ASX off to a tough start with futures down 91 points on COVID concerns

The S&P/ASX 200 index (XJO) finished at 5904 points on Friday, up 1.5% on the day, but down about 0.7% on a week on week basis.

The 86 point gain on Friday was largely attributable to strong performances from the financial sector with all of the big banks making good ground.

One company in the sector that has arguably slipped under the radar during this resurgence is highly regarded investment group Perpetual Ltd (ASX:PPT), and it was interesting to see it outperform the banks on Friday with a gain of nearly 5%.

Its price-earnings multiple and dividend yield metrics look more enticing than CBA for example, so this may be a company to target for investors who like the sector but are looking outside the banks.

The ASX looks set to start the week with plenty of challenges given Friday’s rout on Wall Street combined with increasing coronavirus cases in the US and Australia.

The ASX SPI200 Futures index is down 91 points at 5757 points, suggesting all of Friday’s gains could be lost.

24 hours

It was really just the US that rained on the parade on Friday as other markets in the Asia-Pacific region were generally positive.

The Nikkei 225 gained 252 points or 1.1% to close at 22,512 points.

The Shanghai Composite gained 0.3% to close at 2979 points.

The Hang Seng was the only disappointment as it came off nearly 1% or 231 points to close at 24,550 points.

The mood was relatively positive in the UK with the FTSE 100 gaining 0.2% to close at 6159 points.

However, it was a different story in mainland Europe with the DAX falling 88 points or 0.7% to close at 12,089 points.

The CAC 40 was down slightly, closing at 4909 points.

The Dow was in freefall for the whole session on Friday, plunging from the previous day’s close of 25,705 points to 25,015 points, a decline of 730 points or 2.8%.

The hardest hit sector was financials with Goldman Sachs, JP Morgan Chase and American Express down by 8.6%, 5.5% and 4.5% respectively.

News coming out of Nike was disturbing, prompting a 7.6% decline in the stock.

The NASDAQ was also hard hit as it crashed 2.6% to close at 9757 points.

The S&P 500 didn’t fall quite as sharply but finished down 2.4% to 3009 points.

The CBOE Volatility Index (VIX) reflected the negative sentiment, increasing from about 32 points to a high of more than 36 points before tapering a little as markets closed.

However, a push above 40 points is likely to spook investors.

Gold is the obvious winner in this climate, and it was on Wednesday that the precious metal went within a whisker of touching the US$1800 per ounce mark.

The Gold Continuous Contract recommenced trading at 8AM Australian Eastern time, and it only took 15 minutes to spike US$10 per ounce to US$1790 per ounce to US$1790 per ounce.

The oil price slumped throughout the week with the Brent Crude Oil Continuous Contract falling from about US$44 per barrel on Tuesday to close the week out at the US$40.93 per barrel after dipping below the US$40 per barrel mark on Thursday.

Iron ore rebounded from US$100 per tonne to finish the week at US$103 per tonne.

On the base metals front, copper regained its momentum after a mid-week retracement, finishing the week at US$2.69 per pound, representing a five month high.

Nickel also finished strongly as it surged from US$5.61 per pound to US$5.72 per pound on Friday.

Zinc and lead both retraced slightly.

The Australian dollar is hovering at the mid-point between US$0.68 and US$0.69.