- Today, the ASX 200 is likely to open on a flat note after a mixed trading session on Wall Street.
- On Wednesday, market participants would focus on minutes from the US Fed's Federal Open Market Committee (FOMC) meeting.
- Crude oil retraced from higher levels after OPEC+ members cancelled a meeting due to clashes over plans to increase production to meet rising global demand.
On Wednesday, the ASX 200 is likely to open on a flat note, a day after the Reserve Bank of Australia took its first step towards tapering its massive stimulus program. On Tuesday, the benchmark index fell 0.73%, to 7,261.8.
On Tuesday, global equity markets traded lower after some indices showed the first sign of weakness since the last few days. In addition, China's latest tech crackdown, tumbling bond yields, lower crude oil prices, and rising expectations of a hawkish Fed report due to be out on Wednesday waved red flags for investors.
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Chinese ride-hailing company Didi Global Inc’s share price tumbled over 20% in a day after Chinese authorities ordered Didi’s app to be taken down, days after its US$4.4 billion listing on the New York Stock Exchange. Other US-listed Chinese companies, including JD.com, Alibaba Group, Baidu Inc etc. also fell sharply on Tuesday.
At the closing, the Dow Jones was 0.6% down, at 34,577.38, while the broader market index, the S&P 500, was down 0.2%, to 4,343.53. The tech-heavy NASDAQ Composite registered a gain of 0.17% and closed the session at 14,663.65.
On Wednesday, market participants would focus on minutes from the US Fed's Federal Open Market Committee (FOMC). Investors expect the committee to confirm a hawkish or anti-inflation tilt, that could reverse losses from Tuesday’s session.
On Tuesday, the US Treasury yields traded lower, with the benchmark 10-year note yield marking its longest losing streak in 16 months as market participants look for clues on the Fed’s policy path. The yield on 10-year Treasury notes was down 6.4 basis points to 1.368%, hitting a low of 1.352%, its lowest since 24 February 2021, declining for the sixth straight session.
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The US dollar gained on Tuesday following the US Independence Day long weekend as investors positioned themselves ahead of the release of the minutes from the Fed’s June meeting. At 3:00 PM Eastern time, the US dollar index was up 0.328%, at 92.550.
During the early trading hours, the Australian dollar firmed but lost all of its gains during the end of the session as the country's central bank said it would decrease the pace of its bond-buying campaign from September but also affirmed that a rate hike is not on the cards until 2024. The Aussie dollar fell 0.42% to US$0.7490 as the RBA ended its July 2021 policy meeting by keeping interest rates intact at 0.1%.
On Tuesday, Bitcoin traded almost flat with a minor gain of 0.41%, to US$33,833, while its peers, Dogecoin and Ether, were down 0.43% and up 4.27%, respectively.
The tech-heavy NASDAQ again closed at a record high, rising 0.47% on Tuesday, indicating a positive opening of technology shares on the Australian bourse. Shares such as Afterpay Limited (ASX:APT), Xero Limited (ASX:XRO) and Zip Co Limited (ASX:Z1P) should be on investors’ radar.
Read More: Five exciting ASX technology players of 2021
On Tuesday, crude oil retraced from higher levels after the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, cancelled a meeting due to clashes over plans to increase production to meet rising global demand. This included the United Arab Emirates rejecting an eight-month extension to output curbs.
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However, it is expected that a new meeting would take place in the coming days and would lead to an increase in supply in August 2021. Brent crude closed down by US$2.63 per barrel or fell 3.4% to US$74.53. West Texas Intermediate (WTI) crude futures settled 2.4% down, at US$73.37 per barrel.
On Tuesday, gold prices notched higher, bouncing above an important level of US$1,800. A retreat in the US bond yields has bolstered the demand for the yellow metal while investors watch for minutes from the Fed’s last policy meeting to gauge interest rate path.
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Spot gold rose 0.2% to US$1,794.37 an ounce by 2:13 PM EDT, after jumping to its highest level since 17 June 2021, of US$1,814.78 an ounce. The US gold futures closed the session 0.6% higher at US$1,794.2 per ounce.
On Tuesday, Chinese steel futures rose on the back of higher raw material prices, although slowing auto sales and construction activities capped gains. The Iron ore futures for the September month delivery on the Dalian Commodity Exchange (DCE) closed the session 2.8% higher, at 1,231 yuan a tonne.
Copper prices pulled back from the rally on Tuesday after the US dollar rebounded and oil prices slid from higher levels. Three-month copper on the London Metal Exchange (LME) fell 2.5% to US$9,270 per tonne by 1620 GMT, after hitting a high of US$9,632.50, its highest since 16 June 2021.