ASX futures drop 20 points as Wall Street fades

Published at May 29, 2020, in Market Wrap

US finance company MSCI Inc's (NYSE: MSCI) gauge of world stocks lifted overnight, despite a late sell-off on Wall Street as investors decided to take risk off the table ahead of a news conference by US President Donald Trump today regarding China.

While US markets traded higher for most of the session, a reversal of sentiment was evident amid the ongoing trade dispute between China and the US. The Volatility Index known as VIX, spiked in the final hour of trading by 3.5%.

MSCI’s gauge of stocks across the globe rose 0.46%. The Dow Jones Industrial Average fell 147.63 points, or 0.58%, to 25,400.64.

The S&P 500 lost 6.4 points, or 0.21%, to 3,029.73 while the Nasdaq Composite dropped 43.37 points, or 0.46%, to 9,368.99.

Early gains in healthcare and technology stocks were overtaken by falling bank and consumer discretionary shares.

On the other side of the Atlantic, the pan-regional STOXX 600 index rose 1.64% on the European Union’s plan to provide coronavirus-hit economies with a 750-billion-euro recovery fund.

The euro lifted 0.6% against the US dollar to $1.108.

The overnight action puts the ASX on track for a 20 point drop at 10 am in Sydney as Australian futures declined along with US stocks early in the morning.

The Australian dollar traded at 66 US cents.

As we are looking at commodities, oil futures rose despite earlier losses, as investors bet on rising gasoline demand despite a big surprise build in crude inventories.

Gold pared earlier gains of 1% as rising stock markets dulled its safe-haven appeal, but a return of volatility could result in additional buying demand. Gold continues to trade at the highest level since 2012.

In economic news, Australian investors eye private sector credit for April, published by the Reserve Bank of Australia this morning.

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