ASX to rise, ahead of ‘record’ contraction for Australia’s economy

Australian shares are likely to open higher after another record-breaking session on Wall Street, boosted by technology stocks.

ASX futures were up 28 points, or 0.5 per cent, by 7:10am AEST.

The Australian dollar had slipped to 73.7 US cents, but is near its highest value in two years.

Later this morning the Australian Bureau of Statistics (ABS) will release some highly anticipated figures showing how badly the coronavirus has slowed down Australia’s economy.

Commonwealth Bank economist Kim Mundy believes GDP will have fallen by 5.4 per cent in the June quarter, “which would be the largest quarterly contraction in growth on record”.

The bank’s forecast is less pessimistic than the market consensus, which is a 6 per cent contraction for the economy.

“However, the backwards-looking nature of the release, in the midst of a fast‑moving pandemic, suggests the implications for the Australian dollar will be limited,” Ms Mundy said.

On Wall Street overnight, the Nasdaq jumped (+1.4pc) to 11,940 points, while the S&P 500 lifted (+0.8pc) to 3,567 points. Both indices have hit new record highs.

The Dow Jones index rose 216 points (+0.8pc) to close at 28,646 points, but has yet to claw back all its losses from the coronavirus sell-off in March.

Some of the best performing stocks were Apple (+4pc) and Zoom Video Communications (+40pc).

Zoom surged after the video-conferencing company raised its annual revenue forecast by more than 30 per cent as it converted more of its huge free user base to paid subscriptions.

It was not as bullish in Europe, with Britain’s FTSE falling sharply (-1.7pc) and Germany’s DAX posting minor gains (+0.2pc).

Spot gold was steady at $US1,970.14 an ounce, while Brent Crude oil jumped (+1.1pc) to $US45.79 a barrel.

More to come.