ASX 200: How is the market likely to open on Friday?

Summary

  • Wall Street slid to lower levels despite the four largest US consumer banks declaring blockbuster second-quarter results earlier this week.
  • In the cryptocurrency space, Bitcoin fell 3.3% to US$31,733, the lowest level since 27 June 2021.
  • Gold surged to a one-month high on Thursday, on the backdrop of Fed’s Chairman Jerome Powell's dovish comments.

On the last day of the week, the ASX 200 is set to open flat, as major Australian cities such as Sydney and Melbourne battle the COVID-19 outbreak, while stronger copper and gold prices are expected to help local miners.

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On Thursday, a measure of global stock markets slipped from near-record highs, the US dollar inched up, while bond yields traded lower as investors ponder over the Fed’s inflation outlook and upbeat assessment of the US economy.

Wall Street slid to lower levels despite the four largest US consumer banks declaring blockbuster second-quarter results earlier this week that have beaten analysts' estimates.

The number of people in America filing jobless claims benefits fell to a 16-month low last week as the US jobs market steadily gained traction, while another set of data depicted that import prices rose in June 2021 but might have probably peaked.

                       

Global Market Roundup || Asian shares find support as Jerome Powell shrugs off inflation

 

On Wall Street, the Dow Jones eked out a 0.15% gain, to 34,987.03, but the S&P 500 slid 0.33%, to 4,360.04. The NASDAQ Composite fell 0.70%, to 14,543.14.

US Treasury yields traded lower on Thursday to one-week lows as Fed’s Chairman Jerome Powell testified before Congress for the second day that surging inflation would probably be transitory and the US central bank would continue to support the economy. The benchmark 10-year yields fell six basis points on Thursday to 1.297%.

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In the forex market, the US dollar had climbed in recent weeks as market participants take stock of the Fed's increasingly upbeat assessment of the US economy, which for some investors have brought forward the timeframe for its next rate hike. It was up 0.2% to 92.603 but fell to as low as 92.272 earlier in the session.

In contrast, the Australian dollar struggled to keep up the momentum and closed at US$0.7456, having failed to get any support from another set of upbeat jobs figures. The Kiwi dollar aimed to extend its rally on Thursday as the market participants bet on a real chance that local interest rates could increase as soon as August 2021, way ahead of any other developed nation. It stood at US$0.7007, after rising 1.3% on Wednesday, becoming the best performing developed nation currency.

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In the cryptocurrency space, Bitcoin fell 3.3% to US$31,733, the lowest level since 27 June 2021 as it reaches around the lower end of a month-long consolidation. Dogecoin and Ether both were down 4.52% and 2.49%, respectively.

Technology shares

The NASDAQ ended lower on Thursday, dragged down by heavyweights such as Amazon, Apple and other big tech companies as a downtick in weekly jobless claims data spiked investor concerns regarding a recent inflation surge.

Also, the recent tech rout triggered by Apple’s entry into the BNPL space has negatively impacted investors’ sentiments. As a result, Australian shares such as Afterpay Limited (ASX:APT), BrainChip Holdings Limited (ASX:BRN) and Xero Limited (ASX:XRO) could continue to face selling pressure.

Read More: Afterpay, Zip continue to slide; what’s brewing in the BNPL space?

Crude oil

On Thursday, oil prices dropped by more than a dollar per barrel on expectations of more supply to hit the market after a compromise deal between OPEC+ member countries.

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Brent crude closed at US$73.47 per barrel, falling 1.7%, while US West Texas Intermediate (WTI) crude fell 2.2% and settled at US$71.65 per barrel.

Australian energy stocks such as Viva Energy Group Limited (ASX:VEA), Santos Limited (ASX:STO) and Woodside Petroleum Limited (ASX:WPL) could trade with a negative bias for the day.

Gold

Gold surged to a one-month high on Thursday, on the backdrop of US Fed’s Jerome Powell's dovish comments and some concerns regarding a deceleration in the global economic recovery.

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Spot gold rose 0.1% to US$1,829.16 an ounce by 1:59 PM EDT. The US gold futures were up 0.3% to US$1,830.00 per ounce.

Gold miners such as Northern Star Resources Limited (ASX:NST), De Grey Mining Limited (ASX:DEG) and Silver Lake Resources Limited (ASX:SLR) could be looked upon to play the gold theme today.

Read More: Three ASX gold stocks to light up your portfolio as gold prices heat up

Metals update

On Thursday, ferrous futures in China traded higher, with Dalian iron ore extending gains into a fourth consecutive session, as China’s faltering economic recovery underpinned hopes for additional support measured from the government.

The most actively traded iron ore futures contract on the Dalian Commodity Exchange closed daytime trading 1.6% up, at 1,234 yuan (US$191.02) per tonne.

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Lower than expected growth from top consumer China increased expectations for more policy support for the world's second-largest economy, resulting in higher copper prices. The benchmark three-month copper on the London Metal Exchange (LME) was 1.2% higher on Thursday, at US$9,455 a tonne by 1627 GMT.

Local miners such as Fortescue Metals Group Limited (ASX:FMG), Rio Tinto Limited (ASX:RIO) and BHP Group Limited (ASX:BHP) should be on investors radar on Friday.

Read More: What is the future of coal? 6 ASX-listed coal stocks in focus

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