- The ASX 200 is poised for a good start on Wednesday, with a higher opening by 0.35%.
- On Tuesday, global equity markets edged lower due to the rising cases of coronavirus in Asia.
- The Australian and New Zealand dollars extended losses on Tuesday after cautious investors cut down on risk amid concerns over rising COVID-19 cases.
On Wednesday, the ASX 200 is poised for a good start, with a higher opening by 0.35%, on the backdrop of a strong overnight session on Wall Street, as gains made in frontline technology shares propelled the S&P 500 and the NASDAQ Composite to record highs.
On Tuesday, global equity markets edged lower due to the rising cases of coronavirus in Asia. Investors also speculated about whether the US Federal Reserve would extend its timetable to end its monetary policy.
Image Source: © Embe2006 | Megapixl.com
The S&P 500 marked a record high for the fourth consecutive session, supported by technology and banking shares. The rally was also buoyed by a government survey that revealed US consumer confidence in June 2021 hit its highest since the onset of the coronavirus pandemic.
On Wall Street, the Dow Jones was up 0.03%, to 34,292.3, while the S&P 500 also gained 0.03%, to 4,291.81. The NASDAQ Composite added 0.19% and ended the session at 14,528.34.
Fear over the highly contagious Delta variant of coronavirus is becoming a global worry and denting investors’ sentiment, which had already been shaken by the Fed’s hawkish tilt this month.
Read More: ASX Indices Trade On a Cautious Note
Indonesia is witnessing record-high cases, while Malaysia has planned to extend its lockdown. Thailand has announced newer restrictions. In addition, Portugal and Spain are restricting travel for unvaccinated British travellers.
On Friday, investors would be watching the US jobs report for June 2021. According to a poll by Reuters, economists expect the addition of 690,000 jobs this month, up from 559,000 in May 2021.
Image Source: © Webking | Megapixl.com
The US Treasury yields remained in a range as the market participants waited to see how the US employment data for June 2021, due on Friday, might affect the Fed’s monetary policy stance. The benchmark 10-year yield, which rose as high as 1.51% during Tuesday’s session, was last traded flat at 1.4782%.
On Tuesday, the US dollar rose to a one-week high, registering its largest single day gain in about two weeks, as surging cases of the new Delta variant of coronavirus threatened to derail a global economic recovery. When investors lose confidence in the equity markets, they generally tend to move to the US dollar as a safe haven. In afternoon trading, the dollar index rose 0.2% to 92.077.
The Australian and New Zealand dollars extended losses on Tuesday after cautious investors cut down on risk amid concerns over rising COVID-19 cases, leading to strengthening of the greenback. The Aussie dollar weakened 0.1% to US$0.7557, falling for a second consecutive session. The New Zealand dollar was off 0.1% from its previous closing, to US$0.7032.
Image Source: © Photojk21 | Megapixl.com
In the cryptocurrency market, Bitcoin has risen to the highest level since 19 June 2021, surging 4.8% to US$36,180. Other popular cryptos such as Dogecoin and Ether were also up 3.5% and 5.3%, respectively.
Read More: What is Floki coin, and why is it trending?
Technology shares to continue uptrend
Technology shares have been rising since the last few sessions. Today, the trend seems to be resuming on the ASX, as the tech-heavy NASDAQ 100 has marked a new all-time high in the US, led by demand for technology shares.
Crude oil ticked up
On Tuesday, crude oil prices rose on the back of broad hopes for a demand recovery. The comments from OPEC's secretary general overshadowed travel restrictions due to new COVID-19 outbreaks, also helped fuel the rally.
Image Source: © Rizami | Megapixl.com
Gold prices softened
On Tuesday, gold prices fell to their lowest level since mid-April 2021 as the US dollar gained ahead of this week's US jobs report, which is expected to add new jobs and could cement the Fed’s recent hawkish stance.
Image Source: © Anchesdd | Megapixl.com
Spot gold fell 0.93% to US$1,761.66 an ounce by 01:39 PM EDT, after touching US$1,749.20, its lowest since 15 April 2021. The US gold futures were down 1%, at US$1,763.60 an ounce.
On Tuesday, iron ore futures fell, weighed down by steel demand in China reverting to a lower level due to threats of intervention by the Chinese government seeking to put a leash on high prices.
The most active September futures contract for iron ore on China's Dalian Commodity Exchange (DCE) closed 2.7% lower at 1,153 yuan (US$178.57) per tonne, after four straight sessions of gains.
Image Source: © 1ping | Megapixl.com
Copper prices also fell for the fourth consecutive session on Tuesday as surging COVID-19 cases strengthened the US dollar and cast doubt on a speedy recovery of some economies. In addition, the plentiful supply of industrial metal also weighed down on its price.
Three-month copper on the London Metal Exchange (LME) fell 0.3% to US$9,352 a tonne by 1651 GMT after falling as low as US$9,236 earlier in the session.
Read More: What is coking coal, and where is it used?