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ASX Today: Global recovery gathers pace

Day Trading
26 May 2020 07:24 (AEST)

The share market has a fresh 11-week high in its sights following strong gains in European equities while US and UK markets closed for holidays.

ASX SPI200 index futures climbed 47 points or 0.8 per cent on below-average volume, positioning the S&P/ASX 200 for its strongest open since the second week of March. The local benchmark surged 2.2 per cent yesterday on stimulus news from Asia and signs that lockdown restrictions are easing around the country.

“Global stock markets are moving higher with positive changes in mobility data,” Stephen Innes, Chief Global Market Strategist at AxiCorp, wrote. “According to recent mobility data, the global economy has taken a giant step toward normality in the last week.”

European stocks advanced in light trade as new COVID-19 infections fell and countries continued to relax stay-at-home restrictions. The pan-European Stoxx 600 index rose 1.47 per cent.  

US index futures rallied during last night’s Memorial Day public holiday. S&P 500 futures climbed 35 points or 1.2 per cent. Dow futures gained 273 points or 1.12 per cent.

Germany’s DAX jumped 2.87 per cent to its highest level since early March after a report showed business morale rebounded this month. The closely-watched Ifo business climate index edged up to 79.5 from 74.2 last month but remained well below average levels. France’s CAC index gained 2.15 per cent and Italy’s FTSE MIB 1.61 per cent. UK markets were closed for the Spring bank holiday.

Travel and tourism stocks shone after Spain announced plans to reopen to tourists from July and France recorded its lowest number of new infections since lockdowns began. Anglo-German travel group TUI soared 15.28 per cent. German airline Lufthansa added 7.5 per cent after the German government approved a rescue package. French planemaker Airbus put on 8.51 per cent. The European Commission is set to announce an economic recovery plan tomorrow night.

France began to ease restrictions on May 11 and is set to allow some cafes and bars reopen from June 2. On Sunday, churches held their first services in two months.

Asian markets edged higher, but gains were capped by simmering tensions between China and the US. Japan’s Nikkei put on 1.73 per cent after Prime Minister Shinzo Abe lifted a state of emergency declared to contain the coronavirus. China’s Shanghai Composite and Hong Kong’s Hang Seng inched up 0.15 per cent and 0.1 per cent, respectively, following violent weekend protests in Hong Kong against Chinese plans to impose new security laws.  

Movements on commodity markets were capped by holidays. The spot price for iron ore landed in China held steady at US$96.85 a dry ton. Copper traded in Shanghai fell to a one-week low before rebounding. The July contract dropped as much as 1.2 per cent before paring its loss to 0.2 per cent at the close. The London Metal Exchange was closed for a bank holiday.

Oil battled higher, with the US benchmark continuing to set the pace. West Texas Intermediate was lately up 47 cents or 1.4 per cent at US$33.72 a barrel. Brent crude last traded five cents or 0.14 per cent ahead at US$35.58 a barrel.

Gold last traded $10.50 or 0.61 per cent weaker at US$1,725 an ounce.

The dollar has been in a holding pattern, this morning easing 0.02 per cent to 65.43 US cents.

The day ahead brings domestic weekly consumer confidence figures. Wall Street reopens tonight to a slew of mostly second-tier economic reports, with May consumer confidence data a likely highlight.  

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