Could the ASX be in for its 5th straight daily gain?
The ASX 200 ended up 1.1% for its fourth straight daily gain yesterday. The index is now up 5.4% for the week, and with ASX SPI200 futures now up 12 points we could be in for another green day. A fifth straight day in the green would mark the index’s best week since April.
Continuing the October rally, the index was supported by strength in the tech, health, financials and materials sectors.
In the US, the Dow ended up 122 points or 0.4% overnight, while the S&P500 index gained 0.8% and the Nasdaq index finished up 56 points or 0.5%.
The gains were largely attributed to hopes of further stimulus. After having previously said that stimulus talks would not proceed, President Trump said that discussions were in fact ongoing with Democrats. There was talk of boosting support for US airlines and providing additional $1,200 stimulus checks for Americans.
Morgan Stanley has noted that the US economy is actually relatively sound. The group report that in August, personal incomes of US households reached 2% above pre-COVID levels. It did highlight that in contrast to during the GFC, job losses have been concentrated in lower-wage industries, translating to lower aggregate income loss.
European markets were also strong on Thursday, rising to three-week highs with investors hopeful of more US fiscal stimulus. However, there is worry about the growing number of coronavirus cases across Europe. The STOXX 600 index rose for the fifth time in six days, up by 0.8%. The German Dax index rose by 0.9%, and FTSE index rose by 0.5%.
Global oil prices lifted on Thursday with Brent crude rising by US$1.35 or 3.2% to US$43.34 a barrel after a report suggested that Saudi Arabia could extend production cuts into the new year. In addition, 1.5 million barrels of daily oil output has been halted in the Gulf of Mexico as Hurricane Delta strengthened into a category 3 storm, while are also potential production outages in the North Sea due to Norway workers strike.
In the US, the energy sector rose in line with the oil price, gaining 3% overnight in response.
Bank of America has lifted its fourth-quarter iron ore price forecast by 10% to $US110 a tonne. The bank pointed to a surprisingly strong market and a traditionally weather-disrupted first quarter. It also increased its year end forecast for 2021 to $US90 a tonne to reflect a more balanced global supply and demand picture, with stronger Chinese demand forecasts.
- The spot iron ore price is now at $US123.47 a tonne.
- The gold price is at US$1899/oz
- AUD buying 71.64
- Brent oil US$43.34
- S&P 500 up 0.8%
- DAX up 0.88%
- Nikkei 225 up 0.96%