Despite almost three million more Americans filing for unemployment benefits for the first time in the past week, Wall Street surged in late trading, turning a 400 point slide into a 377 point gain at the close, a move that will see the ASX open higher later this morning.
The market was driven by a 9% jump in oil prices and expectations (once again) that the recovery in the US and other economies is not far away. Gold also rose strongly, iron ore was up.
The 800 point jump was despite the latest jobs benefit figure taking the number of people applying for financial help to more than 36 million since the pandemic erupted and mass lockdowns were imposed across the country.
At 2.98 million, it was the lowest increase since the lockdowns started and came from an upwardly revised 3.2 million a week earlier. It was a lot worse than the 2.5 million forecast by market surveys.
The Dow rose 377.37 points, or 1.62%, to 23,625.34, the S&P 500 added 32.5 points, or 1.15%, to end at 2,852.5 and the Nasdaq closed up 80.55 points, or 0.91%, to 8,943.72.
The S&P 500’s 1.1% rise came after an early drop of nearly 2%. Shares in Europe and Asia fell sharply. The ASX ended deeply in the red, down 1.7% or 92 points.
That will change when trading on the ASX resumes later this morning after overnight futures trading had the ASX 200 up 50 points at 6.50 am.
But what were US bond yields doing amid the late chargeback to confidence? Falling as safe-haven demand continued at a strong pace a story a bit different to the outbreak of confidence in equities.
The 10-year Treasury bond yield fell 3.1 basis points to 0.617%, while the yield on the Treasury’s two-year note rate was virtually flat at 0.0149%. The 30-year bond yield slid 4.6 basis points to 1.294%, a two-week low. That’s a sign of continuing concerns, not galloping confidence.
In New York, West Texas Intermediate crude for June delivery jumped $US2.27, or 9%, to settle at $US27.56 a barrel on Nymex – the highest front-month contract finish since April 3.
In Europe, July Brent crude futures added $US1.94, or nearly 6.7%, to settle at $US31.13 a barrel.
That was despite the International Energy Association warning of a big fall in May demand, partly offset by a big fall in production.
The IEA said world demand for crude will drop by 21.5 million barrels a day this month. At the same time, crude-producing nations and companies are expected to slash output by a “spectacular” 12 million barrels a day.
The market took to heart though from the IEA finding that the gradual pickup in demand as lockdowns ease and sharp reductions in output means the outlook for crude has “improved somewhat” since April.
Gold futures hit a three week high as prices remained well above the $US1,700 an ounce level.
Comex gold for June delivery surged $US24.50, or 1.4%, to settle at $US1,740.90 an ounce, after rising Wednesday’s more modest 0.6% gain.
That was the highest settlement for a most-active contract since April 23,.
Comex July silver climbed 48.5 cents, or 3.1%, to $US16.156 an ounce. Comex copper ended flat $US2.346 a pound.
Iron ore prices rose overnight with the price of 62% Fe iron ore delivered to northern China up 54 cents to $US92.17 a tonne.
Chinese production, investment, and retail sales data is out later today and will show if the economy is continuing its weak rebound from the lows of February.
