Australian stocks are expected to open lower this morning after US and European markets extended losses.
It seems the US and European investors are now starting to worry that central banks could soon start winding down stimulus measures.
Good news for oil investors, was the rise of global oil prices by over 1% on Wednesday as US Gulf of Mexico producers made slow progress in restoring output after Hurricane Ida. According to the US Bureau of Safety and Environmental Enforcement, just over 20% of oil and natural gas production is back online.
It will also be interesting to see how Chinese inflation data affects the markets in the coming days.
Here’s what we saw:
- The Brent crude price rose by US91 cents or 1.3% to US$72.60 a barrel.
- Aluminium was up 1.4% to hit a 13-year high on Guinea supply concerns.
- Nickel was up 1%.
- Tin was up 0.9%.
- Copper fell by 1.1%.
- The gold futures price fell by US$5.00 an ounce or 0.3% to U$1,793.50 an ounce.
- Spot gold was trading near US$1,789 an ounce at the US close.
- Iron ore slid US$4.80 a tonne or 3.5% to US$133.05 a tonne with price volatility the highest since 2016.
Australian markets
The S&P/ASX 200 was lower all day yesterday but recovered from its deep slide at the open to close 0.2% lower, at 7512 points.
The slide is expected to continue this morning.
Gold producers and explorers may fare better that than the overall market, after it was announced that Australia is now the biggest gold producer in the world, overtaking China.
It's good news for small caps such as Red 5 Limited, which is fast-tracking its efforts to begin production at its King of the Hill mine in Western Australia's Goldfields.
Red 5’s managing director Mark Williams told the ABC’s The Business, "We started constructing in October 2020 and we're on track for the first gold in about seven or eight months’ time, in the June quarter of 2022.
It will also take advantage of the spot gold price, which is hovering around $US1,800 per ounce.
"We've been able to essentially beat the rush with the escalation in the pricing," Williams said.
China produced 153 tonnes of gold in the first half of this year, while Australia produced 157 tonnes.
Experts believe safety issues leading to deaths have led to investigations into several Chinese mines, which has slowed production.
In the meantime, Australian gold producers continue to produce at high levels.
And another thing …
An announcement today by the NSW Premier could have positive implications for markets.
Premier Gladys Berejiklian will deliver NSW’s roadmap out of lockdown, which will identify fully vaccinated Sydneysiders as those able to enjoy a drink in a pub by the end of October.
Some parts of NSW will also have restrictions eased within days.
Australian indices
- ASX 200 fell 0.24% to 7,512.00
- ASX24 futures dipped 0.5% to 7,477
- S&P/ASX Small Ordinaries fell 0.85% to 3,559.60
- All Ordinaries fell 0.24% to 7,807.50
US markets
US markets retreated on Wednesday as investors reassessed valuations amid rising economic risks, including the reduction in central bank stimulus.
Shares of Apple fell 1% and Facebook fell 1.2%, however they are forgiven after helping push the Nasdaq index to record highs in the previous session.
Paypal shares dropped 2.7% after acquiring Japanese buy now, pay later firm Paidy for US$2.7 billion.
US indices
- Dow Jones fell 0.2% to 35,031.07
- S&P 500 dropped 0.1% to 4,514.07
- Nasdaq fell 0.6% to 15,286.64
European markets
Markets fell in Europe on Wednesday, a day before the European Central Bank meeting. Let’s see what effect that meeting has overnight.
Automobile stocks were down 2.2%.
European indices
- STOXX 600 fell 1.06% to 467.87
- German Dax fell 1.5% to 15,610.28
- UK FTSE fell 0.8% to 7,095.53