No impact yet on markets from the protests sweeping the US.
As a result, the ASX is looking at a modest gain at the opening this morning of around 10 points after a mixed and directionless session offshore.
While most major markets edged higher, momentum was absent and the gains were based more on hope rather than fact about the putative recovery from the COVID-19 pandemic.
Investors ignored the riots and protests sweeping the US, even though a leading economist warned the damage to consumer and business confidence could end up being significant.
The usual drivers for the ASX – iron ore, gold, oil, and copper were weak to slightly firm but the Aussie dollar surged 2% overnight to close above 68 US cents for the first time since late January at 68.07 US cents.
The price of 62% Fe fines delivered to northern China dipped to $US1.94 to remain above the key $US100 level at $US100.45 a tonne.
Comex gold futures fell 0.08% to $US1,750.30 an ounce but Comex July silver jumped 33 cents to settle at $US18.827 an ounce and again outperformed gold. Comex copper also bounced higher, up 1.9% to $US2.4705 a pound.
US West Texas Intermediate crude lost 0.1% to $US35.44 a barrel and in Europe Brent settled at $38.32, up 1.8% on the day.
“The direct economic impact of the protests is small, at least so far,” Mark Zandi, chief economist of Moody’s Analytics, told MarketWatch.com. But he warned that the near-term damage to the psyche of consumers and the business community may be more substantial.
“Just when people were starting to come out of the proverbial bunkers, the protests may be too much for them, and they will go back in,” he said. “The protests also are symptomatic of just how deep the economic problems and racial tensions go in our country,” the economist said.
On Wall Street, the Dow rose 91.91 points, or 0.36%, to 25,475.02, the S&P 500 added 11.42 points, or 0.38%, to 3,055.73 and the Nasdaq rose 62.18 points, or 0.66%, to 9,552.05.
That was after US manufacturing activity eased off an 11-year low in May, though a full recovery from the COVID-19 crisis could take years because of high unemployment.
Following the very poor figures on consumer spending and trade released last Friday, the Atlanta Federal Reserve Monday estimated economic output could drop a mind-boggling 51% annualised in the second quarter.
In global equities, the Stoxx Europe 600 index closed up 1.1% while the FTSE 100 index was up 1.5%. The ASX 200 ended 63.5 points or 1.1% higher after an early dip into the red.
Investors are looking forward to the May jobs report due out on Friday which economists think the unemployment rate surged to 19.8%, smashing April’s record 14.7%. The actual rate in April including those workers on support programs was 19.4%, so the real rate could be closer to 24%.
US payrolls are expected to drop by 7.4 million, on top of the 20.5 million jobs lost the previous month.
But investors also looked for signs of hope from the global surveys of manufacturing activity. The US survey showed a reading of 43.1 last month up from 41.5 in April, which was the lowest level since April 20, 2009. But it was third month of contraction in a row.
Earlier, China’s official survey of manufacturing showed a positive reading above 50, but the pace of growth dipped for the second month in a row.