Categories
Market

Dollar, commodities surge, US dips

Aussie shares look set to open lower as surging commodity price tags are actually tempered by a two-and-a-half-year high in the dollar and a modest drop on Wall Street.

ASX SPI200 index futures fell thirty six points or even 0.5 a cent. US stocks finished mixed. Iron ore soared five per cent to a fresh multi year high. Crude oil cracked US$fifty a barrel for the very first time since March. The dollar climbed to its highest level since June 2018.

Wall Street
US stocks struggled as a result of the opening bell amid mixed signals on stimulus talks. A jump of claims for jobless benefits underlined strains on the economy. The S&P 500 pared first losses to finish 5 points or maybe 0.13 per cent of the red.

The Dow Jones Industrial Average traded both sides of 30,000 for a great deal of the session before finishing seventy points or perhaps 0.23 every dollar weaker at 29,999. Strength in’ stay at home’ stocks lifted the Nasdaq Composite sixty seven points or perhaps 0.54 per cent.

Hopes for a stimulus buy waxed as well as waned. Treasury Secretary Steven Mnuchin stated talks had made “a plenty of progress”. Democrat House Speaker Nancy Pelosi agreed there had been “great progress”. Yet Republican Senate Majority Leader Mitch McConnell’s office indicated Senate Republicans will not support the most recent proposal. The Senate whip John Thune predicted a deal would have to hold off until next year.

“If we do not get stimulus by the end of the year, you can definitely have a risk off move in the market,” Frank Rybinski, chief macro strategist at Aegon Asset Management, told CNBC.

First-time claims for unemployment benefits climbed from 716,000 to 853,000 last week, topping 800,000 for the very first time since October. The total was significantly even worse in comparison to the 730,000 expected by economists polled by Dow Jones.

“Given the recent behaviour of initial statements, we’ll probably see further increases in continuing claims going forward,” Thomas Simons, money market economist at Jefferies, wrote. “Evidence has been building indicating that claims reach an inflection point in early November because of to rising COVID case numbers and forced the imposition of social distancing policies that truly damage the service sector of the economy.”

Australian outlook
A true mixed bag for local investors this early morning. Plenty of plenty and positives lots of negatives. Looks like a sharp split ahead involving losers as well as winners.

First, the positives. Iron ore soared $7.50 or 5 per cent to US$158.25 a tonne, an eight year peak, as reported by CommSec. Brent crude settled $1.39 or perhaps 2.8 per dollar higher at US$50.25 a barrel, its first close above US$50 since the original days of the pandemic sector plunge.

Energy stocks outperformed in the US, rising 2.9 a cent. Financials and tech stocks also rose, 2 more pluses for our market. Wall Street completed well off its great – another plus.

These days to the negatives. Those stellar benefits in commodity prices fed directly into the dollar. The Aussie surged 1.2 per cent to 75.35 US cents. The regional currency is traded by a lot of forex players as a traditional commodity proxy.

Some other negatives? The rise in iron ore was caused by a cyclone from the Pilbara coast. Any damage or stoppages at local producers would dent share prices. Wall Street finished broadly lower. Oddly, the US supplies sector fell 0.7 a cent. 7 straight gains has left the ASX looking vulnerable to further profit taking. The S&P/ASX 200 is up 2.5 per cent for the month despite yesterday’s 0.7 per cent setback.

So the playbook for the day appears something like this: positive leads for miners, importers and oilers ; damaging leads for different exporters and companies that generate significant revenue in US dollars. The latter include CSL, Cochlear, ResMed, James Hardie, Aristocrat, Altium, Appen, Ansell, Amcor, Brambles, News Corp and Macquarie Group .

Commodities
Barring bad news from Tropical Cyclone Damien, iron ore majors BHP, Fortescue as well as rio Tinto look set for fresh multi-year/record highs. BHP’s US listed inventory placed on 2.78 per cent and its UK listed stock 3.17 a cent. Rio Tinto rose 2.22 per cent in the US and 2.91 per cent in the UK.

Iron ore rose for a 12th straight session. The price has today gone parabolic and looks weak if Tropical Storm Damien passes without incident.

“The marketplace is in disequilibrium at this time – investors are actually trading industrial metals like iron ore as a speculative play on the best way China’s economy is going to perform,” Atilla Widnell of Navigate Commodities told Bloomberg. “There isn’t any way iron ore might be for US$150 based on demand and supply fundamentals.”

Gold dipped for a second day ahead of what’s anticipated as a green light from the US regulator for Pfizer’s Covid 19 vaccine. Gold for February delivery settled $1.10 or less than 0.1 per cent weaker at US$1,837.40 an ounce. The NYSE Arca Gold Bugs Index edged up 0.32 a cent.

“Vaccine information is bearish for gold,” Chintan Karnani, chief market analyst at Insignia Consultants, told MarketWatch.

Copper as well as nickel set the pace during a strong night for manufacturing metals on the London Metal Exchange. Benchmark copper rose two per cent to U$7,860.75 tonne. Nickel gained 4.4 per cent, aluminium 1.3 per cent, zinc 0.3 per cent as well as tin 0.2 per cent. Direct shed 1 per cent.

Leave a Reply

Your email address will not be published. Required fields are marked *