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The last session of the financial year looks set to continue the recent run of sharp reversals after US stocks jagged higher overnight.

ASX SPI200 index futures climbed 67 points or 1.2 per cent, signalling the market will reverse much of yesterday’s 89-point dive on the S&P/ASX 200 at today’s open.

The benchmark index has swung wildly over the last three sessions, hitting a nine-session low yesterday as a rise in coronavirus cases challenged the argument for higher stock prices. Volatility has been exaggerated by weak volumes. Yesterday’s traded volume of 877 million shares was the weakest in more than a month.

US stocks shrugged off a weekend of grim statistics about the virus as investors seized on positive housing data and good news for planemaker Boeing. The S&P 500 bounced 44 points or 1.47 per cent as the banks regained some of Friday’s heavy losses. The Dow was the best of the three major indices thanks to Boeing’s heavy weighting, jumping 580 points or 2.32 per cent. The Nasdaq trailled with a rise of 117 points or 1.2 per cent.

Boeing surged 14.4 per cent on news that its troubled 737 Max was back in the air. Pilots and representatives from the US Federal Aviation Administration began three days of certification tests on the aircraft that was grounded last year after two crashes. If all goes well, the plane could be approved to resume service before the end of the year.

Investors betting on a V-shaped economic recovery were cheered by news that pending home sales bounced 44.3 per cent in the US last month, almost three times the amount economists expected. Chinese industrial profits were up 6 per cent year-on-year in May, the first increase this year.  

The economic news helped offset the latest dire COVID-19 milestones: 10 million infections and half a million deaths. US stocks tumbled on Friday after several ‘hot-spot states’ reclosed businesses that had been allowed to reopen. Analysts looking for positives in the data noted a divergence in the rising number of cases in the US versus the declining number of deaths, a possible sign hospitals have got better at treating the virus. Gilead Sciences announced pricing for its remdesivir drug overnight that was lower than Wall Street analysts had predicted. US health officials said they have secured half a million courses of the treatment.

Bargain-hunters scooped up stocks that had suffered in recent sessions as investors adjusted their expectations for the pace of the economic recovery. The S&P 1500 airlines index jumped 7.7 per cent. Retailers Kohl’s and Gap rose 10.1 per cent and 3.7 per cent, respectively. Disney gained 2.2 per cent.

A sharp fall in iron ore had minimal impact on Australia’s leading producers. The spot price for iron ore landed in China dived $4.65 or 4.5 per cent yesterday to US$99.70 a dry ton. BHP’s US-listed stock put on 0.91 per cent and its UK-listed stock 0.62 per cent. Rio Tinto edged up 0.1 per cent in the UK and shed 0.38 per cent in the US.

Oil was boosted by hopes of higher demand following news Chinese industrial profits increased last month for the first time this year. Brent crude settled 69 cents or 1.7 per cent ahead at US$41.71 a barrel.

Gold closed little changed as the rising virus toll in the US supported demand for the metal near a seven-year high. Gold for August delivery settled 90 cents or less than 0.1 per cent ahead at US$1,781.20 an ounce.

The dollar dipped 0.03 per cent this morning to 68.62 US cents.

The day ahead brings domestic private-sector credit data and a speech by RBA Deputy Governor Guy Debelle, as well as manufacturing and services figures from China.  

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