ASX 200: Everything you need to know before the market opens

Summary

  • The ASX 200 is set for another weak session with a 0.35% lower opening, after a new cluster of COVID-19 is found in the state of New South Wales.
  • Flash US manufacturing PMI surged to a record high in June 2021, helping Wall Street shares to cut losses short.
  • Bitcoin was up around 2.6% on Wednesday, giving back some of the day's gains.

On Wednesday, the Australian benchmark index dropped 0.6% or 43.7 points, led by a fall in the banking shares as concerns regarding a COVID-19 outbreak in the state of New South Wales deepened that called for border closures and curbs on gatherings. Today, the ASX 200 is set for another weak session with a 0.35% lower opening.

A new cluster of coronavirus has surfaced in the most populous city of Sydney, overshadowed improved global sentiments after the assurance from US Federal Reserve chairman Jerome Powell on Tuesday that the Fed is not looking to raise interest rates too quickly.

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The market is still going through the after-effects of the Fed's unexpected projection last week for rate hikes as soon as 2023, which triggered selling in stocks, boosted demand for the US dollar and led to the flattening of the US bond yield curve.

Flash US manufacturing PMI surged to a record high in June 2021, helping Wall Street shares to cut losses short. However, the data revealed that manufacturers are still struggling to secure qualified workers and raw materials, significantly raising prices for both businesses and consumers.

                     

The Early Trades || Tug of war between IT, Energy and Financial: Who will win?

 

On Wednesday, strong manufacturing data lifted the tech-weighted NASDAQ to a new high. The NASDAQ Composite rose 0.13%, to 14,271.74, while the S&P 500 fell 0.11%, to 4,241.83. The Dow Jones shed 0.21%, closing at 33,874.25.

The 10-year benchmark Treasury yields ticked up on Wednesday, one day after Fed’s Chairman Jerome Powell reaffirmed in congressional testimony that the central bank's view of rising inflation will likely to be temporary. The 10-year US Treasury yield last traded at 1.4869% on Wednesday..

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On Wednesday, the US dollar index retreated from upper levels after Jerome Powell’ statement that rising inflation is likely to be temporary and assurance of being in no hurry to tighten monetary policy. The dollar index futures closed the session up by 0.04% to 91.785.

The Australian dollar fell on Wednesday after two consecutive sessions of gains as policymakers reiterate lower-for-longer policy settings. The Australian dollar was last at US$0.7543 after touching a high of US$0.7550 earlier in the day.

Read More: What’s Making Australian Dollar Weak And NZD Firm?

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Bitcoin was up around 2.6% on Wednesday, giving back some of the day's gains. The cryptocurrency dropped to as low as US$28,600 on Tuesday - its lowest since January 2021. Ether was trading 4.37% up, at US$1,964.18.

Read More: Seven red hot cryptos trending in 2021

Technology shares

Taking cues from the US market, the Australian technology shares such as Afterpay Limited (ASX:APT), BrainChip Holdings Limited (ASX:BRN) and Zip Co Limited (ASX:Z1P) could open with a slight uptick. However, the weak opening of the broader market could weigh down on the tech shares.

Crude oil

On Wednesday, crude oil prices again surged to their highest level in more than two years. The demand increased after an industry report on US crude inventories reinforced investors’ views of a tightening market as travel picks up in North America and Europe.

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Brent crude futures closed 0.41% up, at US$75.12 a barrel on Wednesday, while WTI crude futures gained 0.19%, to US$72.99 per barrel.

Energy players such as Woodside Petroleum Limited (ASX:WPL), Origin Energy Limited (ASX:ORG) and Santos Limited (ASX:STO) could trade higher on the back of rising crude prices.

Gold ticked up

On Wednesday, gold prices ticked up further from the seven-week lows hit late week. The demand lifted as the US dollar weakened a day after the Fed said inflation would not be the only determinant of interest rate decisions.

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Spot gold was up 0.4% to US$1,785.32 an ounce by 12:34 PM EDT and the US gold futures were up 0.5% to US$1,786.60 per ounce.

Australian gold miners such as St Barbara Limited (ASX:SBM), Silver Lake Resources Limited (ASX:SLR) and De Grey Mining Limited (ASX:DEG) could catch up with the rising gold prices.

Metals update

Chinese coking coal futures closed 5% up on Wednesday, rising for a second consecutive session on supply concerns as safety inspection by Chinese authorities disturbed production at some mines. Coking coal is used to create coal which is further used as an input for steel production.

The most-actively traded coking coal futures contract for the September month delivery on the Dalian Commodity Exchange closed at 2,037 yuan (US$314.24) per tonne.

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On Wednesday, copper prices inched up after data revealed strong factory activity and Powell’s assurance to keep interest rates low to boost economic recovery. Three-month copper on the London Metal Exchange (LME) had risen by 2% to US$9,489 per tonne by 1600 GMT.

The local miners such as Rio Tinto Limited (ASX:RIO), Fortescue Metals Group Limited (ASX:FMG) and BHP Group Limited (ASX:BHP) should be on investors’ radar for the day.

Read More: What are battery metals? Why is their demand growing?


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