ASX 200 expected to open lower; NASDAQ plummets 1.8%

Summary

  • The ASX 200 index is expected to open 0.3% or 24 points lower.
  • The tech-heavy NASDAQ fell 1.88%, marking its biggest single-day decline in six weeks.
  • Cryptocurrency Ethereum bolstered to another record peak of US$3,530, before paring gains to trade 1.9% lower.

On Tuesday, the ASX 200 closed near the high of the day, up by 0.56%, at 7067.9. However, the net change for the last few sessions has been minimal as the market is consolidating in a tight congestion zone, with contraction in volatility.

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Today, Australian shares are expected to open lower after Wall Street pulled back from its record trading levels overnight, with the NASDAQ Composite declining 1.88%, dragged by the blue-chip tech firms. The ASX 200 index Futures is trading 0.3% lower which would likely to materialise into a fall of around 24 points at the opening of the Australian market.

The Reserve Bank of Australia left its key interest rates unchanged, near zero for a fifth straight meeting and pledged to keep its policies super-supportive for a prolonged period.

The global indices dropped lower with the U.S. Treasury yields on Tuesday on the back of low trading volume (due to holidays in both China and Japan), a lull in economic news and lack of a catalyst to lift stocks higher. These factors sparked a sell-off by market participants worried that further upside in markets is limited amid high valuations.

The tech-heavy NASDAQ fell 1.88%, marking its biggest single-day decline in six weeks, while the yield on the 10-year US Treasury note fell to a low of 1.557%, a slide that normally would push technology shares higher. Signs that the US Fed remains in no rush to reel in its massive stimulus programs kept 10-year U.S. Treasury yields slightly under pressure.

Also, Investors sold the high-flying tech-related stocks that have doubled the value of the NASDAQ since March 2020 lows, and bought government debt, pushing yields lower.

The other two primary indices on Wall Street, the Dow jones closed almost flat with a slight uptick of 0.06% while the S&P 500 was down by 0.67%.

A recent surge in commodity prices helped spur talk of an inflation spike and bucked the downward shift in equity markets.

Read More: Why Commodities Index Hit at A Nine-Year High 

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In forex markets, the US dollar reclaimed some ground to partially unwind April’s long decline as investors squared up positions ahead of monthly payrolls data due on Friday this week. The dollar index rose 0.337%, with the Australian dollar falling 0.69% to 0.7707.

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Cryptocurrency Ethereum bolstered to another record peak of US$3,530, before paring gains to trade 1.9% lower. On the other hand, the largest cryptocurrency, Bitcoin fell 4.66% to US$54,553.

Read More: Ether Hits All-Time High Taking the Spotlight Away from Bitcoin

Commodity outlook

Palladium prices soared to an all-time high of US$3,017 an ounce, fueled by concerns about short supplies of the auto-catalyst metal as demand gradually improves.

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Oil prices rose after more U.S. states eased pandemic-related restrictions and the European Union sought to focus on tourism, though soaring COVID-19 cases in India capped gains. Brent crude Futures settled US$1.32 up, at US$68.88 a barrel, while WTI crude Futures rose US$1.20 to close at US$65.69 a barrel.

Oil companies such as Woodside Petroleum Limited (ASX:WPL), Oil Search Limited (ASX:OSH) and Santos Limited (ASX:STO) may continue yesterday’s uptrend.

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Gold fell almost 1% after the US Treasury Secretary, Janet Yellen said interest rates may need to rise. The US gold Futures last traded at US$1,776 an ounce, falling 0.9%.

Australian gold miners might take a hit due to falling gold prices. Shares of Silver lake Resources Limited (ASX:SLR), Newcrest Mining Limited (ASX:NCM) and De Grey Mining Limited (ASX:DEG) should be on investors’ radar.

Read More: How Central Banks' domestic gold purchase plan can formalise artisanal gold mining


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