The S&P/ASX 200 shed 37.5 points on Thursday to close 0.5% lower at 7,464.6 points. Despite the decline, futures were up 0.5% this morning suggesting the market could open higher.
Materials and Energy stocks led yesterday’s downturn and commodity prices slumped as well.
Below is what we saw yesterday:
- Iron ore fell 4.6% overnight to $US153.39 a tonne.
- Oil prices softened with Brent crude down 2.4% to $US67.41 a barrel.
- Tin slid by 6.7%.
- Nickel was 2.7% lower.
- Copper was down 1.4%.
- The gold futures price fell by 0.1% to U$1,783.10 an ounce.
- Spot gold was trading near US$1,781 an ounce at the US close
- The Australian dollar slipped below US72 cents, the lowest it has been since November 2020.
Overall global markets have been volatile due to a number of factors including the rapidly growing spread of the coronavirus Delta variant around the world, signs of Chinese economic weakness and the Taliban’s takeover of Afghanistan.
“Investors are spooked by the virus once more, compounded by news that the Federal Reserve in the US may be on the brink of reducing its economic support for the US economy,” said analysts at Hargreaves Lansdown when explaining the current downturn.
Australian markets
Top-performing stocks on the S&P/ASX200 were Redbubble Limited and NRW Holdings Limited up 18.95% and 17.42% respectively.
The index has lost 1.63% for the last five days but sits 2.20% below its 52-week high.
Look out for earnings reports from Cleanaway Waste Management Ltd, Smartgroup Corporation Ltd and Stockland (ASX:SGP) Corporation Ltd.
The RBA’s update on Australia’s economic outlook could have an impact on the ASX today.
Assistant Governor Christopher Kent will speak at the FX Markets 2021 conference today to outline the RBA’s mood.
The RBA has up until recently been upbeat about Australia’s ability to recover from the pandemic, however, things have changed since the last board meeting, with the Delta variant causing severe lockdowns.
Following the August meeting, RBA governor Philip Lowe flagged an economic contraction of around 1% in the September quarter.
Treasurer Josh Frydenberg expects that contraction will now be 2% or more.
Australian indices
- ASX 200 fell 0.50% to 7,464.60.
- ASX24 futures rose 0.5% to 7,413.
- S&P/ASX Small Ordinaries rose 0.42% to 3,493.30.
- All ordinaries fell 0.46% to 7,735.30.
- S&P/ASX 100 fell 0.60% to 6,164.20.
US markets
It was choppy on Wall Street overnight, with markets weighing better employment data against global growth worries.
American filed fewer than expected job claims, which brought the total closer to the pre-pandemic levels.
However, as with most other regions, spread of the Delta variant is having an effect on markets.
Oxford Economics said Delta “risks slowing, but not derailing, the recovery,” which is positive news. Oxford predicts that authorities will only “resort to harsh restrictions if there is a huge spike in severe COVID cases”.
The US is now focused on vaccinations.
Robinhood Markets plunged 10.3% following its first earnings report as a publicly-traded company. The trading platform announced a hefty quarterly loss and offered a tepid outlook for the upcoming period.
US indices
- Dow Jones fell 0.2% to 34,894.12.
- S&P 500 rose by 0.1% to 4,405.80.
- Nasdaq declined 0.1% to 14,541.79.
European markets
Paris’ main stocks index briefly tumbled 3%, however, was able to pare losses.
The Paris luxury sector has been hardest hit due to China’s stumbling economic recovery and a potential crackdown on the wealthy by the authorities.
Luxury companies in Paris have come to rely heavily on well-heeled Chinese in recent years, so the lack of custom from China has led shares in Paris-listed luxury groups to take a big hit.
UBS analysts put investor concerns down to:
1) Renewed COVID-related restrictions;
2) Potential macro slowdown; and
3) Most recently policy concerns amid the government calling for wealth distribution and a clampdown on high incomes.”
The Frankfurt and London indices also slumped in a mirror to Asia’s weak performance.
European indices
- STOXX 600 fell 1.51% to 46,724.
- German Dax fell 1.3% to 15,765.81.
- UK FTSE fell 1.5% to 7,058.16.
What to look out for
Asian markets can be a barometer for overall global performance and the outlook isn’t great.
The gloomy economic outlook in China is having an impact on investor sentiment.
Meanwhile, tech stocks led the decline in Hong Kong.
- CSI300 fell 0.66% to 4,862.14.
- Shanghai Composite lost 0.57% to 3,465.55.
- Hang Seng dropped 2.13% to 25,316.33.
- Hong Kong China Enterprises Index lost 2.56% to 8,916.02