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Optimism over progress towards treating coronavirus helped fuel strong overseas gains and lift Australian index futures.
ASX SPI200 futures were this morning signalling an opening gain of 39 points or 0.6 per cent following a record close in the US and sharp rises in Europe.
The S&P 500 rose 394 points or 1 per cent to 3,431, its first close above 3,400. The Dow climbed 378 points or 1.35 per cent as ‘recovery plays’ including Boeing and Dow Inc outperformed.
The Nasdaq put on 68 points or 0.6 per cent. The pan-European Stoxx 600 jumped 1.58 per cent as indices in Germany, France and Italy added more than 2 per cent.
Aussie outlook
Corporate profit reports will set the tone following today’s open. The full-year earnings season is into its final week, with less than a third of S&P/ASX 200 companies left to report. The index shook off a lethargic start yesterday to inch up 0.3 per cent after a strong profit result from Fortescue Metals.
Today’s highlights include full- or half-year reports from Ampol, Oil Search, Seven West Media, Blackmores, Stockland, Scentre Group, Ansell, Alumina, Qube Holdings and Bingo Industries.
What moved Wall Street
Recovery plays shone as investors seized on progress towards treatments for coronavirus. The US Food and Drug Administration issued an emergency authorisation over the weekend for the use of convalescent plasma. The treatment uses blood from recovered patients who have developed antibodies against the virus to treat hospital patients.
President Donald Trump claimed the use of convalescent plasma would cut the mortality rate by 35 per cent. The White House was also reported to be debating fast-tracking an experimental UK vaccine for use in the US.
The news lifted companies that would benefit most from a return to normal economic life. The S&P 1500 airlines index jumped 8.3 per cent. Cruiselines such as Carnival and Norwegian gained up to 10.2 per cent. Boeing rose 6.4 per cent, Dow Inc 5.8 per cent and Wynn Resorts 4.8 per cent.
While tech stocks such as Apple and Facebook also record solid gains, market analysts were cheered by signs of the rally widening from the market-leading megacap tech stocks. The Dow Transportation Average, used by some analysts as a barometer of US economic health, climbed 1.9 per cent.
“There’s been a broadening in this rally and the what’s reflected in the transports,” Chuck Carlson, chief executive officer at Horizon Investment Services in the US, told Reuters. “Volume is accompanying this expanding breadth, and those are all bullish things.”
Commodities
Energy stocks dragged here yesterday, but led the US rally, rising 2.8 per cent as oil shrugged off a partial production shutdown in the Gulf of Mexico due to tropical storms. Brent crude settled 78 cents higher at US$45.13 a barrel. the US benchmark climbed 28 cents to US$42.62.
BHP and Rio Tinto advanced in overseas trade despite a down-tick in iron ore. BHP’s US-listed stock added 1.43 per cent and its UK-listed stock 1.25 per cent. Rio Tinto put on 0.47 per cent in the US and 0.95 per cent in the UK. The spot price for iron ore landed in China declined $2.20 or 1.7 per cent to US$124.45 a dry ton.
Gold fell to its weakest level since late July as part of a general move into risk assets and out of havens. Gold for December delivery settled $7.80 or 0.4 per cent lower at US$1,939.20 an ounce. Silver declined 0.5 per cent to US$26.61.
Copper was boosted by news of a 13-year low in London Metal Exchange warehouse stockpiles. Benchmark copper on the London Metal Exchange rose 1.1 per cent to US$6,559.50 a tonne. Aluminium added 0.6 per cent, nickel 1.5 per cent and lead 0.5 per cent. Zinc was unchanged. Tin fell 2.1 per cent.
The dollar eased 0.03 per cent to 71.59 US cents.
