Aussie shares aimed cautiously higher after tech stocks lifted the Nasdaq to its longest winning run since December.
ASX SPI200 index futures edged up nine points or 0.2 per cent as the three major US indexes eked out modest gains.
The Nasdaq Composite continued to set the pace, rising 75 points or 0.74 per cent to an eight straight daily gain and a new record high. The tech-heavy index is on its best run since an 11-session streak in December.
The S&P 500 held on to a final tally of 13 points or 0.43 per cent despite leaking gains in the final two hours of trade. The Dow put on 131 points or 0.5 per cent.
Yesterday’s US-Sino trade-doubt drama was forgotten as investors focussed on improving economic data and the promise of more fiscal stimulus. New home sales surged 16.6 per cent last month, well ahead of expectations. Measures of services and manufacturing activity climbed to four-month highs in another sign that the worst of the economic downturn may be passing.
The consumer discretionary sector rallied 1 per cent after White House adviser Larry Kudlow said stimulus cheques and tax relief were “on the table” for the next relief package. Kudlow said President Donald Trump “wants to to help out with some form of tax relief. Restaurants, entertainment, athletic contests, things of that sort. We want to help out the tourism business, which has been hurt very badly.”
Cruise companies rallied, along with select airlines and retailers. However, big tech remained the market’s main driver. Apple climbed 2.1 per cent to a new all-time high a day after unveiling new operating systems and announcing it will manufacture its own computer chips. Amazon put on 1.9 per cent, Facebook 1.3 per cent and Microsoft 0.7 per cent.
The market showed no ill-effects from yesterday’s brief market storm after White House trade adviser Peter Navarro told a TV interviewer the US’s trade deal with China was over. Australian shares plunged more than 1 per cent mid-session before rebounding as Navarro walked back his comments and Trump tweeted that the deal was “fully intact”. The S&P/ASX 200 finished ten points or 0.2 per cent ahead.
The Australian benchmark has struggled for direction lately, edging up just 18 points in three sessions since last Thursday’s close. While evidence of rising coronavirus infections around the globe seem to have stalled the ASX, Wall Street has continued to march higher.
“The message today may be that the virus and the bull market can coexist,” Jim Paulsen, chief investment strategist at the Leuthold Group in the US, told CNBC. “Despite back to back days of COVID-19 cases above 30,000 over the weekend and ongoing reports of hot spots, the stock market managed to post a strong gain. Market action seems to suggest that investors expect the economy to continue improving in the months ahead even though the country is likely to experience spotty or temporary spikes in the virus.”
Mining stocks moved higher during a broadly positive night on commodity markets. BHP’s US-listed stock gained 1.45 per cent and its UK-listed stock 2.71 per cent. Rio Tinto tacked on 1.43 per cent in the US and 1.67 per cent in the UK. The spot price for iron ore landed in China rose $1 or 1 per cent to US$102.50 a dry ton.
Copper, sometimes dubbed the “metal with the degree in economics”, continued to grind higher. Benchmark copper on the London Metal Exchange rose 0.5 per cent to US$5,892 a tonne. Nickel gained 0.6 per cent and tin 0.3 per cent. Aluminium declined 0.8 per cent, lead 1.8 per cent and zinc 2.4 per cent.
Gold caught an uplift from the trade jitters. Gold for August delivery settled $15.60 or 0.8 per cent higher at US$1,782 an ounce.
Oil markets appeared rattled by the trade confusion – China is a major importer. Brent crude settled 45 cents or 1 per cent lower at US$42.63 a barrel, giving back a portion of Monday’s 2.1 per cent advance.
The dollar regained the 69 US cent level, rising 0.35 per cent to 69.29 US cents.