The ASX is set for a big rise later today after Wall Street bounced on Friday and ignored another record figure of 69,000 cases of COVID-19 across the US, hundreds of more cases in Victoria, and the re-emergence of tensions in the US bond market.
US bond yields swung wildly on Friday, hitting a low of 0.56% for the key 10-year security (the lowest since April) before recovering to close at 0.646%.
That was down 16 points over the week and 25 points over the past three months.
Yields on the five-year bond though hit an all-time low of 0.25% and seems to be signalling that the US economy is heading for another slowdown as demand for gold and other US dollar assets rises in the wake of the rising numbers of COVID-19 infections
The US reported a new record in the number of daily infections of coronavirus of 67,149, with eight states — Georgia, Ohio, Utah, Iowa, Wisconsin, Idaho, Montana, and Alaska — also reporting new records.
That’s up nearly 60% since June 30.
There’s also been an increase in the number of hospitalisations in 26 states since last week. Texas, South Carolina, and California also reported an increase in average daily deaths.
The growing caution among bond investors is at odds with the continuing rise in share prices – especially tech stocks on Nasdaq and the S&P 500, led by Apple, Amazon, Facebook, Netflix, Alphabet, and Microsoft.
Eurozone shares and the US S&P 500 rose 1% on Friday helped by a report from Gilead Sciences that Remdesivir substantially reduced coronavirus mortality risk.
The positive global lead saw ASX 200 futures jump 95 points, or 1.6%, pointing to a strong start to trade for the Australian share market later today.
The Dow rose 369.21 points, or 1.4%, to close at 26,075.30. The S&P 500 added 32.99 points, or 1.1%, to close at 3,185.04 while the Nasdaq closed at 10,617.44, up 69.69 points, or 0.7%, its 27th record of 2020.
That was after Thursday saw the Dow fall 361.19 points, or 1.4%, to end at 25,706.09; the S&P 500 index lose 17.89 points, or 0.6%, to end at 3,152.05; but the Nasdaq closed up 55.25 points, or 0.5%, at 10,547.75.
For the week, the Dow finished 1% higher, the S&P 500 added 1.8%, and the Nasdaq jumped 4%.
Eurozone shares rose 0.2% and Chinese shares surged 7.5%. However, Japanese shares fell 0.1%.
Australian shares fell 2.3% on the back of fears about the economic impact of Melbourne’s return to lockdown with property, industrial, healthcare, retailers, and utility stocks the hardest hit.
Iron ore prices rose to their highest since August last year. The Australian dollar rose slightly to remain over 69 US cents. Gold, copper, and silver had a good week.
