Shares look set for their highest open in a month after positive coronavirus vaccine news triggered a run on US recovery plays.
Australian index futures climbed 22 points or 0.4 per cent to 6053, setting up a shot at a second day of gains.
The S&P/ASX 200 surged 112 points or 1.9 per cent yesterday – the index’s strongest move in four weeks – on news that US biotech Moderna’s vaccine candidate had performed well in an early-stage trial. How today’s session plays out may be decided by the 11.30 am EST release of June employment data and a slew of Chinese economic reports half an hour later.
The S&P 500 in the US climbed 29 points or 0.91 per cent as traders picked up travel and tourism stocks that will benefit from a return to more normal economic conditions. The Dow rose 228 points or 0.85 per cent to a fourth straight gain.
The Nasdaq trailled the S&P 500 for a fourth straight session as traders favoured recovery plays over the tech giants that have led the market recovery from the pandemic lockdown lows. The tech-heavy index edged up 62 points or 0.59 per cent.
Australian stocks soared yesterday as US index futures responded to data published in the New England Journal of Medicine showing Moderna’s vaccine candidate produced neutralising antibodies in all 45 patients who took part in an early-stage human trial. The company’s chief medical officer said vaccination with mRNA-1273 produced “a robust immune response across all dose levels”. A Phase 3 trial will commence this month. A trial of a rival vaccine in the UK was also reported to be delivering good results.
Moderna shares put on 6.9 per cent. The S&P 1500 airlines index charged 10.2 per cent. Several cruiselines, including Royal Caribbean and Norwegian, put on more than 20 per cent. High-street retailers Gap and Kohl’s jumped 12.7 per cent and 9.4 per cent, respectively. Planemaker Boeing was the best performer on the Dow, rising 4.4 per cent.
“The Moderna news woke everybody up again that this is not going to last forever, and there is light at the end of the tunnel,” Tim Ghriskey, Chief Investment Strategist at Inverness Counsel in the US, told Reuters. “That is why you are seeing such a strong move today into those economically sensitive stocks.”
Worries about corporate profits were soothed by a knockout earnings report from Goldman Sachs. Bank stocks climbed after the financial powerhouse reported its second highest quarterly revenue in history, thanks to a surge in trading revenue. Goldman shares rose 1.4 per cent.
The Federal Reserve reported economic activity increased across almost all of the country last month, but remained well below pre-pandemic levels. Car sales and home improvement led a recovery in consumer spending, according to the central bank’s monthly Beige Book report.
Apple gained 0.7 per cent after a European Union court knocked down a European Commission demand for US$15 billion in back taxes. Stay-at-home plays Amazon, Netflix, Microsoft and Alphabet all declined.
The iron ore miners that led yesterday’s Australian rally edged higher in overseas trade. BHP’s US-listed stock rose 1.38 per cent and its UK-listed stock 2.49 per cent. Rio Tinto gained 0.05 per cent in the US and 0.41 per cent in the UK. The spot price for iron ore landed in China rose 30 cents or 0.3 per cent to US$112.70 a dry ton.
The biggest weekly drop in US crude supplies this year helped drive oil to its highest settlement in at least four months. Brent crude settled 89 cents or 2.2 per cent ahead at US$43.79 a barrel. The upswing came in the face of an OPEC decision to increase production next month.
Copper fell back from a two-year high amid concerns that tensions between China and the US may undermine demand. Benchmark copper on the London Metal Exchange dipped 1.8 per cent to US$6,378.75 a tonne. Aluminium lost 0.3 per cent, nickel 0.4 per cent, lead 0.2 per cent and tin 0.2 per cent. Zinc gained 0.3 per cent.
Gold closed little changed as optimism over economic recovery dulled demand for havens. Gold for August delivery settled 40 cents or less than 0.1 per cent higher at US$1,813.80 an ounce.
The dollar climbed 0.47 per cent to regain the 70 US cents level, lately asking 70.07 US cents.