ASX Today: ASX caps off worst week since GFC with more losses

Shares are pointing lower at the start of a new month as investors weigh easing lockdown restrictions against a mixed close on Wall Street and a weekend of riots in America.

ASX SPI200 index futures declined 24 points or 0.4 per cent, indicating mild weakness following the local market's second-best week of the year. The S&P/ASX 200 put on 259 points or 4.7 per cent last week, despite a 1.6 per cent setback on Friday.  

Wall Street's three major averages finished mixed but near session highs after President Donald Trump announced punitive measures against China that were lighter than the market anticipated. The S&P 500 erased losses earlier in the session to finish 15 points or 0.48 per cent ahead. The benchmark index gained 3 per cent for the week and 4.5 per cent for the month.

The Dow trimmed its fall but ended 18 points or 0.07 per cent in the red. Computer chipmakers outperformed as the Nasdaq put on 121 points or 1.29 per cent.

President Trump announced he would end special treatment for Hong Kong as retaliation for China announcing a new security law last week that critics say undermines the "one country, two systems" principle that has guided governance of Hong Kong until now. US stocks rose after he made no mention of a deal he struck with China to end a damaging trade war.

“The market was worried he was going to announce something substantial, something detrimental to the US economy," Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in the US, told Reuters. "Then, as he spoke, it became clear the actions being taken were not going to be as dramatic as originally feared.”

Trump's attempt to clamp down on social media giants had a modest impact. Twitter eased 2 per cent and Facebook less than 0.2 per cent after the president signed an executive order aimed at widening their liability for content posted on their platforms. The move came after Twitter added a "factcheck" link to one of his posts last week.

The weekend brought fresh social unrest across the US following the death of a black man in police custody. The killing of George Floyd triggered five nights of arson and looting in Minneapolis and led to demonstrations in at least 30 cities in the US and protests at US embassies in several cities around the world.

Chinese manufacturing data released over the weekend showed activity expanded for a second month, but the outlook was clouded by weak export orders. The manufacturing purchasing managers' index eased to 50.6 from 50.8 in April, but held above the 50-point level that indicates expanding activity. The index for export orders improved to 35.3 from 33.5 and remained in sharp contraction.

A two-month-long recovery in Australian stocks accelerated last week ahead of the easing of more COVID-19 restrictions in much of the country this week. People in New South Wales and Victoria enjoy greater freedoms from today. The Northern Territory intends to move to Stage Three on Friday.

Australia's biggest miners got a leg-up on Friday after iron ore broke above US$100 a ton. BHP's US-listed stock put on 0.86 per cent after its UK-listed stock fell 0.54 per cent. Rio Tinto gained 2.69 per cent in the US and 0.57 per cent in the UK. The spot price for iron ore landed in China surged $4.50 or 4.6 per cent on Friday to US$100.90 a dry ton.

Industrial metals were also strong. Benchmark copper on the London Metal Exchange rose 0.9 per cent to US$5,353.25 a tonne. Aluminium added 0.8 per cent, nickel 0.7 per cent, lead 2.6 per cent and zinc 2.7 per cent. Tin dipped 0.9 per cent.

Sino-US tensions kept gold well bid. Gold for August delivery settled $23.40 or 1.4 per cent ahead at US$1,751.70 an ounce.

Oil inched higher at the end of a strong month. Brent crude settled four cents or 0.1 per cent ahead at US$35.33 a barrel. The front-month contract put on almost 40 per cent during May, the biggest monthly gain since 1999. The more-volatile US benchmark rose 88.4 per cent, the largest monthly gain on record.

The dollar dipped 0.1 per cent this morning to 66.6 US cents.


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