Australian shares to lift on record gold price, Wall Street boosted by tech giants
Australian shares are expected to begin their day higher as gold prices climbed to a record high and big name technology stocks boosted Wall Street.
By 7:05am AEST, ASX futures were up 28 points or 0.5 per cent.
The Australian dollar lifted (+0.6pc) to 71.46 US cents.
But the local currency is “facing a higher degree of idiosyncratic downside risk compared to its peers, the New Zealand dollar and Canadian dollar”, ING foreign exchange strategist Francesco Pesole warned.
“Those risks include a highly concerning virus situation with lockdown measures already in place in the state of Victoria, rising Australia-China tensions and geopolitical turmoil in general, with China at the centre.”
Oil markets also rose, with Brent crude rising (+0.4pc) to $US43.51 a barrel.
Spot gold jumped 2.2 per cent to $US1,941.88 an ounce, smashing its previous record from 2011.
Silver prices surged 8.3 per cent to a seven-year high of $US24.74 an ounce.
When there is huge demand for safe-haven metals, that is normally a sign investors are not feeling so confident about share markets — but not today.
Another boost from tech
In New York overnight, the Dow Jones index rose by 115 points (or 0.4 per cent) to 26,585.
The S&P 500 lifted by 0.7 per cent to 3,239 points.
But the Nasdaq outperformed, jumping 1.7 per cent to 10,536 points.
US markets were boosted by optimism towards Apple (+2.4pc), Amazon (+1.5pc), Facebook (+1.2pc) and Google’s parent company, Alphabet (+1.4pc), which are due to report their quarterly earnings this week.
“It [is] tempting to suggest buying of the technology behemoths is because of a reluctance to be short ahead of this earnings report … though we rather think this also has something to do with the weakness of the US dollar,” said NAB head of foreign exchange strategy Ray Attrill.
He noted that “more than 40 per cent of S&P 500 company earnings come from outside the United States”.
More stimulus on the way?
Market sentiment was also lifted by investors feeling hopeful the US Government may pass a bipartisan stimulus package before enhanced unemployment benefits expire on Friday.
After Wall Street closed, Senate Republicans unveiled a $US1 trillion coronavirus aid package, hammered out with the White House.
However, the plan sparked immediate opposition from both Democrats and Republicans.
Senate majority leader Mitch McConnell called the package a “tailored and targeted” plan, which slashes the soon-to-expire supplemental jobless benefits of $US600 a week (down to $US200 each week).
Mr McConnell said the plan would include direct payments to Americans of $US1,200 each, as well as incentives for manufacturing personal protective equipment for healthcare workers in the United States (rather than China).
It also includes new funds and loans to help small businesses, and protects corporations from lawsuits.
Some Senate Republicans criticised it as too expensive.
Democrats decried it as too limited compared to their $US3 trillion proposal that passed the House of Representatives in May. But the Republican-led Senate refused to consider it.
The extra unemployment funds — exceeding the former wages of some workers — have been a sticking point for many Republicans, who say they encourage Americans to stay home rather than go back to work.