ASX eyes gains after Dow adds 550 points, US banks set aside $40 billion for coronavirus hit – ABC News

The Australian share market has risen strongly, led by gains for mining stocks, with the benchmark index pushing back above 6,000 points
Key points:

• The ASX 200 rose back above 6,000 points in early trade
• Gold miners were among the best performers after the spot gold price rose overnight
• In the US, JP Morgan Chase, Citigroup and Wells Fargo set aside a total of $40b to cover potential bad loans due to COVID-19

By 11:55am (AEST), the ASX 200 was 1.2 per cent higher at 6,014 points. The All Ordinaries index had gained 1.3 per cent to 6,123.
The Australian dollar had risen against the greenback (+0.5pc) and was buying around 70.1 US cents.
The monthly survey from Westpac and the Melbourne Institute showed consumer sentiment deteriorated amid the resurgence of COVID-19 cases in Melbourne.
Sentiment fell back to the weak levels seen in May this month, but remained above the low point recorded in April.
The index fell 6.1 per cent in July to 87.9, down from 93.7 in June.
“Victoria’s sentiment index plunged 10.4 per cent in July but sentiment across the rest of the nation showed much milder declines,” Westpac chief economist Bill Evans said.
“While milder, the weakness in other states is also likely to be linked to the outbreak in Victoria, reflecting concerns about the virus spreading interstate and spill-over effects on the wider economy.”
People are feeling less confident about the outlook for the economy over the next 12 months, as well as over the next five years, suggesting growing concerns the virus impact will not be short lived.
Don’t mention the ‘R word’
The Treasurer managed to admit Australia was in recession without ever uttering the word. But there are early signs we’re already be emerging from the worst of the downturn.
Read more
“Certainly, the renewed outbreak points to a slower and more difficult path ahead for the foreign education, hospitality and tourism sectors, all of which may see longer-lasting restrictions even if the latest outbreak is successfully contained,” Mr Evans said.
The survey did not capture the impact of the recent COVID-19 cluster in Sydney.
“Consumer concern around the impact from the virus is dominating decent returns from equities and a higher Australian dollar which normally benefit consumer confidence,” AMP Capital senior economist Diana Mousina noted.
Ms Mousina said activity indicators such as mobility trackers would be important in assessing the broader impact of the Melbourne outbreak from here, and while other Australian cities had not yet seen a large drop in people’s movement, there was a slight drop-off emerging in Sydney.
“Consumer confidence is likely to track changes in mobility from here given the concern households have around a second wave of COVID-19 spreading across Australia. Expect more downside to confidence readings for now,” she said.
Miners, industrials lead market higher
The major mining stocks were helping to lift the market this morning, with gains for BHP (+2pc), Fortescue (+2.3pc) and Rio Tinto (+2.7pc).
Gold mining stocks were also rising strongly after the price of the precious metal rose overnight.
Shares in Silver Lake Resources (+4.9pc), Gold Road Resources (+4pc) and Northern Star Resources (+3.2pc) were all higher.
Tech stocks soar but is a crash coming?
Tech stocks in Australia and the US have not only recovered to pre-COVID highs, they have surpassed them. But some say the rally is reminiscent of the dot-com boom and bust.
Read more
Analysts from Citi have cut their price target on Woodside Petroleum, in the wake of the company flagging impairment charges of $US4.37 billion ($6.3 billion).
Woodside said the majority of the impairment related to, “the significant and immediate reduction in oil and natural gas prices assumed up to 2025”.
“We’ve taken some tough decision over recent months in response to the COVID-19 pandemic and oversupply in our key markets, but Woodside’s focus remains on cash preservation, capital discipline and maintaining the strength of our balance sheet,” chief executive Peter Coleman said.
Today, Woodside reported a 29 per cent fall in revenue for the last quarter, due the collapse in prices.
After initially rising, Woodside shares fell 2.2 per cent to $20.96 and was among the worst performing stocks on the top 200.
However, other energy stocks were making gains, including Santos (+2.3pc), Oil Search (+4pc) and Worley (+3.4pc)
The technology sector was back on the rise, after leading the falls on the local share market yesterday.
Afterpay shares rose by 4.8 per cent to $69.66 after it announced partnerships with Apple Pay and Google Pay in the US.
US banks brace for bad loans due to COVID-19
Overnight, the Dow Jones Industrial Average closed more than 550 points higher.
All 30 stocks on the US blue chip index finished higher, led by machinery manufacturing giant Caterpillar (+4.8pc) and energy companies Chevron (+3.5pc) and Exxon Mobil (+3.3pc).
US bank stocks were mixed, after some reported their quarterly earnings to the market.
Shares in JP Morgan Chase rose modestly (+0.6pc), after it beat estimates with its profit result but tipped a tough economic recovery from the coronavirus pandemic.
JP Morgan, Citigroup and Wells Fargo have provisioned $US28 billion for potential losses on bad loans due to coronavirus.(Reuters)
On a teleconference, JP Morgan chief executive Jamie Dimon noted that government and bank assistance is currently propping up borrowers and “the recessionary part” will come later.
The bank saw revenue surge, driven by its trading business as record volumes went through financial markets during the past few months.
Meantime, Wells Fargo shares fell by 4.6 per cent, after posting its first quarterly loss since 2008.
Combined with Citigroup (-3.9pc), the banks set aside $US28 billion ($40 billion) to cover potential losses on bad loans due to coronavirus.
Market snapshot at 7:00am (AEST):

• ASX SPI futures +0.5pc, ASX 200 (Tuesday’s close) -0.6pc at 5,941
• AUD: 69.74 US cents, 55.54 British pence, 61.16 Euro cents, 74.79 Japanese yen, $NZ1.06
• US: Dow Jones +2.1pc at 26,642, S&P 500 +1.3pc at 3,197, Nasdaq +0.9pc at 10,488
• Europe: FTSE 100 +0.1pc at 6,179, DAX -0.8pc at 12,697, Euro Stoxx 50 -0.7pc at 3,037
• Commodities: Brent crude +0.8pc at $US43.06/barrel, spot gold +0.3pc at $US1,809.08/ounce, iron ore +0.5pc at $US112.40/tonne

The spot gold price rose to $US1809 an ounce, as investors bought safe haven assets as well as stocks.
“On days when stocks are up and gold is up, part of the story is the

Click here to view the original article.