Australian shares are set to open lower, as the global rally sparked by hopeful signs about a nearing peak in new cases of the COVID-19 virus in Italy and Spain, as well as New York city, lost momentum.
ASX futures were down 52 points or 1% to 5190 near 7am AEST; they were more than 100 points higher earlier. The local currency was 1.6% higher, briefly trading above US62¢.
After opening sharply higher and mostly holding gains through about 2pm, shares on Wall Street started to pare their gains and slipped into negative territory at the closing bell.
All three US benchmarks ended modestly lower. After trading in a near 1000 point range on the day, the Dow finished down 26 points or 0.1%.
Twenty-one of the Dow’s 30 components ended higher. Leading the decliners: Boeing, P&G, Walmart and Pfizer. Cisco, Apple and Microsoft also slid on the day.
As for the S&P’s industry sectors, five of the 11 fell; utilities led with a 1.2% drop. While oil prices fell, the energy sector was 2% higher on the day.
The VIX ended up 2.9% at 46.55.
Sentiment also was hurt by a renewed slump in oil amid swelling crude supplies and weak fuel demand.
West Texas Intermediate (WTI) crude futures settled 9.4% lower at $US23.63 a barrel, accelerating their losses late in the day. Brent crude futures settled at $US31.87 a barrel, losing 3.6%.
New York state, the US epicentre of the coronavirus, is nearing a plateau in number of patients hospitalised, governor Andrew Cuomo said, a hopeful sign even as deaths in his state and neighbouring New Jersey hit single-day highs.
In addition, the US surgeon general said the pandemic may kill fewer Americans than had been projected.
Tempering the cautiously optimistic tenor, authorities provided data showing the pandemic having a disproportionate impact on African Americans.
New York state’s death toll rose by 731 to 5489 over the past day, Cuomo said, though he called that a “lagging indicator” illustrating past trends. He said the state was “projecting that we are reaching a plateau in the total number of hospitalisations” due to the coronavirus.
New Jersey Governor Phil Murphy said his state recorded 232 coronavirus deaths in the past day – also a new high – bringing its total death toll to 1232.
New York state overtook Italy on Tuesday, reporting overall coronavirus cases second in the world only to Spain, according to a Reuters tally.
Local: Housing finance February
Overseas data: Japan February machinery orders and current account
ASX futures down 52 points or 1% to 5190 near 7am AEST
Futures peaked overnight at 5344
- AUD +1.6% to 61.88 US cents (Overnight peak 6208)
- On Wall St: Dow -0.1% S&P 500 -0.2% Nasdaq -0.3%
- In New York: BHP -1% Rio -1.3% Atlassian -3.2%
- In Europe: Stoxx 50 +2.2% FTSE +2.2% CAC +2.1% DAX +2.8%
- Spot gold -0.8% to $US1647.23 an ounce at 2.40pm New York time
- Brent crude -3.3% to $US31.96 a barrel
- US oil -9.5% to $US23.60 a barrel
- Iron ore -0.7% to $US82.73 a tonne
- Dalian iron ore +0.1% to 569.5 yuan
- LME aluminium +0.6% to $US1481 a tonne
- LME copper +3.3% to $US5045 a tonne
- 2-year yield: US 0.27% Australia 0.21%
- 5-year yield: US 0.47% Australia 0.41%
- 10-year yield: US 0.72% Australia 0.90% Germany -0.32%
- US pricing as of 4.10pm New York time
From today’s Financial Review
PM plans staggered virus exit: Scott Morrison urges restraint over Easter to stop spread and says least-affected states may emerge faster and economically better off.
KPMG pay cut scares workers into silence: Firm’s decision to cut pay by 20 per cent for four months without reducing hours contrasts with PwC’s decision to reduce both by up to 40 per cent.
Banks warned to slash dividends: The order will throw a spanner in the works for Bank of Queensland’s interim results to be reported on Wednesday and impact plans of three major banks reporting in May.
Wall Street’s fear gauge has steadily retreated from 12-year peaks, but volatility is expected to remain high as companies prepare to report an expected slide in first-quarter earnings and outline more drastic plans to bolster cash reserves.
