Worsening COVID-19 situation in India hitting oil prices, ASX Energy stocks feel the heat

Summary

  • According to the ASX 200 Futures index, the market is expected to open 0.45% or 31 points higher today.
  • Bitcoin took a beating of about 2.8%, trading at US$54,933 while Dogecoin is almost flat at US$0.312.
  • Oil prices further continued to be weighed down by rising COVID-19 cases in India.

On Wednesday, the Australian market closed the session on a disappointing note. The benchmark index witnessed a heavy selling pressure, dragging the index down by almost 1.5%. However, towards the closing, the ASX 200 rebounded from the lower levels, finally closing 0.29% down at 6997.5. According to the ASX 200 Futures index, the market is expected to open 0.45% or 31 points higher today.

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World equity markets rose on Wednesday as the US and European markets bounced back from large drops. However, the concern over rising cases in Latin America, likely restrictions in Japan and record coronavirus infections in India, will be a hurdle for the global economic recovery which has weighed on investors’ sentiment.

On Wall Street, the Dow Jones rose 0.93%, to 34,137.31, while the S&P 500 gained 0.93%, to 4,173.42. The NASDAQ Composite was up by 163.95 points or 1.19%, to 13,950.22. A hefty 7% drop in Netflix weighed on the NASDAQ but indices bounced back from their largest declines in a month.

Read More: Netflix misses subscriber growth targets

In currency markets, the US dollar fell and traded in a tight range throughout the session on Wednesday, not far from the more than six-week low hit intraday on Tuesday. The dollar index fell 0.111%, with the Australian dollar rising 0.38% to 0.7751.

The US Treasury yields were little changed and had a rangebound session even after an auction of 20-year bonds depicted robust demand. This consolidation may persist until the next week when a few more data releases are scheduled along with the Federal Reserve meeting.

The benchmark 10-year notes rose 2/32 in price to yield 1.5573%, from 1.562% late on Tuesday.

The rebound in the global indices had resulted in volatility levels reverting back to the lower end of the day’s range. The CBOE VIX index fell 6.32% to 17.5 while the ASX 200 VIX index retraced from the day’s high of 14.4 and closed near the day’s low of 12.8.

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Bitcoin took a beating of about 2.8%, trading at US$54,933 while Dogecoin is almost flat at US$0.312.

Crude oil traded lower

Oil prices were further pressurised by rising COVID-19 cases in India which would eventually drive down the fuel demand by the world's third-biggest oil importer and by a higher US inventory.

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The WTI crude fell 2.49% to US$61.11 per barrel while Brent crude was at US$65.07, down 2.25% on Wednesday.

Australian Energy players such as Oil Search Limited (ASX:OSH) and Woodside Petroleum Limited (ASX:WPL) could trade lower for the day.

Read More: Unabated COVID-19 surge spooks foreign investors in India

Gold prices traded higher

Spot gold rose 0.9% to US$1,794.03 an ounce while Silver gained 2.62% to US$26.55 an ounce.

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Australian gold miners such as Newcrest Mining Limited (ASX:NCM), Resolute Mining Limited (ASX:RSG), De Grey Mining Limited (ASX:DEG) and Northern Star Resources Limited (ASX:NST) could trade higher today.

Stock Specific Action

Australian technology shares could be the outperforming sector for the day, taking cues from the tech-heavy NASDAQ. Stocks such as Afterpay Limited (ASX:APT) and Zip Co Limited (ASX:Z1P) could be on the forefront for the day.

Santos Limited (ASX:STO) would be coming out with its first-quarter update for the FY21 and it would be interesting to see how it fares on the investors’ expectations. 

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