The ASX 200 is on track to open up higher this morning after Wall Street capped off Friday with a volatile week of gains. Futures on Saturday from 7 am AEST point to a 24-point leap, or 0.4 percent, at the open.
1. Wall Street: Wall Street managed to end a largely higher bumpy day, but it still ended in nearly three months with its worst week.
The S&P 500 fell 1.3 percent a day in its biggest plunge since mid-March after falling nearly 6 percent. It lost 4.8 percent over the week, ending for the benchmark index a three-week winning streak.
2. Optimism v Realism: The uncertainty surrounding the US economy continues to weigh on investors, with comments from Fed chairman Jerome Powell earlier this week muffling hopes of a rapid return to normal.
“This is a battle of optimism and realism that’s been playing out over the last three months,” said Adam Taback, chief investment officer for Wells Fargo Private Wealth Management. “Optimism was winning over realism with a look toward 2021. What Jerome Powell exposed is 2021 is not enough time. It’s likely 2022 or even 2023 before we will see ourselves get back to normal.”
3. ASX faces crucial week: this morning’s Australian share market is poised to win, with Saturday’s futures at 7 am AEST pointing to an open 24-point rise. Markets are bracing this week for crucial pandemic-related data, with the front-and-centre job report on Thursday.
During trade on Thursday and Friday, nearly $90 billion was wiped out of the market, as the local bourse paused for breath amid fresh COVID-19 jitters from the US.
The ASX 200 benchmark finished down 1.9 percent on Friday and for the week shed 2.5 percent.
4. Radar jobs: Thursday’s release of the ABS from the Labor Force is projected to show a dramatic increase in the unemployment rate as government-imposed coronavirus lockdowns have strengthened their economic grip. CBA is tipping unemployment from 6.2% to 7.7%, whereas ANZ is forecasting an increase to 6.9%.
5. Currencies: This morning, the Australian dollar slid a touch to get some 68.40 US cents at 7 am AEST.
Bank of America said it expects the under-fire US dollar to rebound in the medium-term: “We continue to emphasise the extraordinary extent to which the FX market remains an equity-driven one at present. To the extent that the rally continues, USD can continue to weaken.
“We consider USD broadly oversold at these levels and expect a rebound over the medium term, with the longer-term outlook to be determined largely by the pattern of global recovery and increasingly by key event risks such as the US election.”
6. Stutters in Europe: European shares closed marginally on Friday, but marked their worst week since the height of coronavirus sell-off due to ongoing worries about the rate of economic recovery.
The pan-European STOXX 600 index ended up 0.3 percent higher, having clocked its worst single-day loss since the previous session on March 23.
7. Oil slides: The oil prices ended mixed on Friday but a steep weekly loss was recorded. Brent settled up 18 cents at $US38.73 a barrel while West Texas Intermediate settled down 8 cents at $US36.26 a barrel.
Both benchmarks reported weekly declines of about 8%, their first after six weeks of gains that lifted prices off lows in April.
Reuters announced Iraq agreed on Sunday with major oil companies operating its giant southern oilfields in June to further cut crude output.
8. Market watch: ASX’s futures are up 24 points or 0.4% to 5834. The ASX / S&P 200 dropped 150.9 points, or 2.5 percent, to 5847.8 on Friday.
- AUD +0.2% to 68.66 US cents
- On Wall St: Dow +1.9% S&P 500 +1.3% Nasdaq +1.1%
- In New York: BHP +2.8% Rio +3.5% Atlassian -1.1%
- In Europe: Stoxx 50 +0.3% FTSE +0.5% CAC +0.5% DAX -0.2%
- Spot gold +0.2% to $US1730.75 an ounce in New York
- Brent crude +0.5% to $US38.73 a barrel
- US oil -0.2% to $US36.26 a barrel
- Iron ore +1.2% to $US105.02 a tonne
- LME aluminium -1.2% to $US1582 a tonne
- LME copper +0.5% to $US5791 a tonne
- 2-year yield: US 0.19% Australia 0.26%
- 5-year yield: US 0.33% Australia 0.36%
- 10-year yield: US 0.70% Australia 0.90% Germany -0.44%
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