A tech-led rally in the US points to a positive start to Australian trade as investors look beyond a record increase in coronavirus infections.
ASX SPI200 index futures rallied 34 points or 0.6 per cent after Wall Street shrugged off World Health Organization (WHO) data showing the largest single-day rise in new cases since the start of the pandemic.
The Nasdaq climbed 110 points or 1.11 per cent to an all-time closing high. The broader S&P 500 put on 20 points or 0.65 per cent. The Dow added 154 points or 0.59 per cent.
Index heavyweight Apple set the market tone for a second session, jumping 2.6 per cent to a record as investors welcomed a barrage of announcements at its annual developers conference. The tech giant unveiled a new mobile operating system, a new home screen for mobile devices and announced a shift from Intel chips to its own, reportedly faster design. Wall Street fell on Friday after the company announced it was reclosing stores in several US states where COVID-19 infections were still rising.
US stocks struggled higher against a tide of negative developments on the virus. WHO reported more than 183,000 new cases in a single day over the weekend, fuelling demand for gold, US treasuries and other havens. The US recorded 30,000 new cases on Friday, the highest number in around seven weeks. There have been renewed outbreaks in Victoria, South Korea, China and Germany.
“There’s a war going on between the bulls and bears, with each seizing every little data point to buttress their opposing arguments,” Vito Racanelli, market intelligence analyst at Fundstrat Global Advisors in the US, wrote in a note quoted on CNBC. “Coronavirus was not a world ender. But the data remains mixed and COVID-19 fear remains strong, and it’s understandable.”
Market sentiment was buttressed by the prospect of another US stimulus package next month. White House economic adviser Larry Kudlow said it was “highly likely” that Congress and the Trump administration will put together a new support bill after the July recess. Kudlow dismissed talk of a “second wave” of coronavirus infections. “It’s just hot spots,” he said. “We’re on it. We know how to deal with this stuff now.”
The spotlight was back on big tech as traders picked up stocks that would prosper if the economy shut down a second time. The technology sector climbed 1.9 per cent as Microsoft gained 2.8 per cent, Netflix 2.6 per cent, Amazon 1.5 per cent and Facebook 0.2 per cent. Broker upgrades helped lift retailers Gap and Walmart by 8.3 per cent and 1.5 per cent, respectively.
The financial sector slid 0.5 per cent, health 0.4 per cent and consumer staples 0.3 per cent. Utilities gained 1.3 per cent and consumer discretionary 1.1 per cent.
BHP and Rio Tinto built on yesterday’s Australian gains in overseas action. BHP’s US-listed stock rose 2.4 per cent and its UK-listed stock 0.98 per cent. Rio Tinto put on 2 per cent in the US and 1.31 per cent in the UK. The spot price for iron ore landed in China dipped $1.50 or 1.5 per cent to US$101.50 a dry ton.
Oil hit a three-month high amid optimism that demand and production are a closer match after OPEC enforced production caps. Brent crude settled 89 cents or 2.1 per cent higher at US$43.08 a barrel, its highest since early March.
Gold attained its strongest level in almost ten weeks as the rise in COVID-19 infections supported demand for havens. Gold for August delivery settled $13.40 or 0.8 per cent ahead at US$1,766.40 an ounce.
The dollar built overnight, lately up 1.06 per cent at 69.05 US cents.
Australian stocks have marked time since Thursday as traders awaited clear leads. The S&P/ASX 200 edged up two points yesterday.
The economic calendar is light this week. The day ahead brings preliminary manufacturing and services data for this month. Wall Street has the same data on tap tonight, as well as house sales figures.