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The share market looks set to open higher after a record jump in US coronavirus cases fuelled a rally in ‘stay-at-home’ stocks.  

ASX SPI200 index futures climbed 50 points or 0.8 per cent to 5941, signalling  a possible break in a three-session losing run that has stripped 138 points or almost 2.3 per cent from the S&P/ASX 200.

Travel and tourism stocks, retailers and shopping centre operators fell heavily yesterday as Melbourne prepared to go back into Stage 3 lockdown to control the spread of COVID-19. Defensive plays, including supermarkets and gold stocks, rallied.

The pattern on Wall Street was similar overnight, with gains in so-called stay-at-home winners outweighing declines in companies that struggle under lockdowns and low economic growth. The Nasdaq closed at a new high after rising 149 points or 1.44 per cent. A strong final-hour rally helped the S&P 500 put on 25 points or 0.78 per cent. The Dow was underwater for much of the session but finished 177 points or 0.68 per cent ahead.

News of a record increase in US coronavirus infections on Tuesday of more than 60,000 cases drove investors into the likes of Apple, Amazon and Netflix. Microsoft gained 2.2 per cent.

“It seems like you flip a switch when those COVID cases go up, the country takes a step back in terms of reopening the economy and all those names find high demand,” Christian Fromhertz, CEO of The Tribeca Trade Group, told CNBC.

The death toll in the US reached 131,666 as the number of cases passed three million. Several states, including California and Texas, recorded new daily peaks in infections.

The NYSE Arca Gold Bugs index of miners rallied 3.1 per cent as gold reached its highest level since September 2011. Gold for August delivery settled $10.70 or 0.6 per cent ahead at US$1,820.60 an ounce. The metal has benefitted from concerns about record-low interest rates and the long-term effects of central bank stimulus efforts designed to cushion the economy from the effects of the pandemic.

“Gold has been a haven for investors looking ahead to volatility in stocks, currencies and low rates,” George Gero, managing director at RBC Wealth Management, said in emailed commentary.

The market got a late lift from an optimistic economic outlook from Federal Reserve official James Bullard. The St Louis Fed President said the economy was “tracking very well right now” and unemployment could fall as low as 7 per cent by year-end.

While recent economic reports have surprised to the upside, the real test for investors comes when the Q2 earnings season kicks off next week. Data from market information specialist Refinitiv indicate analysts expect earnings to plunge by 44 per cent from the same period last year.

Resource giants BHP and Rio Tinto look set to recoup yesterday’s ASX losses following a surge in iron ore and gains in oil and most base metals. BHP’s US-listed stock bounced 2.38 per cent and its UK-listed stock 1.99 per cent. Rio Tinto gained 2.44 per cent in the US and 0.92 per cent in the UK. The spot price for iron ore landed in China jumped $3.45 or 3.3 per cent to US$106.90 a dry ton.

Copper claimed its highest level since January as Chile locked down to contain the pandemic. Benchmark copper on the London Metal Exchange rose 0.7 per cent to US$6,230.25 a tonne. Aluminium advanced 2 per cent, nickel 0.2 per cent, zinc 2.9 per cent and tin 0.6 per cent. Lead eased 0.9 per cent.

Oil hit a four-month peak on signs of improving  US demand. Brent crude settled 21 cents or 0.5 per cent ahead at US$43.29 a barrel, its highest level since March 6.

The dollar pushed back towards 70 US cents. The Aussie was lately up 0.52 per cent at 69.82 US cents.

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