ASX 200 to open higher, taking cues from Wall Street

Summary

  • The ASX 200 is set to open 0.2% or 17 points higher as Wall Street closes in green.
  • Gold prices rose above an important US$1,800 an ounce level as the US Treasury yields fell after minutes from the Fed’s June meeting.
  • On Wednesday, Crude oil prices retraced more than US$1 per barrel in another volatile trading session.

On Thursday, the Australian benchmark index, the ASX 200, is set to open 0.2% or 17 points higher, on the backdrop of a stronger Wall Street closing and surging iron ore and copper prices will likely to lift heavyweight local miners today.

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The US Treasury prices held gains on Wednesday, keeping Treasury yields lower and global stock markets traded mostly higher with the US dollar standing firm after the US Federal Reserve released minutes from its latest meeting that largely stood on investors’ expectations.

At a mid-June meeting, Fed officials made it clear that substantial further progress on economic recovery has not been met as of now. However, investors expect progress to continue, according to the minutes.

According to the minutes, some market participants still felt conditions for curbing the bond-buying that is supporting stock markets with cash would be met earlier than expectations, while other participants saw a less clear signal from the minutes..

                   

The Opening Bell || What Led ASX 200 To Open Higher?

 

US stocks closed the session in green on Wednesday after minutes from the Fed meeting revealed that officials were divided on economic signals. On Wall Street, the Dow Jones rose 0.3%, to 34,681.8, while the S&P 500 was up 0.34%, to 4,358.14. The tech-heavy NASDAQ Composite was flat at 14,665.07.

The US Treasury yields continued to fall on Wednesday, with 10-year yields falling for the seventh straight session on worries that the economic recovery may be softening while market participants assessed the minutes from the Fed’s June 2021 meeting for clues to its policy path.

Bond prices rose during the session, and the yield on 10-year Treasury notes fell 4.9 basis points to 1.321% after earlier tumbling to as low as 1.296%, the lowest level since 19 Feb 2021.

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On Wednesday, the US dollar traded slightly higher after the release of the minutes of the Fed’s latest policy meeting, showing Fed officials wrestling with the onset of financial stability and inflation concerns but included no big surprises. The dollar index was up 0.135%, to 92.664, consolidating near its recent 3-month high.

The Australian dollar traded below its important resistance level of US$0.75 as market participants bet on the country's central bank to keep the monetary policy easy for a long time to come. The New Zealand dollar pulled back from three-week highs, closing at US$0.7015.

In the cryptocurrency space, Bitcoin is again trading without any major direction. On Wednesday, it was up 0.84% to US$34,512 while its peers, Dogecoin, was down 1.09% and Ether was up 1.44%.

Technology shares

On Wednesday, the tech-heavy NASDAQ 100 continued its massive uptrend, again making a record high. Also, a massive rebound of the ASX Information Technology Index, clocking a 2.5% gain on Wednesday, had depicted the demand for technology is still there.

Shares such as Afterpay Limited (ASX:APT), Xero Limited (ASX:XRO) and Zip Co Limited (ASX:Z1P) could continue with their gains today as well.

Read More: Five exciting ASX technology players of 2021

Crude oil   

On Wednesday, Crude oil prices retraced more than US$1 per barrel in another volatile trading session, as traders worried that this week's collapse in the OPEC+ meeting could eventually mean more upcoming supply is on the way.

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Brent crude closed at US$73.43 per barrel, falling 1.5%. West Texas Intermediate (WTI) crude settled at US$72.20 per barrel, shedding 1.6%. Both benchmarks rallied over US$1 per barrel earlier in the session.

Australian energy shares such as Origin Energy Limited (ASX:ORG), Oil Search Limited (ASX:OSH), and Woodside Petroleum Limited (ASX:WPL) could open on a negative note today.

Gold

On Wednesday, gold prices rose above an important US$1,800 an ounce level as the US Treasury yields fell after minutes from the Fed’s June meeting.

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Spot gold extended gains slightly after the release of the minutes and was up 0.4% to US$1,804.16 an ounce by 2:36 PM EDT, after hitting its highest level since 17 June 2021, of US$1,814.78 an ounce on Tuesday. The US gold futures settled 0.4% higher at US$1,802.10 an ounce.

Gold miners such as Silver Lake Resources Limited (ASX:SLR), St Barbara Limited (ASX:SBM) and De Grey Mining Limited (ASX:DEG) could trade with a bullish bias in today’s session.

Read More: Top ten fully franked gold stocks with high dividend yield

Metals update

Chinese steel futures increased on Wednesday, as hot rolled coils and construction rebar both settled more than 3% up, underpinned by expectations of production cuts.

Benchmark iron ore futures for the September month delivery recovered from the lower levels and closed the session 1% up, at 1,244 yuan per tonne.

On Wednesday, copper prices traded higher, recouping losses from Tuesday’s session. The benchmark copper on the London Metal Exchange (LME) was up 1.6%, to US$9,465 per tonne at 1600 GMT.

Local miners such as BHP Group Limited (ASX:BHP), Rio Tinto Limited (ASX:RIO) and Fortescue Metals Group Limited (ASX:FMG) could have a positive trading session today.

Read More: Which are the booming applications of copper?

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