The ASX200 is likely to drop a full percentage point in trading today, with ASX Futures pointing to a 73-point loss for the morning.
Recent record-highs on the Nasdaq and similar strength in theS&P500 and Dow Jones indices led to a raft of profit taking during US trading, with markets falling strongly in response.
Competing growth and confidence data in the US also muddied waters, with US consumer confidence rising in December giving greater credence to a soft economic landing, while bellwether stock FedEx (NYSE:FDX) fell 12.1%, heightening fears of an oncoming slump in economic activity.
The Dow Jones transportation index also fell 2.4%, weighing on investor’s minds.
Overall, the Dow lost 1.3% or 476 points, the S&P500 1.5% and the Nasdaq also 1.5% or 225 points.
In contrast, European sharemarkets closed higher on Wednesday, buoyed by the latest inflation data from the UK, which pointed to a strong cooling.
The UK's annual consumer price inflation rate fell to 3.9% in November from 4.6% in October, reaching its lowest level since September 2021, albeit slightly higher than the anticipated 4.3%.
This led investors to fully anticipate a rate cut by the Bank of England by May 2024.
In response, the UK's FTSE 100 index rose by 1%, and the FTSEurofirst 300 index, covering a broader range of European stocks, increased by 0.2%.
Currencies and commodities
Major currencies fell against the US dollar in overnight trading.
The Euro fell from US$1.0974 to US$1.0928, stabilising around US$1.0940 at the US close.
The Australian dollar witnessed a slight drop from US67.78 cents to US67.24 cents, hovering near US67.30 cents by the end of the US session.
Meanwhile, the Japanese yen weakened from 143.29 yen per US dollar to JPY143.93, settling near JPY143.65.
Global oil prices trended up yesterday, though gains were tempered due to an increase in US crude stockpiles, casting doubts on the potential impact of further supply disruptions in the Red Sea.
Notably, inventories at the critical US storage hub in Cushing, Oklahoma, reached their highest point since August.
Concurrently, US oil production achieved a record high of 13.3 million barrels per day last week.
As a result, Brent crude oil prices rose by US47 cents or 0.6% to US$79.70 per barrel and the US Nymex crude oil price saw an increase of US28 cents or 0.4% to $74.22 per barrel.
In the metals market, base metal prices showed mixed performance. Copper futures edged up by 0.1%, driven by re-stocking activities in China and stronger physical demand. However, aluminium futures declined, falling by 1.1%.
Gold futures also fell marginally, dropping by US$4.40 or 0.2% to US$2,047.70 per ounce. At the close of the US market, spot gold was trading around US$2,030 per ounce.
Conversely, iron ore futures witnessed a marginal increase, rising by US20 cents or 0.1% to US$134.85 per tonne.
The rise was primarily attributed to persistently low inventory levels and the anticipation of increased purchasing activity for winter re-stocking.
However, the potential for gains was somewhat restrained due to a decrease in demand, which is linked to the growing frequency of equipment maintenance activities among Chinese steel mills.
On the small cap front
The ASX Small Ordinaries gained 0.78% in trading yesterday, adding 22.7 points to the index.
You can read about the following and more throughout the day.
- Krakatoa Resources Ltd (ASX:KTA) has hit pegmatite formations in 75% of 27 drill holes completed at the King Tamba Project, with intersections up to 39 metres thick.
- Magnetite Mines Ltd (ASX:MGT) has inked a historic partnering agreement with the Native Title owner of the land on which the Razorback Iron Ore Project is located, the Ngadjuri Nation.
- Novo Resources Corp (TSX:NVO, OTCQX:NSRPF, ASX:NVO) has received a further $1.8 million investment from Liatam Mining Pty Ltd, increasing the mining company’s stake in Novo to 6%.
- Provaris Energy Ltd (ASX:PV1, OTC:GBBLF) has entered a non-binding MoU with Uniper Global Commodities SE, an international energy company, to qualify the technical, operational and economic benefits of Provaris’ H2Neo carriers and compressed hydrogen supply chain.
- Altech Batteries Ltd (ASX:ATC) has released what it describes as an “outstanding” definitive feasibility study for the Silumina Anodes battery materials project.