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The share market has a record in its sights after signs of a slowdown in the spread of the coronavirus helped lift Wall Street to fresh highs.
ASX SPI200 index futures surged 42 points or 0.6 per cent to 7061 ahead of another big day of domestic interim earnings. An opening rise of that scale would push the ASX 200 to within a few points of the old January high, following a 33-point rally yesterday.
Earnings season came alive yesterday as strong reports from market heavyweights Commonwealth Bank and CSL soothed concerns about elevated valuations. CSL climbed 0.8 per cent to a new high and CBA 4.1 per cent to its strongest level since 2015. Today brings a slew of reports from the likes of Telstra, AMP, Woodside, Newcrest, South32, AGL, Treasury Wine Estate and Goodman Group.
US stocks extended this week’s record run as concerns over the coronavirus epidemic continued to abate. The number of new cases reported in China fell to a two-week low yesterday, adding support to expert medical opinion that the virus may have peaked. The Chinese government has introduced a series of measures to cushion the economy from the effects of city lockdowns and stoppages at factories.
The S&P 500 rose 22 points or 0.65 per cent to a record close. The Nasdaq put on 87 points or 0.9 per cent. The Dow added 275 points or 0.94 per cent.
Reuters reported buying interest in companies that would benefit from a second presidential term for Donald Trump. Health insurers moved higher after Bernie Sanders won the New Hampshire primary, increasing the likelihood he will secure the Democratic Party nomination for president. Sanders is seen as a weak opponent, increasing the odds on Trump winning a second term.
“Markets are operating under the presumption that if Bernie Sanders does get the nomination, he will not be able to win in a general campaign,” Danielle DiMartino Booth, chief strategist at Quill Intelligence told Reuters. “That would mean four more years of polices that have been met with such friendliness by the financial markets.”
Other gainers included airlines and tourism-dependent businesses that will benefit from a return to normal relations with China once the coronavirus passes. Energy and resource stocks rebounded as oil, copper and iron ore rallied on hopes of improved demand.
BHP’s US-listed stock gained 1.67 per cent and its UK-listed stock 2.04 per cent. Rio Tinto climbed 2.67 per cent in the US and 2.66 per cent in the UK. The spot price for iron ore landed in China improved $2.45 or 2.9 per cent to $US88 a dry ton.
Energy was the pick of the sectors, rising almost 1.4 per cent as crude responded to the drop in new cases of coronavirus. Brent crude settled $1.78 or 3.3 per cent higher at $US55.79 a barrel, even as a report showed US stockpiles increased for a third straight month.
Most industrial metals inched higher as caution prevailed after factory stoppages triggered sharp increases in warehouse stocks. Benchmark copper on the London Metal Exchange climbed 0.3 per cent to $Us5,764 a tonne. Aluminium gained 0.2 per cent, lead 0.2 per cent and tin 0.2 per cent. Nickel and zinc finished barely changed.
Gold turned positive after US Federal Reserve Chair Jerome Powell told lawmakers the central bank would use quantitative easing if the economy turned south. Gold for April delivery settled $1.50 or 0.1 per cent higher at $US1,571.60 an ounce.
The dollar rose 0.36 per cent to 67.37 US cents.
Besides a full slate of interim company earnings, the day ahead will bring an insight into the Reserve Bank’s thinking when Governor Philip Lowe takes part in a panel discussion in Melbourne. The January consumer inflation report is tonight’s scheduled highlight in the US.
