ASX surges ahead of Federal Budget and amid optimism around US President Donald Trump’s health
The Australian share market has increased in early trade amid more stimulus announcements ahead of tomorrow’s Federal Budget and reports that tax cuts will be brought forward.
Investors are also optimistic about the health of US President Donald Trump as he made a public appearance, despite suffering from COVID-19.
The ASX 200 index jumped about 2 per cent in early trade, with all sectors higher led by industrials, consumer firms, banks, miners and real estate stocks.
By 10:40am (AEDT), the index was up 1.9 per cent, or 109 points, to 5,901.
The benchmark index fell 1.4 per cent on Friday with most of those losses in the last hour of trade after Mr Trump confirmed that both he and the First Lady had tested positive for COVID-19.
The best performing stocks were Virgin Money, which rose 3.9 per cent to $1.33, and copper miner Sandfire Resources, also up 3.9 per cent to $4.13.
Gold miner Ramelius Resources led the falls on the ASX 200 index, down 1.9 per cent to $2.02, and data centre operator Megaport was down 0.8 per cent to $15.87.
The All Ordinaries rose 1.8 per cent to 6,091.
Investors are also watching tomorrow’s Reserve Bank meeting, but 70 per cent of economists surveyed by Reuters expect interest rates to stay at a record low of 0.25 per cent. The majority expect rates to be cut in November.
The Australian dollar was up 0.7 per cent to 71.68 US cents.
Wall Street finished off lows on Friday
US stocks pared their losses on Friday as prospects increased on the Trump Administration and Democratic Party agreeing to a new round of economic stimulus, a sentiment that Mr Trump supported with a tweet.
The Dow Jones index fell 0.5 per cent to 27,683 and the S&P 500 index lost 1 per cent to 3,348.
However, the tech-heavy Nasdaq fell 2.2 per cent at 11,075.
National Australia Bank head of foreign exchange strategy Ray Attrill said the underperformance of the Nasdaq reflected markets pricing in a win for Democratic Party presidential nominee Joe Biden in the November 3 election, with Mr Biden expected to raise corporate taxes and tighten regulation.
An NBC/Wall Street Journal poll has Mr Biden holding a 14 percentage point lead over Mr Trump, with Mr Biden ahead of Mr Trump in every swing state.
The US employment figures were completely overshadowed on markets by Mr Trump’s diagnosis.
The US jobless rate dropped 0.5 per cent to 7.9 per cent after a drop in the participation rate, with only 661,000 jobs created in August, lower than the 859,000 jobs expected.
Mr Attrill said the numbers confirmed a “significant slowdown in the pace of labour market improvement and so further highlighted the imperative of fiscal support sooner rather than later.”
Major markets were little changed in Europe, with the FTSE up 0.4 per cent, the DAX down 0.3 per cent and France’s CAC 40 flat.
Crude oil prices came off their Friday lows with Brent crude up 0.1 per cent to $US39.30.
Spot gold rose 0.2 per cent to $US1,903.46.