If the overnight futures market is any guide, the ASX should start trading this morning with a roar – more than 190 points if the SPI is any guide.
But as we have seen in the past month solid starts to trading have been promised on numerous occasions based on the overnight futures market, only to have something very different happen when trading gets underway.
A suspicion with the latest (2%, or 199 point) surge in futures was that it matched the gains in the main US indexes which were heavily skewed to the 2.3% bounce (or 160 points) in the Nasdaq.
The Dow added 188 points or 0.95%, but the S&P 500 – the main index could only manage a small rise of 11.3 points or 0.47%.
That modest gain for the S&P 500 came despite a noticeable cooling in the sell-off in government and corporate fixed interest securities which in turn saw the US 10 year Treasury bond yield dip 13 points to 1.17% – the yield on the Australian 10-year bond eased as well to 1.41%
The key oil benchmark West Texas Intermediate crude price rose 24%, the biggest one-day gain on record. Gold and copper edged higher but iron ore saw a tiny 35 cents dip to remain over $US91 a tonne.
European markets were hesitant at first but rebounded after the European Central Bank revealed a new 750 billion euro bond-buying program and the Bank of England trimmed its key rate 15 points to 0.1% and added two hundred billion pounds to its bond-buying support fund.
That saw the key European index, the STOXX 600 jump 2.9%, with gains from 1.4% in London, to 2.68% in France.
President Donald Trump, in a now regular update for Americans, said there were therapies that he believed could be rolled out quickly, and sounded upbeat on the chances of agreeing on hundreds of billions of dollars of aid with Congress.
Late Wednesday, the Fed announced a new Money Market Mutual Fund Liquidity Facility, or MMLF, to help money-market funds in meeting demands for redemptions by households and other investors. That worked with long term bond yields eased in the US.
Thursday’s gains on Wall Street were small compared to the pounding the markets have endured in the past month – the Dow erased the last of its gains under President Donald Trump’s presidency on Wednesday, while the S&P 500 index has lost around $US8.7 trillion in market value in the past month (since its peak on February 20).
Official data showed the number of Americans filing for unemployment benefits surged to 2-1/2-year high last week as companies in the services sector laid-off workers because of the pandemic. A sign of things to come.
