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Aussie stocks face a muted return to action after Wall Street sank at the start of what is expected to be a week of harrowing US corporate earning updates.

Local traders have mixed leads following the Easter break. After rising on Thursday, Wall Street gave back most of those gains overnight. Gold settled at a new seven-year high. Iron ore rebounded. Oil barely reacted to an historic deal to slash production.

ASX SPI200 index futures last traded at midnight on Thursday when Wall Street was still on an upswing. The SPI was then ahead 43 points or 0.8 per cent at 5442. Futures trading recommences this morning at 9.50 am EST.

US stocks declined overnight for the first time in three sessions as traders prepared for a grim quarterly corporate earnings season. The S&P 500 shed 28 points or 1.01 per cent, reversing most of a 40-point rally on Thursday. The Dow gave up 329 points or 1.39 per cent. The Nasdaq bucked the downtrend, rising 39 points or 0.48 per cent.

The early impact of the Covid-19 pandemic is expected to cruel a reporting season that gets underway in earnest tonight. Earnings for S&P 500 companies are expected to have dropped more than 10 per cent last quarter, then predicted to crater 22 per cent this quarter. Banking groups Wells Fargo and JPMorgan Chase, both scheduled to report tonight, dropped 5.3 per cent and 4.5 per cent, respectively. Dow component Johnson & Johnson, also due to report tonight, lost 1 per cent.

Wall Street entered a new week at its highest level in a month following one of its best weeks in history. The S&P 500 climbed 12.1 per cent last week, its strongest weekly return since 1974. The Dow’s 12.7 per cent return during the run-in to Easter was its seventh best on record. The major indices have recouped roughly half of their falls since the start of the virus outbreak.

Investment markets continued to reward winners from the pandemic. Amazon surged 6.2 per cent after declaring it will hire 75,000 new workers to handle a surge in online orders. Netflix jumped 7 per cent on expectations that the streaming service will pick up more subscribers from people stuck at home during lockdowns.

The night’s biggest losers included: Dow component Caterpillar, which tumbled 8.7 per cent following an analyst downgrade; car-marker Ford, down 3.9 per cent after cutting its sales outlook due to the pandemic; and cruise companies after US authorities extended a “no sail order” over US waters.

Overall trading volumes were lower than usual due to market holidays in Europe. Small caps fared worse than larger companies. The Russell 2000 index dropped 2.78 per cent.

The ASX 200 showed no signs of apprehension ahead of the Easter break, advancing 3.5 per cent on Thursday. All 11 local sectors  recorded gains during a broad rally. The index’s 6.3 per cent tally for the holiday-shortened week was the best since 2011.

Oil had risen strongly in anticipation of a new global deal to reduce crude production. However, the market reaction was muted when the Organization of the Petroleum Exporting Countries (OPEC) announced it had struck a deal with Russia to remove roughly 10 per cent of global supply to support prices until the end of June. Brent crude settled a modest 26 cents or 0.8 per cent higher at US$31.74 a barrel. The US benchmark fell 35 cents or 1.5 per cent to US$22.41

Gold continued to scale seven-year highs. Gold for June delivery settled $8.60 or 0.5 per cent ahead at US$1,761.40 an ounce, a price last seen in October 2012..

Australian mining giants BHP and Rio Tinto edged higher in overseas trade.

BHP’s US-listed stock put on 0.25 per cent overnight and its UK-listed stock 2.91 per cent on Thursday. Rio Tinto added 0.44 per cent in the US overnight and 4.22 per cent in the UK on Thursday. The spot price for iron ore landed in China rose $1.65 or 2 per cent yesterday to US$85.20 a dry ton.

The dollar opened steady this morning at 63.81 US cents.

A big week ahead will likely be dominated by the reaction to US company earnings. Domestic economic data includes business confidence today, consumer sentiment tomorrow and jobs on Thursday. China also releases significant reports this week, including trade figures today and monthly factory data on Friday.

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