Wall Street has regained all their losses for the year thanks to a rally spurred by central bank stimulus and optimism among investors that the pace of economic recovery may be accelerating.
Nasdaq hit a new all-time high and the key S&P 500 advanced 1.2% to close at 3,232.39, back above their level at the start of 2020, building on gains from Friday’s unexpected rise in US employment in May.
But the Dow and the S&P 500 remain under their all-time highs reached in February as the COVID-19 pandemic gathered pace.
The rebound was despite the US economy being called in recession since February, according to a special group that sets the timing of slowdowns.
America’s National Bureau of Economic Research said that the economy peaked in February and had since fallen into a downturn, as pandemic-related shutdowns halted the pace of activity and brought an end to a 128 month-long record expansion.
The Dow climbed 461.46 points, or 1.7%, to end at 27,572.44, it’s sixth straight gain. The S&P 500 jumped 38.46 points, or 1.2%, to end at 3,232.39 while the tech-heavy Nasdaq closed up110.66 points, or 1.1%, ending at 9,924.74, a new all-time closing record.
The Dow on Monday finished 6.7% off its closing high in mid-February, while the S&P 500 ended only 4.5% shy of its highest close.
The ASX is looking for a solid start today after the long weekend with the overnight futures market showing a 45 point gain when trading starts at 10 am.
A surge in iron ore and gold prices will help sentiment, but a rise in the value of the Aussie dollar will temper some of that optimism. The Aussie traded around 70.20 US cents at 7 am Tuesday, spending the entire session on Monday above 70 US cents for the first time in months.
Iron ore prices jumped around 5% yesterday to reach above $UD105 a tonne for 62% Fe fines (See separate story) because of more COVID-19 problems in Brazil.
Oil fell despite a month’s extension to the 9.7 million barrels a day production cut by Opec and Russia. Other producers may not play (Mexico especially – see separate story).
Gold prices though regained the $US1,700 an ounce level in a session of solid trading – and despite the surge in share prices on the day.
West Texas Intermediate crude for July delivery lost $US1.36, or 3.4%, to settle at $US38.19 a barrel in New York, after trading as high as $US40.44 during the session. That was after the contract jumped 11.4% last week
That was after Brent oil for August delivery dropped $US1.50, or nearly 3.6%, to $US40.80 a barrel in Europe. Prices for the front-month contract had touched an intraday high of $US43.41, after rising nearly 12% last week.
Comex August gold climbed $US22.10, or 1.3%, to settle at $US1,705.10 an ounce, after finishing last week’s trade at the lowest level since early April a weekly loss of 3.9%. On Friday, prices fell 2.6%.
Comex July silver added 41 cents, or 2.4%, to end at $US17.893 an ounce, after suffering a 5.5% weekly slide
Elsewhere on Comex, July copper rose 0.4% to settle at $US2.5655 a pound, after notching a 5% rise last week.
Last week saw US shares rise 4.9%, Eurozone shares gain9.3%, Japanese shares up 4.5% and Chinese shares add 3.5%.
Reflecting that strong global lead, the ASX rose 4.2% last week to its highest level since early March with very strong gains in banks (again), energy, retail, property, iron ore, and industrial stocks but with the defensive health, telco and utility sectors lagging. Those gains will be added to today.
