The sectors strength was once again led by the market’s mega-cap names. The US FANG+ index continued to surge, to take its rally from March’s stock market lows to over 88 per cent last night.
3. Market participants shrug off worsening US virus data: Though stocks did slip briefly as the news flowed through the market, market participants largely shrugged off what was another dour day of US COVID-19 data.
The US infection rate jumped back to 2 per cent yesterday, as California announced its biggest one day jump in cases, and the total number of cases in the United States climbed beyond 3,000,000. Seemingly to the relief of the market, the mortality rate in the US has remained relatively low, assaying some concerns regarding a potential second-round of economic lockdowns.
4. US Dollar drops, risk-on sentiment flows into FX markets: The little lift in risk appetite in US trade manifested in price action in FX markets, too. The US Dollar failed to back-up yesterday’s advance, dropping 0.25 cent.
European currencies broadly outperformed, with the EUR/USD climbing 0.5 per cent, after German Chancellor Angela further motivated for the EU’s joint fiscal recovery package in a speech overnight. The AUD/USD also regained ground overnight courtesy of the risk-on turn in markets, closing the day’s trade 0.5 per cent higher.
5. Governments coming to the table with promises of stimulus: Markets were buoyed last night hours by signs that fiscal policy makers were coming to the table with greater stimulus measures. Both the Cable and Loonie leapt higher yesterday, after UK Chancellor Rishi Sunak announced a new stimulus package of around £30 billion overnight; and Canadian Finance Minister Bill Morneau announced a much larger than expected fiscal deficit to fund Canada’s economic recovery plan.
The promises of demand boosting programs from G10 governments have aided confidence in the market, as concerns linger about the potential depth and duration of the COVID-19 recession.
6. Gold hits new highs; oil prices rally despite big US crude build: Commodity prices generally lifted overnight, supported by the drop in the US Dollar. The Bloomberg Commodity Index added 0.2 per cent, to close at its highest level since the middle of March.
Gold prices charged higher, to break above the $US1800 mark and to new 9-year highs. Oil prices also trade higher, with Brent Crude adding 0.6 per cent for the session, despite US Crude inventory data revealing US crude stockpiles increased by a much larger than expected 5.7 million barrels last week.
7. ASX200 expected to recover some of the week’s losses today: After a torrid few days for Australian stocks, the ASX200 is expected to open 0.84 per cent higher this morning. The driving factor for the market today remains whether market participants have now fully discounted the economic impacts of Victoria’s second-wave of COVID-19 infections and lockdowns.
It’s been COVID-19 sensitive sectors that has weighed on the ASX200 this week, with consumer discretionary, real estate and bank stocks chiefly to blame for the index’s 1.54 per cent drop yesterday.
8. Market watch:
ASX futures up 50 points or 0.9% to 5941 at 6.58am AEST
- AUD at 69.81 US cents at 7.28am AEST
- On Wall St: Dow +0.7% S&P 500 +0.8% Nasdaq +1.4%
- In New York: BHP +2.4% Rio +2.4%
- In Europe: Stoxx 50 -1.1% FTSE -0.6% CAC -1.2% DAX -1%
- Spot gold at $US1808.81 per ounce at 7am AEST
- Brent crude +0.7% to $US43.37 a barrel at 7.19am AEST
- US oil +0.6% to $US40.88 a barrel at 6.59am AEST
- Iron ore +3.4% to $US106.50 a tonne
This column was produced in commercial partnership between The Sydney Morning Herald, The Age and IG
Information is of a general nature only.