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Index futures indicate a positive open to Australian trade despite a losing end to Wall Street’s worst ever first quarter.
ASX SPI200 futures edged up 71 points or 1.4 per cent this morning to 5180. The rise suggests an early reversal of some of yesterday’s 105-point or 2 per cent tumble.
The S&P/ASX 200 yesterday wrapped up the biggest quarterly loss in the index’s 20-year history. The benchmark has lost 24 per cent since the start of the year. The All Ordinaries index, which has been around significantly longer, shed 24.9 per cent during its worst quarter since the 1987 crash.
The cycle of unwelcome milestones continued in the US, where the S&P 500 and Dow logged their biggest ever first-quarter losses and oil sealed its largest quarterly loss since records began in 1983. A volatile session saw stocks trade higher in the morning before falling away as institutional investors re-jigged their portfolios on the last day of the quarter. The S&P 500 finished 42 points or 1.6 per cent in the red. The Dow gave up 410 points or 1.84 per cent and the Nasdaq 74 points or 0.95 per cent.
The market was pushed around by conflicting signals about the spread of the Covid-19 virus and the health of the global economy. The number of infections in New York state jumped 14 per cent yesterday to more than 75,000 as the national death toll passed 3,000. At the same time, the government’s top infectious disease adviser said he saw “glimmers” that social distancing was slowing the pandemic, but it was too early to call it a turnaround.
Consumer confidence plunged last month, but by less than economists expected. The Conference Board index fell to 120 from 132.6 in February. The median expectation among economists polled by Dow Jones was for a reading of around 110. Chinese manufacturing figures released yesterday showed a strong rebound in activity as factories re-opened.
Goldman Sachs raised its unemployment outlook to a peak of 15 per cent from an original prediction of 9 per cent. The company’s analysts now expect US GDP eased 9 per cent last quarter, to be followed by a 34 per cent plunge this quarter, the worst since WWII. However, Goldman tips the third quarter will deliver a 19 per cent rebound in activity, the fastest in history.
Stock markets around the world have recouped some of their losses over the last week, raising hopes that the worst of the sell-off has passed. But analysis of past bear markets show sharp bounces are not uncommon before further selling.
“Last week’s double-digit gain for markets was a welcome relief rally, though market bottoms are rarely as clean as this one has been,” Mark Hackett, chief of investment research at Nationwide in the US, told CNBC. “Markets will need to reflect more traditional interactions before confidence in a bottom can be reached.”
The energy sector bucked the overnight trend with a rise of 1.6 per cent as US crude pared its worst quarterly loss on record. West Texas Intermediate bounced 39 cents or 1.9 per cent to US$20.48 a barrel. The US benchmark plunged 66.5 per cent over the quarter. Brent crude settled two cents or 0.1 per cent lower at US$22.74 a barrel, wrapping up a quarterly loss of 65.6 per cent.
The defensive utilities and real estate sectors fell 4 per cent and 3.3 per cent, respectively. Financials eased 3 per cent as treasury yields faded.
Resource stocks were mixed. BHP’s US-listed stock eased 0.97 per cent after its UK-listed stock put on 2.77 per cent. Rio Tinto added 1.45 per cent in the US and 1.21 per cent in the UK. The spot price for iron ore landed in China bounced $1.15 or 1.4 per cent to US$83.70 a dry ton.
Gold tumbled after Chinese and US economic data came in stronger than expected. Gold for April delivery settled $46.60 or 2.8 per cent lower at US$1,596.60 an ounce.
Copper, the “metal with the degree in economics”, pared its sharpest quarterly loss since 2011. Benchmark copper on the London Metal Exchange rose 0.9 per cent to US$4,811.50 a tonne, trimming its three-month decline to 22 per cent. Aluminium fell 0.4 per cent, nickel 0.2 per cent and tin 1 per cent. Lead gained 0.9 per cent and zinc 0.4 per cent.
The dollar skidded 0.4 per cent to 61.5 US cents.
The day ahead brings March manufacturing data at 8.30 am EST and February building approvals at 11.30 am, along with the minutes from the last RBA meeting. A private gauge of Chinese factory activity is due at 12.45 pm. Wall Street has manufacturing and private payrolls reports scheduled tonight.
