The S&P/ASX 200 Index posted its first two-day ‘back-to-back’ rally since the COVID-19 crisis began to hit stocks last month.
Since the 20 February all-time high at 7,197, the ASX has only been able to display a one-day recovery. (See inserted graph).
Wall Street also displayed its first back-to-back gains on Wednesday since a harsh sell-off began five weeks ago.
However, much of the overnight’s rally faded into the closing session as a last-minute dispute threatened to hold up a $2 trillion economic rescue package in Congress.
The U.S stimulus package hits a last-minute bump
Congressional efforts to quickly pass an estimated $2 trillion stimulus package hit obstacles on Wednesday, hours after legislative leaders and the Trump administration struck a deal aimed at combating the economic consequences of the coronavirus pandemic.
The Senate had been set to vote on the mammoth bill on Wednesday, but rank-and-file members voiced objections while lawmakers were finalizing the bill’s full text, slowing the process.
By late afternoon it wasn’t clear when the Senate would vote on legislation that would provide direct financial checks to many Americans, drastically expand unemployment insurance, offer hundreds of billions in loans to both small and large businesses, refill drained state coffers and extend additional resources to health-care providers.
“A fight has arrived on our shores,” said Senate Majority Leader Mitch McConnell on the Senate floor. “We did not seek it. We did not want it. But now, we are going to win it.”
But as Senate leaders rushed to move the bill through the chamber swiftly on Wednesday, protests from Republican lawmakers over the unemployment provisions in the bill threatened to draw out the process further.
Sen. Bernie Sanders, a Democratic presidential candidate, said he would slow down the bill if the group of Republicans did not withdraw their threat, creating a high-stakes standoff in the final stages of the negotiations.
Meanwhile, House Speaker Nancy Pelosi said Wednesday that she is optimistic about the legislation and said no decision had been made about when the House will try to take up the legislation if it clears the Senate as expected.
The House is expected then to attempt quickly to pass the bill by unanimous consent.
Treasury Secretary Steven Mnuchin, who has led negotiations on behalf of the White House, said he had spoken to President Trump about the agreement and that Mr Trump would absolutely sign it as it is currently written.
Back on Wall Street, all three of the major U.S. stock indexes were mixed but closed well off their highs of the trading session.
The Dow Industrial Average was the best performing major index, rallied as much as +1,200 points intra-day, but most of those gains were quickly lost with the closed up +495.64 points or +2.39%.
The Standard & Poor’s 500 indexes ended to a gain of +28.23 points, or +1.15%, while the tech-heavy Nasdaq composite lost -33.56 points or -0.45%.
The Australian index futures (SPI 200 futures) climbed +104 points or +2.1% to 5,149, meanwhile, the Australian Dollar, our local currency slipped from the intraday highs of US$0,6070 is currently buying US$0.5915 (as of writing).
All eyes will be focused on Jobless claims on Thursday which will provide information about the U.S. employment picture.
The forecast has skyrocketed from 750,000 to 1,648,000 with the previous release at 281,000.
Daily outlook on the benchmark S&P/ASX 200
Yesterday, the ASX 200 got a shot of adrenaline just before the local share market session ended after the arrival of Congressional agreement on a $US2 trillion ($3.3 trillion) American fiscal stimulus package hit the wires.
The S&P/ASX 200 Index closed +262.40 points higher, or +5.5% to 4,998, as the White House and Senate reached a deal on a coronavirus stimulus bill.
The deal, which includes $US250 billion for direct payments to individuals and families, $US350 billion in small business loans, $US250 billion in unemployment insurance benefits and $US500 billion in loans for distressed companies, will go to a Senate vote on Wednesday and could be enacted within days.
Senate majority leader Mitch McConnell said: “This is a wartime level of investment” that would mean “more equipment to the heroes on the front lines”.
“It’s good news for the doctors and nurses in emergency rooms around the country who are waiting for more masks and more funding,” he said.
Back home, the materials sector rebound in iron ore which saw Titans BHP surged +10.21%, while Fortescue Metals gained +5.04% and Rio Tinto advanced +5.37%.
Health care closed red, however, as CSL lost -0.35% and closed flat.
The relative firm performance of precious yellow metal kept the gold stocks bullish streak in motion with Newcrest gaining +6.9%, and Northern Star Resources rose +5.3%.
Meanwhile, Evolution Mining jumped +10.3% while Perseus and Resolute climbed +16.48% and +22.22% respective gains.
Finance stocks continue to hold to their recent gains from Monday’s rebound of the multi-year lows. The “Fab Four” (banks) stage a strong surge with ANZ climbing +11.58%, while the Commonwealth gained +9.47%, Westpac rose +9.24%, and NAB gained +9.65%.
In the tech sector, Xero gained +3.65%, while Computershare rose +7.44%, while Afterpay rollercoaster performance over the past week, surged another +33.81% to close at $15.00; meanwhile, WiseTech underperformed and lost -8.49%.
A late afternoon rally saw supermarket giants Woolworths and Coles climb out of the bearish trenches with Woolworths eking out a +0.66% rise while Coles rose +3.16%.