Join our daily newsletter At The Bell to receive exclusive market insights
Australian shares look set to play catch-up after strong economic data and disputed reports of a coronavirus breakthrough fuelled a record night on Wall Street.
ASX SPI200 index futures jumped 56 points or 0.8 per cent to 6964 as oil and industrial metals rebounded.
As the death toll from the virus passed 590, stocks in Europe surged after Chinese TV reported researchers had found an effective treatment combining existing drugs. Separately, UK researchers claimed progress towards a vaccine. The World Health Organization later doused the claims, saying, “There are no know effective therapeutics against this.” The slapdown did little to dull a rally that lifted the pan-European Stoxx 600 index 1.23 per cent and drove US indices back to all-time highs.
The S&P 500 advanced 37 points or 1.13 per cent to a record close. The Dow put on 483 points or 1.68 per cent as the major indices rose for a third day.
The Nasdaq hit an all-time high before a steep sell-off in Tesla tempered gains. The tech-heavy index closed 41 points or 0.43 per cent ahead as the electric car-maker’s parabolic rise came to a brutal halt. Tesla shares closed 17.2 per cent in the red following broker downgrades and after a company executive warned of production delays in China caused by the coronavirus.
Underpinning US gains was an upbeat State of the Union address from President Donald Trump and a round of positive economic reports. Trump’s optimistic portrait of the economy found support in unexpectedly strong private payrolls data. The January ADP report showed private employment increased almost twice as much as economists expected: 291,000 versus a consensus estimate of 156,000. The report is often seen as a useful pointer to the broader government jobs report due tomorrow night. A separate report showed activity in the services sector grew at the fastest rate in six months.
Energy stocks were the night’s standout as oil rebounded from its weakest price in more than a year. The NYSE Energy Index rallied 3.1 per cent as Brent crude settled $1.32 or 2.5 per cent higher at $US55.28 a barrel. The rally followed reports that OPEC and its allies were considering production cuts at a gathering in Vienna.
While the quarterly earnings season continued to deliver more winners than losers, Ford was hammered 9.5 per cent after the carmaker reported a $1.7 billion loss. Spotify fell 4.7 per cent as profits failed to match growth in revenues and active users.
The ASX 200 rose 27 points or 0.4 per cent yesterday, but finished well off its session high following a speech by Reserve Bank Governor Philip Lowe that was widely interpreted as dampening hopes for further rate cuts. Lowe used a speech to the National Press Club to clarify that the central bank will only cut again if unemployment rises and inflation falters.
Iron ore miners shrugged off a setback in the price of ore. BHP’s US-listed stock gained 1.3 per cent and its UK-listed stock 1.06 per cent. Rio Tinto improved 1.29 per cent in the US and 1.58 per cent in the UK. The spot price for iron ore landed in China declined $2.50 or 3 per cent to $US80.55 a dry ton.
Copper hit its highest level in a week as stimulus measures in China fuelled further gains in industrial metals. Benchmark copper on the London Metal Exchange rose 1.9 per cent to $US5,722 a tonne in final open-outcry trading. Aluminium advanced 1.8 per cent, nickel 2.6 per cent, zinc 2.2 per cent and tin 2.3 per cent. Lead slid 0.3 per cent.
Gold recouped some of Tuesday’s sharp losses. Gold for April delivery settled $7.30 or 0.5 per cent ahead at $US1,562.80 an ounce.
The dollar edged up 0.12 per cent to 67.45 US cents.
A big dump of domestic economic data is due at 11.30 am EST, including December retail sales and trade figures, and a quarterly business confidence update. Wall Street is light on scheduled data ahead of tomorrow night’s closely-watched January employment update. However, the corporate reporting season continues full pelt with earnings tonight from the likes of Twitter, VeriSign and Western Union.
