Signs of a flattening coronavirus curve in Australia and higher oil prices could bolster the local share market as it resumes trading although US futures were pointing to an overnight drop on Wall Street.
The session after the Easter holiday is always difficult to predict, with the Australian market playing catch up to two US trading sessions, as Wall Street does not take Monday off for Easter, CommSec chief economist Craig James says.
Still, he says, “there’s reasons to be encouraged.”
“The Federal Reserve has come out with an amazing amount of monetary stimulus,” Mr James said, referring to the US central bank’s plans to inject another $US2.3 trillion ($A3.6 trillion) into the US economy to mitigate the impacts of the coronavirus crisis.
Australian energy producers such as Woodside Petroleum and Santos could get a boost after Saudi Arabia and Russia called off their oil price war, with the OPEC+ production cartel reaching a historic agreement to cut production by 9.7 million barrels per day for May and June in a bid to shore up prices.
Brent crude prices were up three per cent to $US32.78 a barrel on Monday afternoon.
Locally there has been some encouraging signs on the coronavirus front, with just 33 new cases in the past 24 hours and the nation’s Chief Medical Officer Brendan Murphy talking about possibly relaxing the nation’s lockdowns in the next several weeks.
“The situation remains all about COVID-19,” Mr James said.
The release of March jobs data by the Australian Bureau of Statistics on Thursday will give some sign of how badly the coronavirus crisis has damaged the economy although figures were collected early in the month before the lockdowns were implemented, Mr James said.
Economists are tipping Thursday’s announcement to show a loss of 30,000 jobs with unemployment rising from 5.1 to 5.4 per cent.
It won’t be until April’s jobs figures are released in May that the impact of the lockdowns on employment will be known, Mr James said.
The day after the lockdowns were implemented, there were huge queues outside Centrelink offices across the country as Australians registered for benefits.
The federal government has since tried to keep Aussies employed during the crisis with its JobKeeper wage subsidy, but there are questions over whether that is enough.
Also, NAB’s business confidence survey will be released on Tuesday, and the ABS will report tourism figures for February on Wednesday.
Meanwhile, the US Federal Reserve’s stimulus measures have weakened the greenback, sending the Aussie dollar to its highest levels against its American counterpart in a month.
The Aussie was buying 63.37 US cents at 1335 AEDT on Monday, up from 62.10 US cents at the market close on Thursday.
Since hitting a nearly 18-year low of 55.08 US cents on March 19, the Aussie has rebounded 15 per cent.
“A higher dollar is not really our friend at the moment,” Mr James said, since it hurts Australian businesses.
But the dollar is still relatively low by historical standards, Mr James noted.