A bit of a topsy turvy day on Wall Street has set the scene for a modest start to the session on the ASX today.
Wall Street was up strongly for most of the session, but slid sharply in the final hour or so of trading after a senior Federal Reserve official injected a note of realism into the increasingly bullish optimism on Wall Street about the impact of the re-opening of the economy.
Fed Vice Chairman Richard Clarida said that while the US economy can return to positive growth in the third quarter after a massive drop in employment and GDP, it won’t be without more help from the central bank.
“More policy support will be needed from the Fed and possibly also fiscal policy. It just depends on how this evolves,” he said on CNBC.
“Realistically, it’s going to take some time for the labor market to recover from this shock. I do think the recovery can commence in the second half of the year,” he added.
It was that guarded optimism and talk of time for the jobs market to recover that hit the optimism on Wall Street in the afternoon.
The 200 point plus fall in the last hour hit futures trading for the ASX 200 – it pushed lower and was down 7 points around 6.20 am – pointing to a virtually flat start later this morning.
That was after a strong rise of 1.6% on Tuesday for the ASX 200. The index is now up 150 points so far this week.
The Dow closed up 133.33 points, or 0.6%. It had been up as much as 419.96 points at its high. The S&P 500 rose 0.9%. It was up as much as 1.9%. The Nasdaq ended up 1.1% after being up more than 2% at its peak.
The S&P 500 ended at 2,868.44, the Dow finished at 23,883.09 and the Nasdaq closed at 8,809.12.
Healthcare stocks rose and anther good day for oil prices also saw energy stocks advance.
Investors got a reminder of the current impact of the crisis when the April survey of America’s huge non-manufacturing sector showed the first monthly fall in more than 10 and a half years.
Shares of car rental group, Hertz tumbled more than 16% after the Wall Street Journal reported that the car rental company had hired an additional adviser to help with an imminent bankruptcy filing.
Clothing retailer, J Crewe collapsed on Monday and other retailers such as Neiman Marcus and JC Penney are said to be close to the edge.
As well, shares of Norwegian Cruise Line Holdings tumbled 22.6% as the world’s third-largest cruise operator raised doubts about its ability to remain in business.
