Looks like we’re in for a flat start on the ASX this morning, due to a mixed end to the week on the Dow Jones and S&P 500 which eked out gains of 0.1% and 0.15% respectively.
The NASDAQ finished slightly down at minus 0.03%, while European markets were also down.
Here’s what we know:
- The Aussie dollar fell from highs near US72.95 cents to lows near US72.35 cents and was near US72.60 cents at the US close.
- The Brent crude price rose by US84 cents or 1.1% to US$78.09 a barrel. Over the week, Brent crude rose for the third straight week, up by US$2.75 or 3.7%
- Tin was up 3.7%.
- Over the week, tin rose 8.5%.
- Nickel rose 0.2%.
- Aluminium fell 1.1%.
- Lead was down 0.3%.
- The gold futures price rose by US$1.90 an ounce or 0.1% to U$1,751.70 an ounce.
- Spot gold was trading near US$1,750 an ounce at the US close.
- Over the week gold rose by just US30 cents.
- Iron ore lifted by US$1.25 a tonne or 1.1% to US$110.15 a tonne. Over the week iron ore rose by US$9.35 or 9.3%
Australian markets
According to CommSec chief economist Craig James, the energy and mining sectors could keep the local sharemarket in positive territory at the start of trade today.
“The oil price continues to rise, so that’s certainly a positive for the energy sector,” James said.
“We also had gold up and base metal prices were generally higher (at the end of last week), and we had a bit of a nudge up in terms of the iron ore price as well.”
The Evergrande crisis is still likely to play a role in trading this week.
“We’re still watching for more news on Evergrande … it’s one that is very much on the radar screen and so there will be a degree of caution until we get a bit more information.”
The Chinese developer’s stock crashed close to 12% in Hong Kong trading on Friday, raising fears of the risks to China’s financial system and broader global markets.
As we do each Monday we ask Wealth Within founder and analyst Dale Gillham what his take on the market is.
Here’s his commentary:
“Right now, everything we hear is either about COVID or China and how this will affect not only our stock market but the economy. Despite the current situation with COVID still being very fluid, there is light at the end of the tunnel and the Australian economy is coping.
"The good news is that the government knows, based on what unfolded in 2020, that it can restart the economy pretty quickly if it needs to. The challenge with this, however, is China and how they respond to the current tensions between our two countries.
“There are concerns around China’s economy and the potential collapse of one of its largest property developers, Evergrande. Speculators are suggesting that if Evergrande fails, this could result in the Australian stock market crashing, which I strongly disagree with.
“We know that China is growing given that its GDP growth in the third quarter of this year is 7.9%, which is on the back of record growth of 18.3% in the second quarter.
"In fact, if we look at the last 12 quarters since 2018, 11 were positive. If we exclude the record second-quarter growth this year, the average growth in the remaining 10 positive quarters is 5.97%, which is above both Australia and the US over the same time. Australia’s GDP growth in the second quarter of this year rose by 9.6% while the US achieved GDP growth of 6.6%.
“Given the current economic climate, the probability of the market crashing is low, therefore, I recommend those who have a longer-term view continue to hold rather than sell. If you are more of a short-term investor, you may have already sold or you are looking to exit with a view to re-entering the market once it settles.”
What's next for Australian share market?
Gillham says, “My opinion as to the direction of the Australian market has not changed, it will stay bearish in the short term until it confirms otherwise.
"Earlier last week, the All Ordinaries Index achieved its lowest low in 12 weeks with the market down over 5% since its all-time high in August. Given this I expect the next low to occur sometime in the next month with the market likely to fall below 7,200 points.
"Remember, you shouldn’t make decisions based on news and speculation, as such I don’t recommend investors panic and sell their stocks, instead they should get ready to buy in November."
Australian indices
- ASX 200 fell 0.37% to 7,342.60
- ASX24 futures were steady at 7,304
- S&P/ASX Small Ordinaries fell 0.99% to 3,493.50
- All Ordinaries fell 0.42% to 7,649.30
US market
It was a volatile week on Wall Street last week, which finished on a muted note.
Evergrande and rising supply chain concerns following disappointing Nike results weighed heavily.
Investors are mindful of increasing backlogs in global shipping infrastructure – the very issue that prompted Nike to trim its sales forecast.
Nike dropped 6.3%, with operations also hindered by government restrictions in Vietnam and Indonesia due to COVID-19 that have cut into product availability.
On the upside, Costco (NASDAQ:NA:COST) Wholesale jumped 3.3% following a jump in profits based on a 17.5% increase in quarterly sales to $US61.4 billion.
Carnival climbed 3% on the back of increased bookings in the second half of 2022.
Could we see the comeback of the travel industry next year?
US indices
- Dow Jones lifted 0.1% to 34,798.00
- S&P 500 rose 0.2% to 4,455.48
- Nasdaq was steady at 15,047.70
European markets
As with all markets, investors continue to monitor developments at troubled Chinese property giant Evergrande.
As such, the European markets were weaker on Friday.
In London trade, shares in Rio Tinto fell by 0.6% and BHP shares fell by 1.3%.
European indices
- STOXX 600 fell 0.9% to 463.29
- German Dax fell 0.7% to 15,531.51
- UK FTSE fell 0.4% to 7,051.48