The ASX is heading for a far more modest gain today than what we saw on Tuesday despite another solid day for Wall Street and other markets.
Overnight futures trading suggests the ASX 200 will open around 20 points or so higher this morning and not bounce out of the gates with a triple-digit gain in mind.
Gold, oil, and iron ore all rose overnight as the US dollar weakened a touch, though the Aussie dollar remained under 60 US cents around 68.80 just after 7 am Sydney time.
Wall Street closed higher but off the session’s best levels after Federal Reserve Chairman Jerome Powell suggested more fiscal stimulus may be needed as the American economy may only make a slow recovery from the COVID-19 pandemic.
Rising coronavirus cases in several US states and in China are also are a concern for investors, even though retail sales and industrial production data show the economy is slowly recovering, and progress on the development of potential therapeutic drugs has been reported from the UK with a freely available steroid helping people needing ventilation.
Investors also preferred to focus on the Fed corporate bond-buying announcement and ignored the fact the program had already been announced a month or so ago and that Monday’s news from the central bank was a finessing of that news.
Traders ignored an appearance by Fed chair, Jay Powell before the Senate Banking Committee where he repeated his comments from last week that recovery in the US economy will be slow even though some data suggested a steadying in the economy.
A 17.7% surge in US retail sales in May was one of those data points that encouraged markets yesterday, even though much of the rise merely represented the impact of shops and other outlets re-opening for business after being closed in lockdowns.
The Dow rose 526.82 points, or 2%, to end at 26,289.98. The S&P 500 index added 58.15 points to end at 3,124.74, for a gain of 1.9% and the Nasdaq ended up 169.84 points, or 1.8%, to finish at 9,895.84.
All three benchmarks extended their win streak to three straight sessions but finished below their best levels of the day.
Tuesday saw the ASX 200 close 3.9% higher thanks to talk of more stimulus in Japan and the US.
The ASX200 jumped 222.5 points higher to end at 5,942.3. it was up as much as 4.5% in the session as it clawed back some of the $125 billion lost since last Wednesday’s close.
