The share market's four-day winning run faces an early test after a record surge in US coronavirus cases weighed on financial markets over the July 4 long weekend.
Oil, European and Canadian stocks and US index futures declined. The ASX SPI200 slipped 35 points or 0.6 per cent, signalling weakness this morning following a strong week that saw the S&P/ASX 200 put on 154 points or 2.6 per cent.
European and Canadian stocks faded as fears over the impact of COVID-19 on the global economy outweighed positive economic data. The pan-European Stoxx 600 shed 0.78 per cent. The UK's benchmark gave up 1.33 per cent and Germany's DAX 0.64 per cent. Banks and energy stocks were the biggest drags. Canada's main stock index dipped 0.2 per cent.
The US reported more than 55,000 new cases on Thursday, the highest recorded in any country in a single day. The numbers improved only marginally over the Independence Day long weekend, with more than 52,000 new cases on Saturday as Texas and Florida reported record numbers. The US has recorded more than 2.8 million infections and almost 130,000 deaths since the start of the pandemic.
Stock markets have largely ignored the spread of the pandemic while economic data indicate the global economy is recovering. A measure of Chinese services activity hit a decade high last month. In Europe an aggregate measure of services and manufacturing activity also beat expectations, rising to 48.3 from a May reading of 31.9. On Thursday, a report showed the US jobs market rebounded in June as 4.8 million Americans went back to work.
US index futures tracked European markets lower. S&P 500 futures eased 13 points or 0.43 per cent. Dow futures declined 136 points or 0.53 per cent. Nasdaq futures dipped 30 points or 0.26 per cent.
Trading volumes on financial markets were depressed by the US holiday. Friday's volume on the S&P/ASX 200 of 787 million trades was the lowest since mid-February. Much of the excitement here last week took place at the speculative end of the market, which witnessed several quadruple-digit percentage runs, including Etherstack, Alterity Therapeutics and Dorsavi. All three fell heavily on Friday.
The Reserve Bank meets tomorrow, but is not expected to announce any major shift in policy with the cash rate already at a record low 0.25 per cent. Reports are due today on jobs advertising and inflation.
European energy stocks retreated with crude prices. Brent crude dropped 34 cents or 0.79 per cent to US$42.80 a barrel.
Mining heavyweights BHP and Rio Tinto tracked European indices lower. BHP's UK-listed stock eased 1.56 per cent. Rio Tinto shed 1.9 per cent in the UK. The spot price for iron ore landed in China lifted 75 cents or 0.7 per cent to US$101.20 a dry ton.
Copper's 40 per cent rebound the March pandemic lows stalled amid technical indications the rally has run too far, too fast. Benchmark copper on the London Metal Exchange fell 0.8 per cent to US$6,023.50 a tonne. Aluminium lost 1.3 per cent, zinc 0.8 per cent, tin 0.1 per cent and lead less than 0.1 per cent. Nickel gained 0.4 per cent.
The dollar dropped 0.12 per cent this morning to 69.29 US cents.