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The share market is poised to open at an all-time high after US stocks rallied on positive signs from China on the coronavirus epidemic.
ASX SPI200 index futures climbed 15 points or 0.2 per cent to 7103, indicating further gains after the ASX 200 scaled a new peak yesterday. The benchmark Australian index overcame a mixed batch of earnings on Wednesday to rise 31 points or 0.4 per cent to a record close.
The domestic earnings season continues today with another heavy slate of reports from the likes of Qantas, Santos, LendLease and Medibank. The January jobs report – another potential mood-changer – is due at 11.30 am EST. (See below for more on both.)
Wall Street resumed its record run as China moved to a cushion its economy against the economic impact from the Covid-19 outbreak at the same time as a drop in the number of confirmed cases once again sharpened hopes that the outbreak has peaked. The S&P 500 rose 16 points or 0.47 per cent to an all-time closing high. A rebound in Apple and a rally in tech stocks helped drive the Nasdaq to a gain of 84 points or 0.87 per cent. The Dow put on 116 points or 0.4 per cent.
The number of new coronavirus infections continued to trend lower, falling to 1,749 on Tuesday from 1,886 on Monday and more than 2,000 each day over the weekend. The death toll rose to 2,014 and the total number of cases to 75,309.
The People’s Bank of China is expected to cut its benchmark lending rate when members gather for today’s monthly meeting. Overnight, Ministry of Industry officials were reported as saying the government will help companies ride out the economic hit from breaks in the supply chain caused by factory stoppages and travel bans. Separately, Bloomberg said the government was considering injecting cash into the country’s struggling airlines and facilitating mergers.
China-sensitive tech and energy stocks led the US rally. The tech sector rose 1.1 per cent as Apple bounced 1.45 per cent and Nvidia surged 6.1 per cent following a broker upgrade. The defensive utilities, real estate and consumer staples sectors declined.
Following a profit warning from Apple, yesterday’s Australian session was marked by caveats and uncertainties over the impact of the Covid-19 virus. Wisetech, Crown Resorts and Vicinity Centres warned that business had been affected by the outbreak. Companies slated to report today include Bingo Industries, Boral, Coca-Cola Amatil, Domain Holdings, Iluka, Iress, Origin Energy, Perpetual, Southern Cross Media, Star Entertainment Group, Super Retail Group, Sydney Airport and Whitehaven Coal.
A mixed night for the big iron ore miners saw gains in UK trade give way to weakness in the US. BHP’s US-listed stock eased 0.25 per cent following a 1.44 per cent gain in its UK-listing. Similarly, Rio Tinto shed 0.13 per cent in the US after adding 0.71 per cent in the UK. The spot price for iron ore landed in China held steady yesterday at $US89.15 a dry ton.
Gold’s charge to fresh six-year highs continued as investors remained wary about potential disruption to the global economy from the virus epidemic. A fifth night of gains saw gold for April delivery settle $8.20 or 0.5 per cent higher at $US1,611.80 an ounce.
The US energy sector was the night’s best performer, rising 1.3 per cent after crude claimed a three-week high with a seventh straight rise. Brent crude settled $1.37 or 2.4 per cent ahead at $US59.12 a barrel.
A flat night on the London Metal Exchange produced minimal change. Benchmark copper eased $3 or less than 0.1 per cent to $US5,770 a tonne. Aluminium and nickel were flat. Lead and zinc fell 0.8 per cent. Tin edged up 0.1 per cent.
The dollar declined 0.12 per cent to 66.76 US cents.
The key event today for equity and forex traders is the 11.30am EST January employment report, which will have a significant effect on the rates outlook. After two months of strong employment growth, economists expect the number of new jobs created tapered down to 10,000 last month from growth of 28,900 in December and 39,900 in November. The European Central Bank holds a policy meeting tonight. In the US, reports are due on crude oil inventories, unemployment claims and manufacturing in the wider Philadelphia region.
