It should be a big day on the ASX and other markets across the region today after Wall Street staged a huge surge on Monday on news of a promising COVID-19 treatment and upbeat sentiment about the pace of re-openings across the country and globally.
The S&P 500 closed at a 10-week high, on encouraging early-stage data for a potential coronavirus vaccine and on the promise of more spending to boost the weak US economy.
The S&P 500, in fact, had its biggest one-day percentage gain since April 8.
The upbeat sentiment was shared on other markets – oil surged, iron ore rallied again to be within sight of $US100 a tonne, gold fell though on this new optimism.
Overnight futures trading saw a 100 point gain for the ASX 200 when the market re-opens this morning. The Aussie dollar climbed back over 65 US cents and remained there amid the optimism.
Traders however ignored the warning from the International Monetary Fund that the global economy was sicker than previously estimated and that the fund would most likely downgrade growth even further to a fall steeper than the 3% estimate in April.
The IMF also believes the rebound next year will be more muted than the 6.1% jump forecast a month ago.
Instead, they took heart from comments by Federal Reserve Chair Jerome Powell on Sunday (on the CBS 60 Minutes program) forecasting a gradual economic recovery and his affirmation that more monetary stimulus would be on the way if required.
Powell is set to speak before the Senate Banking Committee tonight, our time to discuss how economic rescue efforts are working.
Instead, they concentrated on the news that a small drugmaker had good news for an experimental drug. That saw a 20% surge in the price of shares in Moderna Inc after the company said its experimental COVID-19 vaccine showed promising results in a small early-stage trial (just five people, too small to be useful)
The Dow jumped 911.95 points, or 3.85%, to end at 24,597.37, the S&P 500 added 90.21 points, or 3.15%, to close at 2,953.91 and the Nasdaq added 220.27 points, or 2.44%, to 9,234.83.
The prices of airline and cruise companies saw big gains on news the lockdowns were easing and the vaccine trial results.
Iron ore prices jumped more than 3% to $US96.84 on Monday, according to Metal Bulletin data for 62% Fe fines delivered to northern China. That took the price rise from early May to more than 12% and prices are now around 2020 highs.
Crude oil futures jumped again as prospects faded for a repeat of the chaotic trading a month ago on the expiration of the current front-month contract for US West Texas Intermediate crude. That happens tonight, Sydney time and the way pries went on Monday, there will be no problems.
West Texas Intermediate crude for June delivery rose $US2.39, or 8.1%, to settle at $US31.82 a barrel in new York on Monday. Based on the front-month contracts, prices marked their highest finish since March 11.
The contract added 19% last week on easing fears of a repeat of the April 20 chaos and price collapse in the May contract which expired on that date and saw the price end at a negative $US37 a barrel
The July contract which is the most actively traded and is soon to be the front-month contract settled $US2.13, or 7.2% higher, to finish at $US31.65 a barrel.
In Europe, the global crude benchmark July Brent jumped $US2.31, or 7.1%, to settle at $US34.81 a barrel. The contract added 4.9% last week. Like WTI, front-month prices settled at their highest since March 11.
On the other hand, gold sold off, but not silver or copper.
Comex gold for June delivery fell $US21.90, or nearly 1.3%, to settle $US1,734.40 an ounce, its first loss in five sessions.
It had touched an intraday high of $US1,775.80, which put the metal near its highest settlement since 2012. Gold rose 2.5% last week.
But Comex July silver surged 39.8 cents, or 2.3%, to end at $US17.468 an ounce, adding to last week’s strong 8.2% gain.
And July Comex copper was up almost 3.2% at $2.404 a pound.