“I’d like to think that the bottom is behind us, but I wouldn’t say that’s necessarily the case,” said Bert Brenner, director of asset allocation strategy at People’s United Advisors in Bridgeport, Connecticut.
Analysts now expect first-quarter earnings for S&P 500 firms to fall 6.4% compared to a January 1 forecast for a rise of 6.3%.
Exxon Mobil throttled back a multi-year investment spree in shale, LNG and deep water oil production, saying it would cut planned capital spending this year by 30% as the pandemic saps energy demand.
British Prime Minister Boris Johnson was set to spend a second night in intensive care on Tuesday to help him fight off a coronavirus infection, with his designated deputy saying he would pull through because “he’s a fighter”.
Johnson is receiving oxygen support but is stable, in good spirits and breathing without assistance, said Foreign Secretary Dominic Raab, who is standing in for the prime minister.
European shares rallied for a second straight day on Tuesday. After having risen as much as 3.3% during the day, the pan-European STOXX 600 index closed up 1.9%, at its highest level in nearly a month.
German shares led the charge, up 2.8%, while indexes in Spain and Italy both rose more than 2% on a slowdown in reported new infections in Italy, Spain and hard-hit parts of the United States.
Travel and leisure stocks outperformed, driven by a whopping 49% surge in shares of Cineworld after it said it was in talks with lenders for its liquidity needs as the strict stay-at-home orders forced it to shut all its 787 cinemas across 10 countries.
The stock also topped the pan-region STOXX 600 benchmark.
The STOXX 600 index has gained more than 22% since hitting an eight-year low in March – technically marking a bull market – but remains 24% below its February record high, when the global spread of the coronavirus led to a virtual halt in business activity.
At the close of trade, the Hang Seng index was up 504.17 points, or 2.12%, at 24,253.29. The Hang Seng China Enterprises index rose 2.02% to 9846.92.
The sub-index of the Hang Seng tracking energy shares rose 0.7%, while the IT sector rose 1.9%, the financial sector ended 1.9% higher and the property sector rose 2.2%.
The top gainer on the Hang Seng was Galaxy Entertainment Group, which gained 7.4%, while the biggest loser was Hang Seng Bank, which fell 1%.
China’s main Shanghai Composite index closed up 2.1% at 2820.76 points, while the blue-chip CSI300 index ended up 2.3%.
The US economy could shrink 30% or more this quarter as stay-at-home orders aimed at slowing the coronavirus outbreak choke off business, and it could be a couple years before the economy regains its footing, former Federal Reserve chairman Ben Bernanke said on Tuesday.
“Overall, it could be a very bad year for the economy,” Bernanke said in a Brookings Institution online event, though he added that so far the fiscal and monetary policy responses have been pretty good, and more will still be needed.
“There are things we can do to open up the economy, significantly perhaps, but I don’t see the economy returning to a more normal state until there’s much greater confidence … that opening up the economy won’t restart the crisis.”
Still, he said, history suggests the recovery will be considerably shorter than that which followed the 2007-2009 financial crisis. “The US economy will recover and within a few years will show only modest marks of this experience,” he predicted
Rio says China is showing growing appetite for iron ore: The miner says it is pleased with how fast the Chinese economy is picking up after the coronavirus disruption.
US oil companies are expected to temporarily reduce oil output by about 2 million barrels per day as lower crude prices force companies to cut back operations, the US Energy Department said on Tuesday.
“The private sector and the free market are driving those cuts,” the department said regarding projections in a US Energy Information Administration, or EIA, report.
The United States, the world’s top oil and natural gas producer, pumped a record of more than 12 million barrels per day (bpd) in 2019, according to the EIA.
The EIA’s short-term energy outlook report released on Tuesday projected that US oil output in the fourth quarter would average about 11.04 million bpd, down about 1.74 million bpd from the year-ago quarter. The Energy Department did not immediately respond to a query about whether the projection of a temporary 2 million bpd drop was based on this figure.
ASX closes 0.7pc lower, failing to build on Wall St advance: Shares on the local market closer lower, unable to maintain its opening surge after one of the strongest closes on Wall Street since the pandemic struck.
The market hasn’t revised earnings low enough: Macquarie is warning forward earnings are likely to be cut further because the current 7 per cent reduction looks too small, given the scale of the downturn.