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A late swoon on Wall Street points to a soft open to Australian trade after dire US payrolls data underlined the economic impact of coronavirus lockdowns.  

ASX SPI200 index futures slid 48 points or 0.9 per cent to 5348, indicating further weakness following yesterday’s 23-point or 0.4 per cent retreat.

US stocks closed mixed but broadly lower. The S&P 500 traded both sides of break-even for much of the session before fading in the last half hour to a loss of 20 points or 0.7 per cent. The Dow Jones Industrial Average gave up 218 points or 0.91 per cent as gains in tech giants Apple and Microsoft were outweighed by declines in “old-school” businesses such as Dow Inc, AmEx, Chevron and Boeing. The Nasdaq trimmed its rally but finished 45 points or 0.51 per cent ahead.

A two-speed market saw businesses that benefit from stay-at-home orders outperform. Netflix climbed 2.3 per cent, Amazon 1.4 per cent, Apple 1 per cent and Facebook 0.7 per cent.

“The leadership has come from stocks that benefit from stay-at-home economy,” Jack Janasiewicz, portfolio strategist at Natixis Investment Managers, told Reuters. “For the most part people are hedging their bets, increasing their exposure to companies such as Amazon and Microsoft.”

The hit to the economy from the pandemic was starkly illustrated by news private employers shed 20.2 million jobs last month. While the report was the worst in the history of the series, it was marginally better than the 22 million losses predicted by economists polled by Dow Jones. Still, it sharpened expectations for tomorrow night’s monthly government employment report, tipped by Federal Reserve official James Bullard to be “one of the worst ever”.

Investors continued to seize on any evidence of life returning to normal. New York Governor Andrew Cuomo announced seven targets to be met before lockdown restrictions will be eased. Some parts of the state were already meeting five out of seven requirements. California is set to allow clothes stores, flower shops and bookstores to commence “curbside pick-up” from tomorrow. The number of new cases in the US has been levelling off after infecting more than 1.2 million Americans, according to data from John Hopkins University.

The energy sector was among the principal drags on the index, falling 2.6 per cent as oil ended a five-session recovery. Brent crude settled $1.25 or 4 per cent lower at US$29.72 a barrel. The US benchmark, West Texas Intermediate, dropped 57 cents or 2.3 per cent to US$23.99 after rallying more than 100 per cent in the last week.

Mining stocks may resist any downtrend in the broader market today following slim gains in overseas action as iron ore and copper rallied. BHP’s US-listed stock put on 0.56 per cent and its UK-listed stock 1.32 per cent. Rio Tinto added 0.59 per cent in the US and 0.15 per cent in the UK. The spot price for iron ore landed in China resumed trade with a rise of 25 cents or 0.3 per cent to US$84.20 a dry ton.

Copper rose for a third day as buyers welcomed a pause in US-China squabbling and signs that economies around the world are slowly starting to re-open. Benchmark copper on the London Metal Exchange climbed 0.8 per cent to US$5,167.50 a tonne. Nickel gained 2.6 per cent and zinc 3.5 per cent. Aluminium dipped 0.1 per cent, lead 0.1 per cent and tin 0.2 per cent.

A firming US dollar helped push gold lower. Gold for June delivery settled $22.10 or 1.3 per cent weaker at US$1,688.50 an ounce.

The S&P/ASX 200 seems to have settled into a sideways trading range after a swift partial rebound from the February-March market crash stalled just below 5600. The index has been moving between 5100 and 5550 for almost a month. A close above 5522 might be the signal for another upleg.

The dollar was steady this morning at 64.03 US cents.

The day ahead brings domestic trade figures at 11.30 am EST and Chinese services data at 11.45 am. Rio Tinto and QBE are set to hold virtual AGMs. Wall Street has weekly unemployment claims tonight, as well as quarterly earnings from News Corp, GoPro and TripAdvisor.

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