Falling infection rates for the COVID19 virus in mainland China spurred further optimism in overnight trading. Shares rose, and US indices hit new records. Crude oil jumped 3%, and base metals also lifted. In contrast, gold and bonds edged lower. Asia Pacific futures point to opening gains, although Australian investors could be more cautious after a string of write down affected company results this morning.
New infections in China fell to 2,015 cases on Tuesday, lower than Monday’s 2,478. Markets interpreted this as a possible sign that the peak of infections has passed.
The US dollar made modest gains against the Yen, and the strength pushed the Euro to its lowest level against the dollar since May 2017. However more positive sentiment saw the commodity exposed New Zealand, Canadian and Australian dollars lift against all of the majors, and cryptocurrencies extended a 5 week rally.
Australian investors face a conflict between the international buoyancy and weak reports from leading stocks this morning. Gold miner Newcrest delivered an 18% increase in profits for the half-year. The profit was affected by an 18% blowout in costs at its Australian and PNG operations, and is well below forecasts. The bad news continued at Woodside Petroleum. Revenues dropped 7%, but profit slumped 75% after a US $720 million impairment charge against its Canadian gas interests.
On a bad morning, investors may reserve their ire for wealth manager AMP. While the new CEO focused on the positive, the reality of a $2.5 billion dollar loss forced him to concede that reputational damage saw $6.3 billion in outflows from its managed funds. AMP’s share price could test the 2019 all-time low at $1.60, and investors may wonder if the formerly largest fund manager in Australia can survive at all.