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Shares are pointing lower after dire economic data and a stimulus stalemate drove the Dow Jones Industrial Average and S&P 500 into the red.

ASX SPI200 index futures sank 28 points or 0.4 per cent, implying the S&P/ASX 200 will give back some of yesterday’s 44-point advance at today’s open.

However, the outlook for the day improved sharply in the last hour following earnings updates from tech giants Facebook, Amazon, Apple and Alphabet. The US heavyweights rallied in after-market trade as they reported quarterly earnings following the closing bell this morning. Facebook was lately up 6.7 per cent, Amazon 5.1 per cent, Apple 5.6 per cent and Alphabet 0.8 per cent. Nasdaq index futures bounced 2 per cent and S&P 500 futures 0.5 per cent.  

The regular session finished mixed as investors digested the worst US GDP reading in history, an increase in claims for unemployment benefits and little sign of progress in negotiations for a new stimulus package to replace measures expiring tonight. The Dow lost 226 points or 0.85 per cent as investors dumped companies whose earnings depend on the economy recovering. The S&P 500 finished 12 points or 0.38 per cent lower. The Nasdaq outperformed, rising 45 points or 0.43 per cent as traders bet on a positive reaction to this morning’s after-market earning reports.

The US economy shrank by almost a third last quarter as the country locked down to contain the COVID-19 outbreak. Gross domestic product contracted a record 32.9 per cent, marginally ahead of the median view of economists polled by MarketWatch, who predicted a 35 per cent decline. Consumer spending, which drives growth, fell 34.6 per cent.

“This is really a day that will live in infamy,” Kent Engelke, chief economic strategist and managing director of Capitol Securities in the US, told MarketWatch.

While the GDP data showed the economy started to climb out of the hole in May, unemployment benefit claims suggested the recovery in the jobs market may be stalling. Continuing claims climbed 867,000 to 17 million as several states introduced new restrictions to contain outbreaks.

The grim data highlighted the importance of tonight’s deadline for a new US$1 trillion stimulus package. White House Chief of Staff Mark Meadows this morning said it was too late to avoid a gap in unemployment payments as political divisions remained over the content of a new package.

The energy sector led the US sell-off, falling 4.1 per cent amid concerns about demand as unemployment rises and government payments are delayed. Brent crude settled 81 cents or 1.9 per cent weaker at US$42.94 a barrel. The US benchmark fell 3.3 per cent to US$39.92, its first close below US$40 in three weeks. Exxon Mobil and Chevron were the biggest drags on the Dow, falling 4.9 and 4.2 per cent, respectively. Industrial giants Caterpillar, Dow Inc and Boeing also weighed.

The materials sector slumped 2 per cent, pressuring Australian market heavyweights BHP and Rio Tinto. BHP’s US-listed stock gave up 2.05 per cent and its UK-listed stock 2.46 per cent. Rio Tinto shed 2.62 per cent in the US and 2.55 per cent in the UK. The spot price for iron ore landed in China edged up 55 cents or 0.5 per cent to US$111.45 a dry ton.

Gold suffered its first setback in ten sessions. The precious metal for August delivery settled $11.10 or 0.6 per cent lower at US$1,942.30 an ounce, a day after reaching a new closing high. Silver tumbled 3.9 per cent to US$23.36.

Base metals were hit by news of record coronavirus infections here, India and parts of the US. Benchmark copper on the London Metal Exchange declined 0.6 per cent to US$6,441.75 a tonne. Aluminium dropped 0.1 per cent, nickel 1.1 per cent, zinc 0.5 per cent and tin 0.7 per cent. Lead was unchanged.

The dollar rose 0.1 per cent to 71.93 US cents.

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