ASX futures suggest a recovery after three days of losses

The performance of global equities markets over the last 24 hours has demonstrated the volatility and unpredictability of the current situation which is still being influenced by economic factors and COVID-19 fears.

Regarding the latter, Asian markets plunged in response to news of a resurgence in coronavirus cases in Beijing.

Australian markets were trading during this period, and the negative sentiment rubbed off with the S&P/ASX 200 index (XJO) plunging 2.2% or 128 points to close at 5720 points on Monday.

This was the third consecutive day of losses which has seen the index fall by 426 points.

Negative sentiment also surrounded UK and European markets.

However, Wall Street was the surprise packet — after the Dow futures index (YM00) slid substantially during Asia-Pacific trading hours, it was a different story when markets opened in the US with the Dow finishing up 0.6%.

Given this backdrop, it is anyone’s guess where we’re headed today, but the ASX SPI200 futures index is pointing to a decidedly positive day of trading, up 141 points to 5876 points.

24 hours

As mentioned, Asian markets led the decline after China announced that there had been new infections in Beijing, prompting it to instigate precautions to prevent spreading.

In Japan, the Nikkei 225 was the hardest hit, falling 774 points or 3.5% to close at 21,531 points.

The Hang Seng plunged 524 points or 2.2% to 23,777 points.

The Shanghai Composite demonstrated more stability, coming off 1% to close at 2890 points.

In the UK, the FTSE 100 fell nearly 0.7% or 40 points to close at 6064 points.

The mood was similar in mainland Europe with the DAX and the CAC 40 off 0.3% and 0.5% respectively.

However, it was Wall Street that turned the tide with the Dow’s upward trajectory never faltering as it increased 157 points to close at 25,763 points.

The S&P 500 finished up 0.8% or 25 points, closing at 3066 points.

The NASDAQ appears to have regained its mojo, substantially outperforming the other indices, gaining 137 points or 1.4% to close at 9726 points and now sitting less than 100 points shy of its pre-coronavirus record high.

Amid this recovery, the CBOE Volatility Index plummeted from 44 points to 34 points.

There was a late surge in the Brent Crude Oil Continuous Contract as it increased from about US$37.60 per barrel to nearly US$40 per barrel.

While there was weakness in the gold price early in the day, an afternoon rally saw it finish broadly in line with the previous day’s close at approximately US$1730 per ounce.

The iron ore price retraced slightly to around US$103 per tonne.

Base metals were mixed with copper and lead trending lower while nickel built on the previous day’s gains to finish at US$5.78 per pound.

Zinc consolidated just above the US$0.90 per pound mark, sitting within striking distance of a four month high should it be able to climb another 2%.

Having traded in a broad range between US$0.68 and US$0.70 over the last five days, the Australian dollar is now sitting at the upper end of that band, and an increase of less than 1% would push it through the US$0.70 mark.