UK-listed stock 4.69 per cent. Rio Tinto lost 5.48 per cent in the US and 6.56 per cent in the UK. The spot price for iron ore landed in China improved $1.35 or 1.6 per cent to US$83.95 a dry ton.

Oil continued an extraordinarily volatile run with a rise of 25 per cent in the US that trimmed its April loss to just 8 per cent. West Texas Intermediate crude settled $3.78 or 25.1 per cent ahead for the session at US$18.81 a barrel. Brent crude settled $2.73 or 12.1 per cent higher at US$25.27 a barrel.

Gold unwound its post-Federal Reserve meeting rally, finishing lower in choppy trade. Gold for June delivery settled $19.20 or 1.1 per cent weaker at US$1,694.20 an ounce.

The dollar retreated 0.7 per cent overnight to 65.1 US cents.

Producer inflation figures are due at 11.30 am EST. Trade in China and several European markets is suspended for May/Labour Day holidays. Wall Street has manufacturing data on tap tonight, plus earnings from Exxon Mobil and Chevron.     

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