Stand by for a rough day on the local market with the ASX poised to drop more than 1 per cent on opening, as global markets suddenly lost their appetite for risk overnight.
Markets at 7:15am (AEST):
- ASX SPI 200 futures -1.16pc to 5,710
- AUD: 76.81 US cents, 59.05 British pence, 86.15 Japanese yen, 67.12 eurocents, $NZ1.052
- US: S&P 500 -0.86pc to 2,419, Dow Jones -0.78pc to 21,287, Nasdaq -1.74 pc to 5,653
- Europe: Euro Stoxx -1.71pc to 374.86, FTSE -0.51pc to 7,350
- Commodities: Gold -0.25pc to $USUS1,245.71/ounce Brent crude: +0.17 to $US47.39 Iron ore +3.8% to $US64.71 a tonne
US markets gave back all of the gains made during yesterday’s rally, with technology stocks leading the overnight losses.
Shares in tech giants Apple, Facebook, Netflix, Amazon and Google’s parent company, Alphabet, all fell more than 1 per cent, weighing on both the benchmark S&P 500 and Nasdaq indices.
Analysts suggest equities are resetting, after an extended rally since late last year, which has seen Wall Street at or close to record territory.
There was also consensus investors were using the near end of the quarter to reposition their portfolios or take profits.
Banking and energy stocks were the only bright spots in last night’s session and went some way towards limiting the broader falls.
Oil prices edged up after a decline in weekly US crude production alleviated some concerns about a growing oversupply in the market.
Commodities back in favour
One of the few bits of positive news for local investors was the surprise iron ore rally rolling on.
The spot price rose nearly 4 per cent to $US64.71 per tonne, its highest level in two months.
Iron ore is now up 14 per cent for the week.
Chinese traded futures prices for iron ore and steel have also been rising, along with base metals such as copper, all of which has been hauling the Australian dollar higher.
“The pickup in physical tenders (for iron ore) suggests a real tightness in the market, with mills chasing prices higher,” ANZ’s Daniel Gradwell said.
Mr Gradwell said the rally in base metals was showing no signs of stopping, with copper inventories at their lowest level since March and news of a loss of capacity at larger Chinese smelters.
“Copper is leading the sector, with the shift in tone to a more positive macro backdrop supporting prices.”
Article Source: ABC News