The ASX is expected to open lower this morning after a Wall St sell-off saw US markets tumble.
European markets fell. Brent oil prices were also down after briefly jumping above $US80 a barrel for the first time in almost three years.
Here’s what we know as told by Commsec.
- The Aussie dollar fell from highs near US73.10 cents to lows near US72.25 cents and was near US72.40 cents at the US close.
- Global oil prices fell by near 0.5% on Tuesday as traders booked profits on the recent rally.
- The Brent crude price fell by US44 cents or 0.6% from 3-year highs to US$79.09 a barrel. The US Nymex crude price fell by US16 cents or 0.2% to US$75.29 a barrel.
- Base metal prices were mixed on Tuesday.
- Copper and nickel fell by up to 2% while other metals rose up to 2.1%.
- The gold futures price fell by US$14.50 an ounce or 0.8% to U$1,737.50 an ounce.
- Spot gold was trading near US$1,733 an ounce at the US close.
- Iron ore fell by US$6.30 a tonne or 5.3% to US$112.35 a tonne.
Australian markets
Victoria has recorded 950 new COVID cases in the last 24 hours and is yet to hit its peak.
Meanwhile, Sydney’s numbers are dropping.
The numbers are still high in both states; however, the vaccination rates are edging closer to major re-opening targets.
Hopefully, this happens sooner rather than later, and we can put our economies back in order.
On the interesting news front this morning, Woolworths Group Ltd raised $700 million linked directly to its carbon emissions goals to 2030.
Woolworths successfully priced $350 million of senior unsecured six-year notes to financial year 2025 and $350 million of 10-year notes to FY29.
“Following the strong level of demand for our Euro sustainability-linked bond transaction, we are pleased to have provided the Australian debt capital markets with a similar domestic offering," Woolworths chief financial officer Stephen Harrison said.
"There was strong interest in the market reflecting the growing importance of sustainability in the debt capital markets.”
The notes were priced at 1.85% for the six-year notes and 2.75% for the 10-year notes with settlement on October 6.
Woolworths closed 2% lower at $38.30 yesterday.
Australian indices
- ASX 200 fell 1.47% to 7,275.60.
- ASX24 futures fell 1.2% to 7,152.
- S&P/ASX Small Ordinaries fell 1.22% to 3,472.70.
- All Ordinaries fell 1.43% to 7,581.10.
US markets
We asked our friend Alex Moffatt his take on what’s happening in the US. Here’s what he told us.
“Equity traders are finally taking notice of the rise in Treasury yields.
“The US 10-year Treasury note rose 6 basis points overnight to yield 1.55%. The move in yields is happening for a couple of reasons: the large treasury auctions this week and an expectation amongst traders that the Fed will start raising rates soon, possibly in 2022. This latter point will be subject to timing as the Fed has made it abundantly clear that the quantitative easing program will be wound down to nothing before rates will start rising.
“The chairman of the Federal Reserve said yesterday that the US economy is still far from achieving maximum employment, a key component of the Bank’s requirement for raising interest rates.
“Traders will also have an eye on oil prices as energy pressures rise in China, Europe and the UK.
“The US Treasury auctioned US$62 billion of seven-year notes last night at a high yield of 1.332% which seemed better than one might have expected given the volatility in the market.
“Then we move on to the dark clouds over the nation’s capital where The Treasury Secretary, Janet Yellen, has warned that the US risks running out of money by 18 October.
“The US is fast approaching its debt ceiling, but still haven’t negotiated a higher one with the Republicans in the Senate blocking the bill to suspend the debt limit. Needless to say, the US will default if it cannot pay its bills.
“So, there we have it, it is looking like a slow-moving train wreck at the moment, but then we have seen it all before and not just once or twice. Our market will slavishly follow our American cousins with index futures suggesting an 82-point loss today.”
US indices
- Dow Jones fell 1.6% to 34,299.99.
- S&P 500 dropped 2% to 4,352.63.
- Nasdaq fell 2.8% to 14,546.68.
European markets
Another region to suffer.
According to Craig James at Commsec, technology fell 4.8% as bond yields rose - the 'growth' sector is sensitive to higher interest rates.
Investors are also worried that an unfolding power crisis may slow economic growth in China.
The pan-European STOXX 600 index fell by 2.2% - the biggest fall in two months.
In London trade, shares in Rio Tinto fell by 0.6% and shares in BHP fell by 1.6%.
European indices
- STOXX 600 fell 2.2% to 452.25.
- German Dax fell 2.1% to 15,248.56.
- UK FTSE fell 0.5% to 7,028.10.