SPI futures down 78 points on back of negative US leads and COVID fears

The S&P/ASX 200 index (XJO) finished the week at 5942 points, up from the previous Friday’s close of 5848 points, representing a week on week gain of 94 points, just over 1.6%.

However, it was a rollercoaster week with the index plunging on Monday before staging an outstanding one-day gain of nearly 4% on Tuesday.

There were strong gains by tech stocks at the end of the week, and the Information Technology (XIJ) and Communications (XTJ) sectors made weekly gains of 7.8% and 3% respectively.

It is worth noting that the tech sector has been relatively resilient throughout the last three months in the US, with the NASDAQ even making ground in the face of coronavirus headwinds.

However, both the US and Australian markets could be challenged in the near term by the re-emergence of coronavirus cases in various regions of both countries.

Victoria has already moved to wind back its easing regulations, effectively placing more strain on businesses.

If it becomes evident in other states that the recent changes in terms of “opening up for business” are fuelling coronavirus outbreaks this could have severe repercussions which would reflect on the performance of equities.

Given this backdrop and a fairly negative lead from Wall Street, our markets could experience some negative sentiment today.

The ASX SPI200 index is down 78 points to 5854 points.

24 hours

Asian markets finished the week on a fairly solid note with the Hang Seng gaining 0.7% or 179 points to close at 24,643 points.

The Shanghai Composite was up nearly 1% or 28 points, closing at 2967 points.

After a sharp fall early in the week, the Nikkei 225 recovered all of the lost ground plus some to finish at 22,478 points, delivering a 0.5% gain on Friday.

UK markets remained resilient early in the week despite global volatility, and the FTSE 100 finished close to its one-week high at 6292 points after a gain of 1.1% on Friday.

The mood was also fairly positive in mainland Europe with the Dax and the CAC 40 both up 0.4% to close at 12,330 points and 4979 points respectively.

However, it could be the Dow that has most significant impact on the ASX as it shed more than 200 points or 0.8% on Friday to close at 25,871 points.

The S&P 500 was down 0.6% to 3097 points.

Even the NASDAQ failed to buck the trend as it put on a meagre three points to close at 9946 points.

With uncertainty prevailing, gold was back in the picture, finishing close to its one-week high of US$1760 per ounce.

After trading close to US$43 per barrel late in the week, the Brent Crude Oil Continuous Contract finished just shy of US$42 per barrel.

There was little movement in the base metals space, but copper continues to look robust as it closes in on a five month high.

The Australian dollar is fetching US$0.68.

This week’s market drivers

The coming week will see both new and existing home sales figures released in the US, as well as manufacturing PMI figures, with the latter likely to have a significant impact on market performance, as well as providing some insight as to how President Trump’s position is looking as the election draws closer.

US GDP data will also be released towards the end of the week, another measure of economic health.

In Australia, it will be out import/export figures to be released on Tuesday that will come under scrutiny, as well as the level of skilled vacancies and job vacancies for May which will be released on Wednesday and Thursday respectively.