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Australian shares are set to open higher, bolstered by optimism that efforts to reopen the global economy are gathering momentum, particularly in the US.

ASX futures were up 26 points or 0.5% to 5334 near 6am AEST. Wall Street was higher near 4pm, with all three benchmarks up near or more than 1%.

The local currency was 1.4% higher.

That optimism was offset again by continuing weakness in the oil market.

Brent crude hovered around $US20 a barrel and US crude plunged anew, driven lower by skittish investors fleeing the US benchmark due to lack of available storage to deal with a coronavirus-induced collapse in demand.

Fuel demand is down 30% globally, and storage is becoming precious, with roughly 85% of worldwide onshore storage full as of last week, according to Kpler data.


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Today’s agenda

No local data

Overseas data: UK nationwide house prices April; US S&P CoreLogic CS house prices February, consumer confidence index April, Richmond Fed manufacturing index April

Market highlights

ASX futures up 26 points or 0.5% to 5334 near 6am AEST

  • AUD +1.4% to 64.59 US cents (overnight peak 64.72)
  • On Wall St near 4pm: Dow +1.5% S&P 500 +1.6% Nasdaq +1.1%
  • In Europe: Stoxx 50 +2.6% FTSE +1.6% CAC +2.6% DAX +3.1%
  • Spot gold -1% to $US1712.33 an ounce at 2.23pm New York time
  • Brent crude -8.8% to $US19.56 a barrel
  • US oil -24.2% to $US12.84 a barrel
  • Iron ore -1% to $US83.48 a tonne
  • Dalian iron ore -0.8% to 602 yuan
  • LME aluminium -0.5% to $US1507 a tonne
  • LME copper +1.2% to $US5199 a tonne
  • 2-year yield: US 0.22% Australia 0.22%
  • 5-year yield: US 0.40% Australia 0.44%
  • 10-year yield: US 0.66% Australia 0.90% -0.46%
  • US prices near 4.10pm New York time

From today’s Financial Review

NAB pain builds bad debt buffer: National Australia Bank shareholders are taking a savage blow as the bank seeks to protect itself from rising loan losses, with the dividend cut set to pressure its big four rivals.

Chanticleer: Market forgives NAB’s sins: Years of underperformance against its peers meant the success of NAB’s $3.5 billion capital raising rested heavily on the turnaround capabilities of CEO Ross McEwan.

Future Fund shows how to play the illiquid game: The Future Fund thumbed its nose at the superannuation industry with a resilient March quarter performance showcasing its covetous advantage of not having to “take its marks” on illiquid assets. At least not yet.

United States

US investors are looking ahead to earnings this week including from Apple, and Microsoft.

“Everyone’s excited that we will reopen, and there’s optimism around that but I would be a little concerned because what we really need is to return to normal for the markets to keep up with the optimism,” said Julia Carlson, chief executive of Financial Freedom Wealth Management Group in Oregon.

jumped more than 9% and was the biggest boost to the Nasdaq after a report said the electric-car maker is calling some workers back to its California vehicle-assembly plant next week.

The US economy needs another, fourth stimulus bill that could push it to take off again in what is commonly called a “V-shaped recovery”, White House Kevin Hassett said in a interview.

“We’re going to probably need another phase of stimulus of some sort. We’ve built a bridge to the other side of this crisis we believe and it looks like we’re getting close to opening up in many places around the country. With that, we have to think about what’s it going to take to make sure we go back to thriving,” Hassett said.

“And I don’t think that absent another round of stimulus that it’s very likely that you would see a V-shape,” he added.

Europe

Britain poised to hit visitors with two-week quarantine: The government may belatedly tighten its borders next month, even as it relaxes some domestic lockdown restrictions.

Airline stocks led European shares higher on Monday on hopes of state support, while upbeat earnings from Deutsche Bank and others added to optimism fuelled by signs that many countries will soon ease coronavirus-driven lockdown measures.

Shares of Lufthansa jumped 10.5% after Germany’s transport minister said he was in favour of protecting the airline company. Air France KLM advanced 0.9% following a €7 billion government aid package.

German shares surged 3%, while the pan-European STOXX 600 closed up 1.8% after a modest fall last week.

The volatility gauge for euro zone stocks dropped to its lowest in nearly eight weeks at 34.7193, more than halving from its peak of 95.02 in mid-March.

Euro zone banks surged 3.9% as Deutsche Bank beat first-quarter earnings expectations but warned it might miss its capital requirement target this year. The German lender’s shares jumped 12.7%.

“One important point is that earnings have actually been coming better than expected,” Sebastien Galy, macro strategist at , wrote in a client note.

Asia

Japanese shares rose sharply on Monday as some better-than-expected earnings lifted market sentiment.

The benchmark Nikkei average advanced 2.7% to 19,783.22, its highest closing since April 17, with the Nikkei volatility index, considered a fear gauge based on option pricing, falling 9.8% to 34.9.

Advantest jumped 8.4% after the chip-testing equipment supplier forecast a 14.2% year-on-year increase in operating profit for the April-June quarter.

Fanuc surged 12.0% as the factory automation company’s profit drop in the business year ended in March was not as bad as some had feared.

Analysts said investors also were pleased by Fanuc’s earnings forecast for the April-September half, as it allowed the market to gauge the potential downside from the impact of the coronavirus.

Payne lashes China’s ‘economic coercion’: Foreign Minister Marise Payne says Australia’s call for an inquiry is “principled” as one winemaker highlights the “political risk” of doing business with China.

Hong Kong shares climbed on Monday, in line with global peers, as hopes for a fresh rollout of stimulus measures from major central banks to cushion the economic impact of the coronavirus underpinned sentiment.

At the close of trade, the Hang Seng index was up 448.81 points or 1.88% at 24,280.14. The rose 2.27% to 9875.59, its best daily performance since March 25.

The Shanghai Composite index closed up 0.25% at 2815.49 points, while the blue-chip CSI300 index ended 0.68% higher.

Currencies

Commodities

Benchmark three-month copper on the London Metal Exchange (LME) rose as much as 2.5% to $US5269 a tonne, its highest since March 17, before paring gains to $US5199 by 1700 GMT, a rise of 1.2%.

LME aluminium inventories keep piling up, rising to 1,336,775 tonnes, the highest since January 16 and up 38% over the past six weeks, LME data showed.

LME aluminium shed 0.5% to $US1507.

China’s Yunnan province will set aside 1 billion yuan to help businesses stockpile 800,000 tonnes of base metals. China is the world’s biggest consumer of metals and accounts for around half of global copper consumption.

Coal and alumina prices looking sick as virus takes hold: The perverse price rally that accompanied the initial stages of the pandemic is a distant memory for Australian exporters, which are now facing collapsing commodity prices.

Australian sharemarket

Australian shares started the week strongly as optimism over an easing of pandemic restrictions and more central bank support offset weakness in the banking sector after National Australia Bank revealed a capital raising and savage dividend cut.

The S&P/ASX 200 index jumped 1.5 per cent, or 78 points, to 5321.40, shaking off a sluggish start to the session. surged 41 per cent to $3.85 extending Friday’s rally linked to optimistic clinical outcomes of its .

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