Stocks look set to extend a robust start to the week after optimism that the spread of the coronavirus may be slowing fuelled strong gains in the US and Europe.
Australian index futures surged 124 points or 2.4 per cent to 5397, positioning the S&P/ASX 200 for its highest open in three weeks. The benchmark index advanced 219 points or 4.3 per cent yesterday.
Wall Street started the week at a hectic pace, jumping 7 per cent after a downturn in new infections raised hopes the pandemic in the US is close to peaking. The S&P 500 surged 175 points or 7.03 per cent, erasing last week's 2.1 per cent decline. The Dow put on 1,627 points or 7.73 per cent and the Nasdaq 540 points or 7.33 per cent.
With the nation braced for "peak death week", investors were encouraged that the number of new infections declined across the country on Sunday and the death toll in the epicentre of the outbreak - New York - dropped for the first time. New York State recorded 584 deaths on Sunday, down from 630 on Saturday.
“It is definitely not going to be a one-way street but this potentially could be a turning point," Peter Jankovskis, co-chief investment officer at OakBrook Investments in the US, told Reuters. "We are starting to get some good news and hopefully that trend will continue.”
Wall Street's "fear gauge", the VIX, fell to its lowest level in two weeks. All 30 Dow components rallied, with gains ranging from 2.4 per cent for Procter & Gamble to a 19.5 per cent surge in Boeing. The technology sector led the advance with a rise of 8.8 per cent, followed by utilities +7.9 per cent and consumer discretionary +7.7 per cent. Energy and consumer staples trailled with gains of 5.2 per cent and 3.9 per cent, respectively.
Earlier, European markets marched higher as the rate of new infections appeared to slow in the continent's worst-hit countries. Italy reported its lowest death toll in more than two weeks. Spain and Germany both reported slowdowns in infections. The pan-European Stoxx 600 climbed 3.73 per cent as Italy's benchmark put on 4 per cent, France 4.61 per cent and Germany 5.77 per cent.
Oil trimmed two days of extreme gains after a meeting of major producers was delayed until Thursday. Brent crude settled $1.06 or 3.1 per cent lower at US$33.05 a barrel after rocketing 22 per cent last week after US President Donald Trump suggested Saudi Arabia and Russia were on the verge of a deal to reduce production. A virtual meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies originally scheduled for last night was delayed amid reports of tensions between the Saudis and Russians. Market sentiment was boosted overnight by claims from the chief of Russia's sovereign wealth fund that the two sides were "very, very close" to a deal.
“Forget all of the drama,” Phil Flynn, senior market analyst at The Price Futures Group in the US, told MarketWatch. “The pressure is too high for OPEC+ not to cut.”
BHP and Rio Tinto rolled higher in overseas action. BHP's US-listed stock gained 6.31 per cent and its UK-listed stock 3.03 per cent. Rio Tinto added 2.89 per cent in the US and 0.41 per cent in the UK. Iron ore has steadied over the last few sessions just above US$80 a dry ton. Yesterday the spot price for ore landed in China eased 10 cents or 0.1 per cent to US$82.55.
Gold closed at a seven-year high as investors continued to hedge against the fallout from the pandemic. Gold for June delivery settled $48.20 or 2.9 per cent ahead at US$1,693.90 an ounce.
Most industrial metals firmed with the slowing death toll. Benchmark copper on the London Metal Exchange rose 1 per cent to US$4,870 a tonne. Nickel bounced 0.5 per cent, lead 1.1 per cent, zinc 1.2 per cent and tin 1.3 per cent. Aluminium eased 0.8 per cent.
The dollar rallied 1.5 per cent to 60.86 US cents.
A busy day ahead brings an index of services activity during March at 8.30 am EST, followed by March job advertising data and February trade figures at 11.30 am. The Reserve Bank sits this morning and releases a policy update at 2.30 pm. The meeting is expected to leave the cash rate at a record low 0.25 per cent.