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Aussie stocks look set to open lower after Wall Street fell heavily amid jitters over the dangers of lifting lockdown restrictions prematurely.

ASX SPI200 index futures sank 68 points or almost 1.3 per cent despite preempting some of the US weakness yesterday. The S&P/ASX 200 shed 58 points or 1.1 per cent yesterday as US futures deteriorated following reports of rising coronavirus infections in the US and fresh outbreaks overseas.

US stocks finished at session lows after the White House’s top infectious disease expert warned of more “suffering and death” if states reopen their economies too quickly. A market betting on a swift economic revival spiralled in the final hour of trade.

The S&P 500 dropped 60 points or 2.05 per cent. The Nasdaq, which had been leading the market recovery in recent days, snapped a six-session winning run with a fall of 190 points or 2.06 per cent. The Dow gave up 457 points or 1.89 per cent.

Investors tempered high hopes for the reopening of the economy as reports trickled in of setbacks in countries where restrictions have been lifted. New clusters have been identified in China, Germany and South Korea.

US states have begun easing restrictions even as a White House report indicated the infection rate was still climbing in many parts of the country. Leading US disease expert Dr Anthony Fauci said some states were loosening social distancing measures prematurely, elevating the risk of an outbreak the government cannot control.

“If we skip over the checkpoints in the guidelines to: ‘Open America Again,’ then we risk the danger of multiple outbreaks throughout the country,” Fauci told The New York Times. “This will not only result in needless suffering and death, but would actually set us back on our quest to return to normal.”

Market-leading technology stocks fell alongside companies that would benefit from easing restrictions. The FAANG group of tech leaders – Facebook, Amazon, Apple, Netflix and Google parent company Alphabet – all shed between 1.1 and 2.2 per cent. Major banks dropped by more than 3 per cent. Airlines sagged up to 5 per cent after Boeing CEO David Calhoun said a major US airline would “most likely” go bankrupt due to the collapse in business caused by the pandemic.

“From the science viewpoint if we open too quickly, we’ll just go back to where we were. But if we don’t open at all, we have this economic malaise,” Phil Blancato, chief executive of Ladenburg Thalmann Asset Management in the US, told Reuters.

Twenty-nine of thirty Dow components declined, led by falls of at least 3 per cent in global bellwether Caterpillar, JPMorgan Chase and Goldman Sachs. Walmart edged up 0.1 per cent.  

A strong night for select commodities cushioned the big Australian miners from the worst of the sell-off. BHP’s US-listed stock eased 2.21 per cent after its UK-listed stock gained 0.24 per cent. Rio Tinto lost 1.06 per cent in the US after rising 1.08 per cent in the UK. The mixed performance came as iron ore broke back above US$90 a dry ton. The spot price for iron ore landed in China rallied $2.30 or 2.6 per cent to US$90.15.

US oil hit a five-week high in a delayed reaction to news of Saudi production cuts. West Texas Intermediate crude climbed $1.64 or 6.8 per cent to US$25.78 a barrel. Global benchmark Brent crude settled 35 cents or 1.2 per cent ahead at US$29.98 a barrel.

A weaker US dollar and caution over the likely pace of economic outlook helped gold rise for the first time in three sessions. Gold for June delivery settled $8.80 or 0.5 per cent higher at US$1,706.80 an ounce.

Copper outperformed other industrial metals during a lowkey session on the London Metal Exchange. Benchmark copper edged up 0.1 per cent to US$5,227.50 a tonne. Aluminium dropped 1.4 per cent, nickel 0.2 per cent, lead 2.2 per cent, zinc 1.2 per cent and tin 0.1 per cent.

The dollar faded 0.3 per cent to 64.69 US cents.

The day ahead brings the monthly consumer sentiment report at 10.30 am EST and quarterly wage price figures an hour later. Wall Street had crude oil inventories tonight, as well as producer inflation prices and a speech by Federal Reserve Chair Jerome Powell.  

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