Australian shares are likely to claw back some of yesterday’s heavy losses despite the ongoing heavy sell-off of US “mega tech” stocks.

ASX futures were up 20 points (or 0.3 per cent) by 6:30am AEST.

The Australian dollar had risen (+0.1pc) to 73.13 US cents.

Shares in Apple (-1.6pc), Amazon (-2.3pc) and Facebook (-3.3pc) were among the biggest drags on Wall Street.

The tech-heavy Nasdaq was hit hardest, losing 1.3 per cent to 10,910 points.

It was followed by the S&P 500, down 0.8 per cent to 3,357, and the Dow Jones, which dropped 0.5 per cent to 27,902.

From the March market lows, “this has been an amazing recovery represented by a few good tech names,” said Jake Dollarhide, chief executive officer of Longbow Asset Management.

He expects tech-related names to rebound by the end of the year.

European markets also closed lower, with Britain’s FTSE down (-0.5pc) to 6,050 and Germany’s DAX falling (-0.4pc) to 13,208.

It comes after the Bank of England said it was looking more closely at cutting interest rates into negative territory, as Britain’s economy faces a triple whammy of rising COVID-19 cases, higher unemployment and a potential no-deal Brexit.

Overnight, the BoE kept its main lending rate on hold at 0.1 per cent.

It had already cut rates twice from 0.75 per cent, since the pandemic hit the UK’s economy.

Unemployment remains high in the US

Meanwhile, the number of Americans filing new claims for unemployment benefits fell last week but remains perched at extremely high levels, according to the Labor Department’s latest report.

Initial claims for state unemployment benefits fell to 860,000 in the week ending September 12, which was a decrease of 33,000 compared to the previous week.

However, almost 30 million Americans were receiving ongoing jobless benefits at the end of August, laying bare both the continuing economic and human devastation six months after the COVID-19 pandemic started in the United States.

“With nearly 30 million people unemployed and the ongoing failure of politicians to deliver additional needed fiscal stimulus, the climb out of the pandemic downturn is likely to be slower and more damaging to long-term growth than it should have been,” said Ron Temple, head of US equity at Lazard Asset Management.

‘Ultra easy’ monetary policy fails to boost market

On Wednesday (local time), the Federal Reserve pledged to keep interest rates near zero, until at least 2023, to lift the world’s biggest economy out of a pandemic-induced recession.

Fed chair Jerome Powell made clear the US labour market had a long way to go to meet the central bank’s “maximum employment” goal.

Mr Powell laid out a range of conditions to achieve maximum employment, which would trigger the case for a rate hike.

These conditions include higher wage growth, workforce participation and lower disparities in minority joblessness relative to whites.

He also said the central bank’s tools to achieve that were limited, dashing investors’ hopes of further stimulus.

“Investors love when the Fed lowers rates because they feel that’s good for market,” Mr Dollarhide said.

Oil prices jumped overnight as the Organization of the Petroleum Exporting Countries (OPEC) and its allies said it would crack down on countries that fail to comply with output cuts.

OPEC also said it would plan an extraordinary meeting in October if crude prices weakened further.

Brent crude futures jumped (+2.7pc) to $US43.36 a barrel.

Spot gold fell (-0.8pc) to $US1,944 an ounce.

ABC/Reuters