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Australian shares have a shot at a fourth straight rise for the first time since July after US stocks rallied on revived hopes for targeted stimulus measures.
ASX SPI200 index futures climbed 25 points or 0.4 per cent as a change of approach at the White House fuelled a strong rebound on Wall Street.
The S&P 500 bounced 59 points or 1.74 per cent, reversing Tuesday’s 1.4 per cent dive. The Dow Jones Industrial Average gained 531 points or 1.91 per cent. The Nasdaq Composite added 210 points or 1.88 per cent.
What’s driving the market
A day after triggering a collapse on Wall Street by abandoning negotiations with the Democrats for a comprehensive coronavirus relief package, US President Donald Trump stoked a rebound by tweeting his support for smaller standalone measures for airlines and small businesses.
“The House & Senate should IMMEDIATELY Approve 25 Billion Dollars for Airline Payroll Support, & 135 Billion Dollars for Paycheck Protection Program for Small Business,” he tweeted. “Both of these will be fully paid for with unused funds from the Cares Act. Have this money. I will sign now!”
The S&P’s index of airline stocks jumped 3.5 per cent. Planemaker Boeing jumped 3.2 per cent.
Trump also tweeted support for another round of stimulus cheques for ordinary Americans. “If I am sent a Stand Alone Bill for Stimulus Checks ($1,200), they will go out to our great people IMMEDIATELY. I am ready to sign right now.”
The minutes of last month’s Federal Reserve meeting showed central bank officials expected the economic recovery in the US to slow if government did not provide further stimulus. Chair Jerome Powell said the recovery had “a long way to go”.
Australian outlook
Four-session winning runs have been rare during the local market’s sideways trading pattern since June. The last was three months ago at the start of July. That one topped out just above where the S&P/ASX 200 finished yesterday after a slow-burning rally on the back of a stimulatory Federal Budget lifted the index 74 points or 1.3 per cent to its strongest close in four weeks.
Yesterday’s advance was led by consumer stocks and other winners from the budget. In the US overnight, all 11 sectors rose, led by materials +2.8 per cent, consumer discretionary +2.5 per cent and industrials +2.3 per cent. The technology sector gained 1.8 per cent despite a critical report from a House of Representatives committee investigating anti-competitive business practices.
The dollar stabilised overnight as the White House’s change of tack took the wind out of a rally in the greenback. The Aussie bounced 0.4 per cent to 71.35 US cents.
Investors will keep an eye on Chinese markets as they re-open after the week-long Golden Week public holiday. A gauge of Chinese services sector activity is due this morning.
Commodities
The buoyant mood on Wall Street lifted the energy sector 1.4 per cent despite declines on oil markets. Brent crude settled 66 cents or 1.6 per cent weaker at US$41.99 a barrel.
The Arca Gold Bugs index of US gold stocks edged up 0.2 per cent despite the yellow metal’s lowest close in a week. Gold for December delivery settled $18 or 0.9 per cent lower at US$1,890.80 an ounce.
A strong night for mining stocks saw BHP’s US-listed stock gain 2.83 per cent and its UK-listed stock 1.99 per cent. Rio Tinto improved 2.68 per cent in the US and 2.35 per cent in the UK. With Chinese markets closed for the last day of Golden Week, the spot price for iron ore landed in China was steady at US$123.15 a dry ton.
