Record highs in Facebook and Amazon helped push Wall Street to a ten-week peak, positioning Australian shares for a positive start to trade.
The S&P/ASX 200 looks primed to open at its highest level since early March, following yesterday’s 0.24 per cent rally. ASX SPI200 index futures climbed 36 points or 0.6 per cent as the three major US indices advanced for the fourth time in five sessions.
Tuesday night’s Moderna-vaccine-doubt tantrum in the US was forgotten as investors focussed on the reopening of the economy and hopes for further stimulus measures. The S&P 500 rose 49 points or 1.67 per cent, reversing Tuesday’s 31-point fall. The Dow gained 369 points or 1.52 per cent. The Nasdaq added 191 points or 2.08 per cent.
Facebook and Amazon, two big winners from the stay-at-home economy, led the rally. Facebook climbed 6 per cent to an all-time high after the social media giant announced a new feature called Facebook Shops that expands its ecommerce offering. Analysts said the addition should help Facebook compete on advertising with Amazon and Google.
Amazon shareholders appeared unfazed. The ecommerce juggernaut, which has benefitted hugely from the switch to online shopping during the coronavirus pandemic, climbed 2 per cent to its own record close.
Moderna bounced 2.5 per cent after the biotech said it will release full data from a trial of an experimental vaccine for treating coronavirus. Initial signs of a breakthrough in the trial triggered a global rally on Monday, before doubts over the robustness of the data caused a rethink on Tuesday.
The Nasdaq moved to within five per cent of its February all-time high. The three major US averages have put on at least 3 per cent this week as states relaxed lockdown restrictions. Restaurants in Connecticut reopened for dining in yesterday and some shops reopened. Several other states plan to lift restrictions before Monday’s Memorial Day holiday.
The White House’s feud with China continued to simmer in the background. The rally was briefly dented by news the Senate had passed a bill aimed at preventing many Chinese companies from listing in the US and delisting others that fail to comply with US regulatory standards. President Donald Trump accused China of “incompetence” over its handling of the COVID-19 breakout and said it was responsible for “mass Worldwide killing!”
The Russell 2000 index of small caps outperformed the other indices, rising 3 per cent in a sign investors are willing to take on more risk. All 11 S&P sectors advanced. Energy, telecoms, financials and tech gained at least 2 per cent. The defensive utilities and health sectors trailled with rises of less than 0.5 per cent.
BHP and Rio Tinto suffered modest setbacks in Australian trade yesterday, but resumed their uptrends in overseas action. BHP’s US-listed stock gained 2.25 per cent and its UK-listed stock 1.17 per cent. Rio Tinto put on 1.1 per cent in the US and 0.4 per cent in the UK. The spot price for iron ore landed in China eased $1.85 or 1.9 per cent to US$96.10 a dry ton.
Oil continued to confound expectations, climbing to a ten-week high as US stockpiles declined for a second week in a sign a global glut is easing. Brent crude settled $1.10 or 3.2 per cent higher at US$35.75 a barrel.
Gold edged up for a second night as the minutes from last month’s Federal Reserve policy meeting showed further stimulus measures remained on the table. Gold for June delivery settled $6.50 or 0.4 per cent ahead at US$1,752.10 an ounce.
Industrial metals attracted a bid amid expectations that China will use this week’s National People’s Congress to announce increased spending on infrastructure to boost the economy. Benchmark copper on the London Metal Exchange jumped 1.7 per cent to US$5,417.50 a tonne. Aluminium and nickel also advanced 1.7 per cent, lead and tin 1 per cent, and zinc 0.3 per cent.
The dollar eased 0.05 per cent to 65.94 US cents.
A busy day ahead brings preliminary manufacturing and services reports for this month at 9 am EST. RBA Governor Phil Lowe is due to participate in a Financial Services Institute webinar at 12.30pm. Europe and the US also have manufacturing and services reports scheduled tonight. Wall Street also awaits data on unemployment benefits and an address by Fed Chair Jerome Powell.