Australian shares are set to open slightly higher as Wall Street closed in the green despite fresh record unemployment in the US, as President Donald Trump pushed to reopen the economy early.
US stock indexes ended a wobbly day with modest gains Thursday, while the biggest increases went to Amazon, Netflix and other companies poised to do the best during the coronavirus crunch. The S&P 500 rose 0.6 per cent after flipping between small gains and losses all day.
The jobs report was universally regarded as awful, and it brought the total for the last month to roughly 22 million. But markets had braced for a number that was even more awful, which helped to bolster gains for stocks.
ASX futures were up 8 points, or 0.2 per cent, after a surge in late trading. Earlier, they were down 72 points or 1.3 per cent at 4.51am AEST.
The Australian dollar was up 0.2 per cent to 63.38 US cents.
Mr Trump laid out a strategy to phase out the month-long economic shutdown aimed at stanching the coronavirus pandemic, despite concerns from health experts, governors and business leaders about the dangers of lifting restrictions without widespread testing in place.
Trump will push states to lift stay-at-home orders that have shut down business and social life as the number of deaths recorded in the United States on Wednesday rose by 2500, a second consecutive daily record. The US death toll in the global pandemic is now more than 31,000, higher than any other nation.
Another 5.2 million more Americans sought unemployment benefits last week, the Labour Department reported on Thursday, lifting total filings for claims over the past month to more than 20 million.
Meanwhile China is expected to record negative GDP growth for the first time in 40 years.
Capital Economics’ Sheana Yue writes, “The deep slump in January and February’s official activity data suggests that officials may allow recorded GDP growth to turn negative for the first time since 1976 in Q1.
“Meanwhile, March activity data will probably show an even larger contraction than in the previous two months. Admittedly, the high-frequency data we follow suggest that activity improved through the course of the month, but it remained well below 2019 levels and was weaker than during the first two months of the year.”
And hedge fund Elliott says stocks could fall by 50pc from February highs, warning there is “no gilded cornucopia of shining bargains.”
Local: NZ business manufacturing PMI March
Overseas data: China GDP Q1; China industrial production March; China retail sales March; Japan industrial production February; US leading index March
ASX futures were up 8 points or 0.1 per cent.
- AUD -0.35 per cent to 62.96 US cents at 3.30am AEST
- On Wall St: Dow -0.5 per cent S&P 500 no change Nasdaq +1 per cent at 1.44pm in New York
- In Europe: Stoxx 50 +0.1 per cent FTSE +0.5 per cent CAC -0.1 per cent DAX +0.2 per cent
- Spot gold -0.2 per cent to $US1713.02 an ounce at 1.29pm New York time
- Brent crude -1 per cent to $US27.41 a barrel
- US oil -1 per cent to $US19.68 a barrel
- Iron ore -2 per cent to $US85.37 a tonne
- Dalian iron ore -0.3 per cent to 606 yuan
- LME aluminium +0.6 per cent to $US1516.50 a tonne
- LME copper +0.5 per cent to $US5139 a tonne
- 2-year yield: US 0.19 per cent Australia 0.21 per cent
- 5-year yield: US 0.33 per cent Australia 0.41 per cent
- 10-year yield: US 0.60 per cent Australia 0.83 per cent Germany -0.48 per cent
From today’s Financial Review
PM’s pro-business growth agenda: Tax and industrial relations reform, deregulation, and fast-tracked infrastructure are back in the mix after Scott Morrison set forth a pro investment strategy.
How this fundie made 6pc in March: Sage Capital has operated its absolute return fund only since August but it has left rivals eating its dust with an impressive performance in March.
Don’t ease restrictions too early, warns CBA’s Catherine Livingstone: The Commonwealth Bank chairman sees July as a key month for starting to re-open the economy and says the crisis offers an opportunity for diversification.
The S&P 500 flipped between small gains and losses through the day, after the government reported that 5.2 million more Americans filed for unemployment benefits last week.
A 6.2 per cent fall for Boeing Co sent the blue-chip Dow down 1 per cent, as its European rival Airbus said it was examining requests to defer deliveries after a collapse in travel demand.
The Nasdaq outperformed the broader market with Amazon and Netflix surging to record highs as sweeping stay-at-home orders drove demand for online streaming services, household essentials, groceries and cloud computing.
