ASX Futures up 38 points following strong gains in Europe and the US

By Trevor Hoey. Published at Sep 29, 2020, in Market Wrap

The S&P/ASX 200 index (XJO) slid 13 points to 5952 points on Monday, dragged lower by the big banks and constituents of the Consumer Staples index such as Woolworths (ASX:WOW) which has given up 2% in less than a week.

It was only a strong performance by the tech sector that limited the decline to modest levels.

Given the overnight surge in the NASDAQ, tech stocks could once again be in the spotlight today.

The ASX SPI200 index is up 38 points to 5932 points, suggesting we could see a significant bounce.

However, there were also strong performances from the other US indices, and especially, the UK and European region where the DAX gained a massive 402 points or 3.2% to close at 12,870 points.

Until last week, the DAX has slowly but steadily being shaking off the coronavirus blues, getting within a few hundred points of its early 2020 highs.

After giving up more than 600 points last week, last night’s gain has gone a long way to erasing those losses.

It was a similar story in France with the CAC 40 gaining 2.4% to close at 4843 points.

In the UK, the FTSE 100 rallied 1.5% or 85 points, closing at 5927 points.

Back to the US, it wasn’t just the NASDAQ that was in good form, both the Dow and the S&P 500 gained more than 1.5% with the former surging 410 points to close at 27,584 points.

The S&P 500 gained 53 points as it closed at 3351 points.

Gold rebounds, AUD supportive of Australian-based metal producers

Looking across the commodities, gold recovered some of its recent losses to close at US$1882 per ounce, and it was still on the up in aftermarket trading, hitting US$1888 per ounce.

As we highlighted yesterday, the decline in the Australian dollar against the US dollar absorbed around 50% of the decline in the gold price over the last week, and investors have latched onto this theme over the last two trading days with the S&P/ASX All Ordinaries Gold Index (XGD) surging 350 points or more than 4% despite a significant fall in the US dollar gold price.

This trend should continue despite a slight strengthening in the Australian dollar overnight as it is still hovering below US$0.71, having shed about 3% in the last fortnight.

Iron ore stocks could also receive support today following a moderate rebound to US$116 per tonne.

There was also a significant kick in the oil price with the Brent Crude Oil Continuous Contract surging from about US$42 per barrel in morning trading to touch on US$43 per barrel as markets drew to a close.

Base metals were mixed with copper coming off slightly to close just below US$2.98 per pound after recording its fifth consecutive day of declines.

Nickel was up slightly to US$6.53 per pound.

There was little movement in the lead price, while zinc was the standout performer, gaining about 1.8% to US$1.09 per pound.

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