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Index futures point to a lacklustre start to Australian trade despite gains in Europe and Asia after China announced fresh stimulus measures to counteract the effects of the coronavirus.
ASX SPI200 index futures drifted four points or less than 0.1 per cent lower to 7062 on below-average volume as Wall Street took a long weekend for Presidents Day.
US index futures climbed after China’s central bank cut a key lending rate by 10 basis points and announced it will pump more than $US29 billion in additional funding into money markets. China’s finance minister confirmed plans to cut taxes as the economy teeters under the impact of factory closures and travel restrictions. S&P 500 futures rose seven points or 0.22 per cent.
The Shanghai Composite surged 2.28 per cent and has now recouped most of its losses since the Covid-19 outbreak triggered fears of a major global economic slowdown. Hong Kong’s Hang Seng gained 0.52 per cent. Japan’s Nikkei shed 0.69 per cent following news that the economy contracted last quarter at the fastest rate in nearly six years.
European markets hit new highs before moderating gains. The pan-European Stoxx 600 closed 0.34 per cent ahead after setting a record. Sentiment has been helped by evidence of solid earnings growth last quarter for the first time in a year.
Investors kept a wary eye on the latest coronavirus statistics. The number of new cases in China increased to 2,048 on Sunday from 2,009 the previous day, but the broader trend remained hopeful.
“The latest numbers from the Hubei province still suggest that the infection pace is slowing after the sudden jump following the methodology changes last week,” Danske Bank analysts wrote in a research note.
The ASX 200 traded in a holding pattern for much of yesterday’s session, closing five points or less than 0.1 per cent lower at 7125. Without a lead from Wall Street, any momentum today may come from earnings season. Index heavyweight BHP reports today, along with Coles, Cochlear, Ansell, Oz Minerals, Emeco Holdings, Virtus Health, Monadelphous Group and IOOF Holdings.
Overnight, BHP’s UK-listed stock rallied 0.98 per cent and Rio Tinto’s UK stock gained 0.37 per cent as iron ore climbed back above $US90 a dry ton. The spot price landed in China rose $1.75 or 2 per cent to $US90.10.
Copper claimed a three-week high as the latest Chinese stimulus moves encouraged buyers. Benchmark copper on the London Metal Exchange was bid up 0.9 per cent to $US5,811 a tonne at the close. Nickel gained 0.7 per cent, zinc 1.1 per cent and tin 0.4 per cent. Aluminium eased 0.1 per cent. Lead ended flat.
Oil extended last week’s 5.2 per cent rebound, its biggest weekly tally in five months. Brent crude settled 35 cents or 0.6 per cent ahead at $US57.67 a barrel.
Gold drifted off a two-week peak in light trade. Gold for April delivery was lately down $2.30 or 0.1 per cent at $US1,584.10 an ounce.
The dollar edged up 0.06 per cent to 67.17 US cents.
Besides a slew of profit reports, the day ahead brings the minutes from this month’s Reserve Bank policy meeting at 11.30 am EST. Wall Street resumes trade tonight, with a regional manufacturing report the highlight of a light slate.
