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Australian stocks looked set to open higher as a Wall Street rally and easing lockdown restrictions outweigh simmering trade tensions with China.

ASX SPI200 index futures rose 32 points or 0.6 per cent after US stocks finished a losing week with modest gains on Friday.

Wall Street inched higher as traders weighed hopes of economic recovery as the country reopens against grim backward-looking data and an ongoing squabble with China. The S&P 500 put on 11 points or 0.39 per cent to reduce its loss for the week to 2.3 per cent. The Dow added 60 points or 0.25 per cent and the Nasdaq 71 points or 0.79 per cent. For the week, the Dow shed 2.65 per cent and the Nasdaq 1.2 per cent.

US stocks sank early in the session on news of record plunges in retail sales and manufacturing output. Retail sales collapsed 16.4 per cent last month as panic stockpiling in March faded, well ahead of the 12.5 per cent decline anticipated by economists. Industrial production slumped 11.2 per cent, the biggest monthly fall in the 101-year history of the Federal Reserve survey. A preliminary measure of consumer sentiment this month ticked up to 73.7 from 71.8 in April but remained near historic lows.

The west’s simmering dispute with China showed no sign of easing. On Friday, the White House opened a new front by announcing a new rule that would block Chinese telecom giant Huawei from accessing US technology. The Chinese state-run Global Times said Beijing may retaliate by adding Apple, Boeing and other US manufacturers to an “unreliable entity list”. The editor-in-chief of the tabloid newspaper called on China to expand its nuclear arsenal.

The newspaper also attacked Australia for pushing for an independent investigation into the origins of COVID-19, branding the nation a “US attack dog” and dismissing Trade Minister Simon Birmingham’s suggestion that local producers should look beyond China for trading partners. A Global Times feature over the weekend highlighted China’s alternatives to Australian iron ore and agricultural produce.  

Australian stocks outperformed Wall Street last week partly because Australia is seen to be further down the path to post-pandemic recovery. The S&P/ASX 200 rose 1.4 per cent on Friday to finish 0.3 per cent ahead for the week. However, the nation’s dependence on Chinese trade means the pace of recovery hangs on continuing demand for Australian produce and raw materials.  

Retail stocks led US gains on Friday despite the bleak April sales report. The S&P retail exchange traded fund climbed 2 per cent as Dow components Home Depot and Walmart gained 2 per cent.  

Investors were cheered by progress on a new US$3 trillion stimulus package, which later passed in the House of Representatives. While the package faces resistance in the Republican-controlled Senate, a compromise measure is expected to pass.

Australian miners marched higher in overseas trade as strength in iron ore overshadowed weakness in base metals. BHP’s US-listed stock advanced 2.45 per cent and its UK-listed stock 4.28 per cent. Rio Tinto put on 2.21 per cent in the US and 4.39 per cent in the UK. The spot price for iron ore landed in China improved $2.50 or 2.8 per cent to US$93.25 a dry ton. On the London Metal Exchange, copper eased 0.3 per cent, aluminium 0.8 per cent, nickel 1.8 per cent, lead 1.2 per cent and tin 0.6 per cent. Zinc gained 0.4 per cent.

Oil extended a week-long rebound with further gains on Friday. Brent crude settled $1.37 or per 4.4 cent ahead at US$32.50 a barrel. The global benchmark rose 4.39 per cent last week on expectations of improving demand as lockdown restrictions ease. The US benchmark fared even better, surging 19 per cent over the week.

The US’s feud with China kept gold well bid. Gold for June delivery settled $15.40 or 0.9 per cent higher at US$1,756.30 an ounce, the highest settlement in a month.  

The dollar ticked higher at the start of a new week, rising 0.1 per cent to 64.2 US cents.

The day ahead brings the latest insight from the Australian Bureau of Statistics into the impact on households of COVID-19. Tomorrow brings the minutes from the last Reserve Bank policy meeting, as well as weekly consumer confidence and payroll and wages data.   

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