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ASX to rise early after Wall Street gains

Shares on the Australian market are likely to rise early in trade after solid gains on Wall Street overnight following a rebound in US services industry activity and hopes of a revival for China’s economy.

The Australian SPI 200 futures contract was higher by 31.0 points, or 0.52 per cent, to 6019.0 points at 0800 AEST on Tuesday.

The positive lead comes after data for US non-manufacturing activity showed a jump in June to almost return to its pre-COVID-19 pandemic levels.

Investors also bet on an improving Chinese economy and its impact on the global growth as the yuan led commodity currencies higher against the US dollar.

The Dow Jones Industrial Average rose 459.67 points, or 1.78 per cent, to 26,287.03, the S&P 500 gained 49.71 points, or 1.59 per cent, to 3,179.72 and the Nasdaq Composite added 226.02 points, or 2.21 per cent, to 10,433.65.

The gains came despite a record surge in new COVID-19 cases in 16 US states that could further hamper reopening plans and create a risk to the economic recovery.

In Australia on Tuesday, the main event of interest will be the Reserve Bank board meeting.

The central bank isn’t expected to make changes to the cash rate but economists will be watching closely to see what the central bank says about the economy, jobs and the Aussie dollar.

Investors will also be monitoring the coronavirus infection rate in Victoria after the state on Monday recorded its highest daily increase in cases, 127, and two deaths. New South Wales will close the border with Victoria tonight as the nation tries to keep the outbreak spreading to other states.

The Australian dollar was buying 69.75 US cents at 0800 AEST, barely changed from 69.72 US cents at the close of trade on Monday.

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