Dow notches up seventh day of gains, but futures point to a flat day

By Trevor Hoey. Published at Aug 11, 2020, in Market Wrap

The Australian sharemarket started the week strongly with the S&P/ASX 200 gaining 105 points or nearly 1.8% to close at 6110 points.

It was mainly positive economic data coming out of the US in terms of its labour force report that contributed to the momentum, but it was also a big day for the banks with the CBA leading the way as its shares increased approximately 3.4% to close at $73.98.

Another 1% gain would see CBA make a near six-month high.

With most markets gaining ground overnight, one would expect another positive day, but the ASX SPI200 Futures Index is only up two points to 6072 points.

This may suggest that yesterday’s significant spike will be the precursor to some consolidation.

24 hours

Markets were mixed in the Asia-Pacific region yesterday with the Shanghai Composite the only major index to finish in positive territory, gaining 0.7% to close at 3379 points.

Elsewhere, the Hang Seng and the Nikkei 225 came off 0.6% and 0.4% to close at 24,377 points and 22,330 points respectively.

While European markets finished in the black, there weren’t any big moves.

The FTSE 100 gained 18 points to close at 6050 points.

In mainland Europe, the DAX just eked out a 0.1% gain, closing at 12,687 points while the CAC 40 put on 20 points to close at 4909 points.

In the US there was a marked uptick in sentiment with the Dow gaining 358 points or 1.3% as it closed at a six month high of 27,791 points.

This seventh consecutive day of gains appeared to be fuelled by Trump’s payroll tax cut, and given the index closed broadly in line with its all day high the positive sentiment seems to be sticking.

The index also benefited from a rebound in energy stocks with Chevron Corp and Exxon Mobil Corp gaining 3.4% and 2.5% respectively.

It was the NASDAQ’s turn to play second fiddle with most of the FAANGs dragging the index lower.

On the commodities front, gold pushed back up towards US$2060 per ounce in morning trading, but it finished the day at US$2037 per ounce, up 0.5%.

The Brent Crude Oil Continuous Contract rallied strongly throughout the day to hit a high of US$45.26 per barrel before settling just shy of US$45 per barrel.

After falling steeply on Friday, copper spiked on Monday regaining all of the previous day’s lost ground plus some, finishing just shy of US$2.97 per pound a level it hasn’t traded at since 2018.

Lead and zinc made nominal gains, while nickel retraced slightly to close at US$6.40 per pound.

After an intraday spike, the Australian dollar retraced to close at US$0.715.

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