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Aussie stocks are set to open sharply lower after dire economic data and the collapse of an oil company fuelled sharp falls on Wall Street.

ASX index futures dropped 169 points or 3.2 per cent as all three major US indices shed more than 4 per cent.

The S&P 500 tanked 114 points or 4.41 per cent to start the new quarter on a grim note. The Dow shed 974 points or 4.44 per cent as Boeing, Dow and AmEx all shed at least 7.5 per cent. The blue-chip average briefly fell as much as 1,100 points in late trade. The Nasdaq gave up 340 points or 4.41 per cent.

The benchmark Australian index, the S&P/ASX 200, appeared to commit a rare misstep yesterday, surging 182 points or 3.6 per cent despite negative signals from US index futures after President Donald Trump warned Americans to prepare for a “very, very painful two weeks”.

“This is going to be a rough two-week period,” Trump told reporters. “The kind of death that has been caused by this invisible enemy, it’s incredible.”

Cracks appeared in the global share market rebound that started last week as the UK, France and Spain recorded a record number of deaths from the Covid-19 virus and Americans were warned to prepare for up to 240,000 deaths. European markets tumbled as the mood darkened. The pan-European Stoxx 600 lost 2.9 per cent as benchmarks in the UK, France and Spain declined between 3 and 4.3 per cent.

The fragile mood in America was further shaken by confirmation from economic reports of the early impact of the virus. A measure of manufacturing activity showed factory work contracted last month as new orders fell to their lowest level since the end of the Great Recession. Private payrolls diminished for the first time in two and a half years but not by as much as economists expected.

Plunging oil prices claimed their first major scalp after US shale oil explorer Whiting Petroleum filed for bankruptcy. The company blamed the “severe downturn in oil and gas prices driven by uncertainty around the duration of the Saudi/Russia oil price war and the Covid-19 pandemic”. President Trump is due to meet executives from oil companies tomorrow to discuss government support for the industry.

The US energy sector fell 4.6 per cent as Brent crude settled $1.61 or 6.1 per cent weaker at US$24.74 a barrel. The international benchmark dropped 65.6 per cent over the first three months of the year after an international deal to cap crude output collapsed in acrimony.

No sector was left unscathed. Real estate, utilities and financials all lost at least 6 per cent. Consumer staples was the closest thing to a haven with a drop of 1.8 per cent.

The big two Australian miners look set to give back yesterday’s gains following falls in their overseas listing. BHP’s US-listed stock sank 2.23 per cent and its UK-listed stock 3.29 per cent. Rio Tinto coughed up 3.05 per cent in the US and 3 per cent in the UK. The spot price for iron ore landed in China eased $1.70 or 2 per cent to US$82 a dry ton.

Gold declined for a fourth straight session. Gold for June delivery settled $5.20 or 0.3 per cent lower at US$1,591.40 an ounce.

The dollar retreated almost 1 per cent overnight to 60.77 US cents.

Wall Street expects another bleak take on the state of the employment market when jobless benefits figures for last week are released tonight. Trade and factory orders data are also due.  

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