A retreat on Wall Street to pressure Australian stocks on Friday

By Zachary Graves. Published at Jun 5, 2020, in Market Wrap

World equity markets pulled in the reins on Thursday after a strong seven-day run. Shares were appearing overvalued heading into the weekend and it appears that the rally, at least for the time being, has run out of steam.

The S&P 500 eased and the Nasdaq joined in negative territory, while the blue-chip Dow posted a nominal gain.

It was much the same in Europe as most major indices retreated after a stellar run German shares as well as the UK market closed in the red.

The euro rallied for an eighth straight session – recovering after getting slammed from the coronavirus pandemic – as the European Central Bank (ECB) said it would increase the size of emergency bond purchases by €600 billion to €1.35 trillion.

ASX SPI Index Futures dipped 14 points ahead of trading this morning as the retreat on Wall Street puts opening pressure on Australian stocks.

Australian share market closes higher, Qantas jumps

The ASX extended recent gains on Thursday as Qantas outperformed and investor sentiment remained upbeat. The ASX 200 rose 0.84% to 5991.8 points. The Small Ordinaries added 0.18%.

Qantas Airways (ASX: QAN) soared over 7% after the airline operator announced it is planning for domestic flying to reach 40% of its pre-pandemic capacity by the end of July.

Australia outperformed most Asian markets in a somewhat mixed session.

The Shanghai Composite eased 0.14% to 2,919.25 and the Hang Seng added 0.17% in Hong Kong.The Nikkei 225 lifted 0.36% in Tokyo to close at 22,695.74 points.

In the US, the S&P 500 fell 11 points or 0.34% while the tech-heavy Nasdaq gave up 67 points or 0.69%. The blue-chip focused Dow Jones lifted late in the session to close 12 points or 0.05% higher.

Airlines were also strong performers in the US overnight. American Airlines gained a huge 41% for the session, while United, JetBlue and Delta Air Lines each recorded double-digit gains.

Despite the overnight pause, all three major US indexes have shown remarkable resilience since the March plunge, with the Nasdaq, the S&P 500 and the Dow about 2%, 8% and 11% below their respective record highs reached in February.

Remarkably, the Nasdaq 100 Index touched an intraday record high before fading throughout the session.

Overall, investors were cautious overnight after a steep recovery in equity prices leaving many analysts scratching their heads. The VIX volatility index added 0.58% after steadily climbing off a multi-month low throughout the session.

Brent crude settled 20 cents or 0.5% higher at US$39.99 per barrel. Gold prices rose for the first time this week, rising 1.3% to be last quoted at US$1,727.40 an ounce.

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