Shares are pointing lower for a third day after Wall Street broke its longest winning run of the year as coronavirus infection rates soared in several parts of the world.
ASX SPI 200 index futures fell 30 points or 0.5 per cent, signalling a soft start to the session.
The Australian market has been under pressure all week as authorities scramble to contain a COVID-19 outbreak in Victoria. A strong early rally yesterday faltered in the final hour after the Victorian government announced Melbourne and Mitchell Shire would go back into State 3 lockdown to control the outbreak. The S&P/ASX 200 finished 1.7 points in the red after being up almost 63 points. Shopping centres and travel and tourism companies fell sharply.
Wall Street has ignored evidence the pandemic was widening in many parts of the country, but finally cracked last night as a rally in ‘stay-at-home’ stocks ran out of steam. The S&P 500 fell 34 points or 1.08 per cent, breaking a five-session winning run. The Dow shed 397 points or 1.51 per cent. The Nasdaq gave up 90 points or 0.86 per cent.
The five-day rally in the US ended as stay-at-home stocks turned lower. Amazon, one of the big winners from the pandemic, retreated 1.9 per cent from Monday’s record close. Netflix eased 0.1 per cent after touching an all-time high. Apple shed 0.3 per cent.
“This market is way overbought,” Peter Cardillo, chief market economist at Spartan Capital Securities in the US, told CNBC. “This market has been ignoring the potential problems that are going to arise from the coronavirus.”
Travel and tourism companies declined sharply during a session when upbeat jobs data was offset by reports of rising infections around the country. A government report showed a record 6.5 million Americans found work in May. The S&P 1500 airlines index sank 5 per cent as American gave up 7 per cent and United 7.6 per cent. Several cruise lines fell more than 5 per cent. Hyatt Hotels lost 4.8 per cent. An index of casino and gambling companies shed 6.4 per cent.
Adding to pressure on the market was news that the White House wants to cap a stimulus package expected this month at US$1 trillion. An aide to Vice President Mike Pence said there had been a lot of stimulus already and US$1 trillion was the Trump administration’s limit.
The defensive consumer staples sector resisted the downtrend, rising 1 per cent. Energy, financial and industrials took the biggest hits, falling between 1.9 and 3.2 per cent.
BHP and Rio Tinto helped cushion the market here yesterday from a deeper loss, but came under pressure in overseas trade as the night wore on. BHP’s US-listed stock fell 1.01 per cent after its UK-listed stock shed 0.95 per cent. Rio Tinto edged up 0.44 per cent in the UK. but lost 0.07 per cent in the US. The spot price for iron ore landed in China lifted $1.85 or 1.8 per cent to US$103.45 a dry ton.
Gold settled at its highest level in almost nine years as a weak dollar, record-low interest rates and a global pandemic gave investors plenty of reasons to buy. Gold for August delivery climbed $16.40 or 0.9 per cent to US$1,809.90 an ounce, its highest finish since September 2011.
Copper secured a new five-month peak, boosted by optimism about Chinese growth and supply concerns as Chile struggles to contain the pandemic. Benchmark copper on the London Metal Exchange rose 0.8 per cent to US$6,184.75 a tonne. Nickel gained 1 per cent, lead 1.9 per cent and zinc 0.3 per cent. Aluminium eased less than 0.1 per cent and tin 0.3 per cent.
Oil closed little changed. Brent crude eased two cents or less than 0.1 per cent at US$43.08 a barrel.
The dollar edged up 0.03 per cent to 69.48 US cents.