ASX Today: Positive start as global rally outweighs virus surge...

ASX Today: Positive start as global rally outweighs virus surge

Australia was the only major share market to retreat during 24 hours of 'risk-on' trade around the world. China's Shanghai Composite soared 5.71 per cent, Hong Kong's Hang Seng 3.81 per cent and Europe's Stoxx 600 1.58 per cent.

The Nasdaq in the US rose 226 points or 2.21 per cent to an all-time closing high.

The S&P 500 put on 50 points or 1.59 per cent. The Dow added 460 points or 1.78 per cent.

Tech stocks spearheaded the US advance. All five members of the 'FAANG' leadership group gained at least 2 per cent.

Facebook put on 2.9 per cent, Amazon 5.8 per cent, Apple 2.7 per cent, Netflix 3.6 per cent and Google parent company Alphabet 2 per cent. Amazon, Netflix and Tesla hit record highs.

Investors were encouraged by a round of deal-making, a possible sign that stock prices still present reasonable value.

Warren Buffett's notoriously cautious Berkshire Hathaway swooped on the natural gas transmission and storage assets of Dominion Energy in a deal worth around US$10 billion, including debt. Uber snapped up food-delivery app Postmates for around US$2.65 billion.

Asian markets built a platform for European and US gains with yesterday's huge rally.

The Shanghai Composite claimed its strongest level since 2018 after a front-page editorial in a state-owned newspaper talked up the prospects of a "healthy bull market". Retail investors took the hint. Recent economic data suggested the Chinese economy is powering back out of the pandemic lockdown.

Economic data in the US also surprised to the upside. A measure of activity in the services sector surged to 57.1 last month from 45.4 in May, the biggest rise since the survey was created in 1997. Economists had expected a more modest expansion to a reading of around 51.

“The economy is doing a lot better than most of the economists think,” Jeff Saut, chief investment strategist at Capital Wealth Planning in the US, told CNBC.

“We may stall here for a while into the fall, into September, October, November, but I think you’re going to get a rocket ship coming in the fall of this year... I think the S&P 500 is going to trade above 4,000."

Resource stocks helped drag the ASX lower yesterday, but should provide support today following gains in iron ore, oil and base metals. BHP's US-listed stock climbed 0.72 per cent and its UK-listed stock 1.76 per cent.

Rio Tinto gained 1.17 per cent in the US and 2.05 per cent in the UK. The spot price for iron ore landed in China improved 40 cents or 0.4 per cent to US$101.60 a dry ton.

Copper, sometimes dubbed "Dr Copper" or the "metal with the degree in economics”, hit a five-month peak on optimism over Chinese demand.

Benchmark copper on the London Metal Exchange climbed 1.9 per cent to US$6,135.25 a tonne. Aluminium gained 1.2 per cent, nickel 2.6 per cent, lead 1 per cent, zinc 1.8 per cent and Tin 1 per cent.

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