ASX to rise on encouraging COVID-19 trend

The Australian sharemarket is tipped to continue its strong start to the week after global equities were encouraged by early signs the coronavirus death toll is slowing.

The SPI200 futures contract was up 124 points, or 2.35 per cent, at 5,397.0 points at 0800 AEST on Tuesday, suggesting local stocks will rise again at the start of trade.

Global markets jumped overnight as coronavirus-related deaths showed signs of slowing in certain major cities.

The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite added more than 7.0 per cent each after a decline in the daily death toll in New York, the US’ biggest coronavirus hot spot.

“Whether mere perception, or reality, signs that the virus’ spread could be peaking – that the “curve is flattening” – emboldened market participants to buy into the notion that the worst of the COVID-19 crisis is passing,” IG Markets analyst Kyle Rodda said in a note.

US officials had earlier braced the country for a dire week, with the death toll topping 10,000.

The S&P/ASX200 benchmark index finished Monday up 219.3 points, or 4.33 per cent, to 5,286.8, while the All Ordinaries index rose 216.7 points, or 4.24 per cent, to 5,323.6 points.

The rally snapped a two-day losing streak, with the ASX200 closing at its best level since March 17.

The Reserve Bank board will consider today whether its bond-buying program needs tweaking when it holds its first monetary policy meeting since unveiling a historic suite of stimulus measures to combat the impact of the coronavirus pandemic.

Westpac’s economists are among those who do not expect the RBA to touch the cash rate on Tuesday as board members have already signalled it will likely remain lower bound at 0.25 per cent “for some time”.

“As such, the focus of RBA meetings will be on how the board assesses its QE measures and whether they may require adjusting,” Westpac said in a note on Monday.

The Australian dollar was buying 60.83 US cents at 0800 AEST, up from 60.50 US cents at the close of markets on Monday.

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