Wall Street has swung this week between hopes of a peaking in coronavirus cases and fears of the biggest economic slump since the Great Depression, as the lockdown measures crushed business activity.
“We know the numbers are not going to be good, but companies can show they’ve taken steps to stop the cash drain or that they’ve positioned themselves well,” said Sal Bruno, chief investment officer at IndexIQ.
Amazon, Dollar General and Walmart are all close to record highs as people shop for staples. Netflix and video-game companies Activision Blizzard and Electronic Arts are also at all-time highs as people spend more time than ever at home.
Treasury yields fell again and remain extremely low, though, which shows how pessimistic investors are about the economy’s prospects.
The FTSE 100 rose, boosted by a weaker pound as Britons braced for a longer lockdown to curb the spread of the new coronavirus pandemic.
Foreign Minister Dominic Raab said the country will extend its lockdown for at least three more weeks as a relaxation of the measures would damage both public health and the economy.
The FTSE 100 closed up 0.6 per cent in a volatile session, with drug companies GlaxoSmithKline and AstraZeneca surging 5.3 per cent and 2.7 per cent, respectively, and other big dollar earners rising as sterling dropped.
UK equities have lagged a broader European rally as countries including Germany, Austria and Spain looked to restart their economies amid signs the pandemic was plateauing. The broader pan-European STOXX 600 has gained in six of the past seven sessions.
“We expect markets to remain volatile as the real economic impact of the ongoing crisis begins to come through in company earnings updates,” noted Ingrid Kukuljan, head of impact investing, international at Federated Hermes.
The Hong Kong stock market drifted to its lowest level in over a week as worries about the coronavirus outbreak’s economic impact weighed, ahead of China’s first-quarter GDP data that is likely to be the worst in nearly three decades.
The MSCI’s Asia ex-Japan stock index was weaker by 0.9 per cent, while Japan’s Nikkei index was down 1.4 per cent.
The United States opposes creation of liquidity through issuance of the International Monetary Fund’s Special Drawing Rights (SDRs) as part of the response to the coronavirus pandemic, US Treasury Secretary Steven Mnuchin said on Thursday.
In a statement to the IMF’s steering committee, Mnuchin spelled out US concerns that have put it at loggerheads with China and other big IMF member countries, arguing it would be better for advanced economies to contribute to other IMF facilities to help poorer countries.
He said 70 per cent of the funds created through an SDR allocation, something akin to a central bank “printing” new money, would go to G20 countries, most of whom did not need it, while only 3 per cent would go to low-income countries.
The 24-member International Monetary and Financial Committee met to review the IMF’s response to the pandemic and a possible SDR allocation that could provide hundreds of billions of dollars in urgently needed foreign exchange reserves for all of the IMF’s 189 members.
Meanwhile Facebook and its partners have scaled back its much vaunted Libra cryptocurrency after numerous hurdles and heavy regulatory scrutiny.
Libra will no longer be the putative basis of a new global financial system where Facebook could essentially play the roles of a central bank and Wall Street. The project will now be focused on creating a more traditional payment network in which coins will be tied to a local currency, somewhat like the digital dollars in a PayPal account.
Copper prices firmed as data from China pointed to signs of gradual recovery, but gains were capped by concerns about global growth and falling metals demand.
New home prices in China grew at their slowest annual pace since June 2018, but a pick-up in momentum signalled the coronavirus impact on the property market was fading.
“The short-term outlook is one where these rallies run out of steam because we are still faced with the biggest demand shock in living memory it will take a long time to reset itself,” said Saxo Bank analyst Ole Hansen.
LME zinc gained 0.7 per cent to $US1944, lead fell 0.4 per cent to $US1695, tin eased 0.4 per cent to $US15,040 and nickel eased 0.1 per cent to $US11,765.
The sharemarket partly recovered from early sharp falls on Thursday as investors looked to a National Cabinet meeting for detail on when restrictions may be eased.
The S&P/ASX 200 Index ended the day 50.40 points, or 0.9 per cent, lower at 5416.3, with a better-than-expected labour force report helping lift the market from an intra-day low of 5345 points.
With markets focused on when and how restrictions may be eased, Prime Minister Scott Morrison’s news conference late in the day had mixed news for investors.
After meeting with state and territory leaders, the Prime Minister said while Australia’s efforts to contain the pandemic had produced encouraging results, he warned easing measures too early would risk further outbreaks and said current restrictions would be in place for the next four weeks.